Inspired by Black Wall Street, Triangle investors target black-led startups with new fund

DURHAM – Durham’s Black Wall Street may be long gone, but a team of local angel investors is working on a comeback of sorts.

Enter Resilient Ventures, a new fund “inspired by the legacy of Black Wall Street” that specifically targets African American-led startups.

Keith Daniel, owner of Durham-based Madison Consulting Group, and Thomas Droege, president of Droege Computing Services, started the fund.

Their mission: close the existing wealth gap by expanding access to capital, networks and opportunity.

“As far as we can tell, we’re the only fund, at least in the Durham-RTP area, that is explicitly targeting African-American founders,” Daniel told WRAL TechWire.

Back in the early 1900s, black-owned businesses once lined Parrish Street, forming a hub of black wealth and political power in the heart of Durham’s downtown. But with the construction of the Durham Freeway and urban renewal, those shops were pushed out, along with its once vibrant black business community.

These days, black founders often face disproportionate struggles in securing cash and connections to get their companies off the ground.

The numbers don’t lie. Last year, angel investors invested around $38 million in the Southeast – but only 5 percent of funds went to founders/CEOs who were non-white, according to a recent report released by the Angel Capital Association (ACA).

Resilient Venture’s Keith Daniel and Thomas Droege.

That’s not good enough, argue Daniel and Droege.

“We knew there needed to be a voice at the table and more focus on African American founders — the challenges they face racing capital, and the unconscious and conscious biases that are a part of the water, and the air that we breathe,” said Daniel.

On Friday, the pair was among the 200-strong crowd sitting in the Carolina Theatre for the Black Founders Exchange’s Demo Day.

It was the culmination of a week-long immersion accelerator program hosted by American Underground in partnership with Google for Startups, which ran in tandem with Black Wall Street, a three-day conference celebrating multicultural entrepreneurs.

From among the 11 startups pitching, Daniel said they were looking for possible ventures to invest in: “Our vision and aspiration is that we’ll find these entrepreneurs that others are overlooking because of the nature of the business.”

Raising $10M for black-led startups

Launched earlier this year, Resilient Ventures is looking to raise $10 million to invest in companies over the next five years.

So far, they’ve raised around $1 million from eight investors and made one pledge — around $50,000 to a Chicago-based tech startup called Five to Nine, run by two female, African-American entrepreneurs.

However, local investment is also a top priority. They’ve dedicated a portion of the fund to local startups, even giving it the nickname, “Mainstreet Durham.”

Already, there are two companies in the pipeline.

“I can’t disclose them at this point,” said Daniel. “We’re in the final phase of negotiating term sheets and the details.”

It’s just the beginning, he added.

“Close to 40 companies have filled out what we call our national registry for consideration to be one of our portfolio companies, and they span the country pretty well. So far, we’ve gotten a lot of affirmation that this is an important space to be in.”

Part of a national movement?

What’s happening with Resilient Ventures could be seen as part of a national trend.

In recent years, a growing group of black angel investors and black-led early-stage Venture Capital (VC) funds have been working to address the funding gap by seeking out minority-led companies.

Among the most visible firms are New York-based Harlem Capital Partners, California-based Backstage and Black Angel Tech Fund.

Daniel, however, is quick to point out that he does not consider himself a black angel investor.

“It so happens Tom is white, and I’m black. Though we are inspired by the legacy of Black Wall Street, our [limited partnerships] and advisory team are diverse, both in terms of ethnicity and gender.”

Bill Spruill is another black entrepreneur and local angel investor. He echoes this sentiment.

“[The term] is not offensive, but it creates a separation when no separation is required. You’re either an angel investor or you’re not, regardless if you’re black, Hispanic or otherwise.

“I don’t want to be defined by my skin tone. I want to be defined by my accomplishments – both as investor and entrepreneur.”

Spruill knows first-hand the hardships of raising capital as a person of color.

Back in 2011, he was forced to bootstrap his data and technology firm, The Global Data Consortium, when he couldn’t find any investors.

These days, he has 18 employees and counts Amazon Payments and DHL eCommerce among his clients.

“We’ve been growing at 100 percent per year for the last three years,” he said.

However, when in comes to his own investing, he takes a more nuanced approach than Resilient Ventures. While he’s always looking for “interesting minority-led deals,” it doesn’t define his strategy.

“I look at all deals and I invest accordingly,” he said. “I don’t invest in the deal just be because it’s minority led. It’s important to make that differentiation. If I invest just because it is minority led, that’s charity, not investing.

“I’m investing because I think the founders are solid; I’m a big fan of founders and that they’re operating out of space that’s interesting and has great potential.”

Ultimately, it comes down to one thing: deal flows.

“Skin color doesn’t matter, but do I want to see more? Yes, I’d love to see more deals that fall into that category.”