Black Ops Ventures Launches Fund for Black Founders

The Current State of Venture Capital Funding

The venture capital landscape is experiencing significant activity, with substantial funds being allocated to startups globally. Presently, it is widely regarded as a favorable period for securing capital and establishing businesses centered around disruptive technologies.

However, this advantageous climate isn't universally experienced. While the recent surge in venture capital has benefited numerous founders, the distribution of funding remains uneven. Despite some progress, women continue to receive a disproportionately small share of investment. Similarly, although Black founders are securing more funding than in the past, the amount remains significantly lower compared to their counterparts.

Introducing Black Ops Ventures

Black Ops Ventures has emerged with the specific goal of addressing this imbalance, focusing its investment strategy on Black founders.

Our awareness of Black Ops’ launch and initial funding round stemmed from our connection with James Norman, one of its partners. He is the creator of Pilot.ly, a platform designed for gathering insights on video content audiences, and also a partner at Transparent Collective.

Beyond Norman, the Black Ops team comprises managing partner Heather Hiles (with experience at Udemy and the Bill & Melinda Gates Foundation), partner Sean Green (ARTERNAL), and principal Ebony Peay Ramirez (Oculus, Plum2.0).

Fund Details and Investment Strategy

The initial Black Ops fund currently totals $13 million, with expectations for growth following a second funding close. The initial capital was secured from corporate entities like Northwestern Mutual and Bank of America, as well as prominent figures in the technology sector, including Drew Houston and Ben Horowitz.

TechCrunch engaged with Norman to discuss the fund’s overarching strategy. According to Norman, Black Ops will concentrate on seed-stage investments, providing funding in rounds valued at several million dollars.

A key objective of the group is to lead these seed rounds, directly addressing a challenge frequently encountered by Black founders – receiving investor interest without a venture group willing to spearhead the funding process.

By taking the lead, Black Ops aims to facilitate further investment from other capital sources.

Addressing Systemic Challenges

The firm’s investment approach also seeks to assist overlooked founders in building diverse teams, something often hindered by the limited networks of traditional venture capital firms. Norman posed the question: “If I went and raised a big round from some top-tier VC, do you think that those people can help me hire other people of color?” He immediately answered his own question with a firm “No.”

He further explained that “building a team and cultivating a sustainable company culture aligned with the founder’s vision is difficult,” and that “the resources necessary for startup success that we will provide are currently inaccessible to Black founders.”

The Rationale Behind Investing in Black Founders

The core investment thesis of Black Ops – focusing on Black founders – is a strategically sound approach. Competition for investment in white male founders from a select group of U.S. universities is exceptionally high.

This intense competition can lead to inflated valuations, as investors vie for access to promising startups. Black founders rarely experience this level of demand. Consequently, Black Ops is positioned to invest in opportunities that are likely to be both beneficial for Black founders and profitable for the firm.

Norman emphasized this point, stating that “the narrative we presented was unique to everyone we pitched this idea to. We thoroughly demonstrated why this demographic represents the most significant arbitrage opportunity in tech. Ignoring this group is a financial misstep, as it means missing out on substantial returns.”

A Step Towards Equity

While Black Ops Ventures cannot single-handedly eliminate the disparities in venture capital funding for Black founders, it represents a significant step towards addressing a problem that many venture capital firms, despite their resources and expertise, have been unable to resolve effectively.

• Focus: Investing specifically in Black founders.
• Stage: Seed-stage funding rounds.
• Investment Size: Several million dollars per round.