Clearing the bias hurdle for African American entrepreneurs

With VCs historically investing in narrow networks, geographic and diversity bias has made it increasingly difficult for investors to pierce the glass ceiling and gain access to capital. Qodeo Advisory Board Member and Duke University innovation maven, Stephen Fusi has penned some thoughts for those facing these challenges.

The challenges facing investors and diverse, regional entrepreneurs  

When it comes to raising capital or finding a much-needed mentor, many entrepreneurs can rely on old uni networks, personal and professional connections, and word of mouth. But what happens when the entrepreneur isn’t part of a traditional business-school alumni or they’re located in smaller regional areas? What if they have a fire in their belly but weren’t born with connections and a silver spoon in their mouth?

And what of venture capital and private equity investors, all around the globe, who might be overlooking fantastic regional investment opportunities (from startups to seasoned concerns) because the entrepreneur’s business flies under their usual geographic radar or target demographic?

Recent research also shows that a lack of ethnic diversity in investment firms limits the ability to look at investment opportunities from different perspectives. In turn, investors aren’t extending their gaze to ethnically diverse communities – communities that ‘get’ their markets better and offer greater returns for VC/PE firms.

In my career, I’ve had many, many conversations with entrepreneurs and investors who would benefit hugely if the bias obstacle were cleared, and they had greater accessibility to their perfect business match. Here’s a recent example.

Bias in action

This week, I had a conversation with a younger black man, a tech-company founder with whom I’d connected on LinkedIn some months ago. I meet many founders who wonder if I can help connect them to investors or be another set of eyes on their pitch deck.

This particular conversation started off in a conventional manner, with me asking for an introductory overview of the business model, and then listening for the clues that signal how the business is doing. Within the first 15 minutes, I learned that this founder had bootstrapped his company for two years, then secured a wide range of non-dilutive grants to keep building his business, which now has several enterprise customers. I also learned that revenue has been growing at an increasing rate, and new features requested by prospective customers are soon to be rolled out. Everything sounded good until I asked how I could be helpful.

First, I was asked if I had any corporate contacts in his startup’s target industry. I have a few and promised to make some introductions when requested. Then the mood on the call changed from enthusiastic to cynical, and the reason why was all too familiar. Unprompted, this founder noted that he would be able to scale his business even faster if he had access to the capital necessary to build out a proper sales force. Several white founders in his industry have raised venture capital despite their businesses having far less traction than his company. People he knows personally, people with no product in the market and no paying customers, have managed to convince professional investors of the worthiness of the ideas in their pitch deck, ideas like those which he has already turned into revenue. 

I asked him why he thought his investor meetings to date had not resulted in an investment, and he immediately pointed to relationships. He does not know of any alumni from his university who are venture capitalists. He has no family, friends, or former colleagues who could put in a good word with investors and secure a serious pitch meeting. He suspects that some of the investors he has met took the meetings as a favour to someone and, based on the conversations, never intended to consider his business as an investment opportunity. In his words, “Investors just don’t want to trust someone like me with their money.”

The whole discussion just irritated me because I have heard it so many times. All the introductions in the world won’t make a bit of a difference unless more investors decide to appreciate the potential of the ideas black founders create and then wire the money.

It’s time to democratise the system for both investors and entrepreneurs

I recently joined the advisory board of Qodeo, a startup firm that uses a proprietary algorithm to match entrepreneurs with investors who are best fit for each other. What interested me about Qodeo is the premise that, with a sufficiently large base of engaged investors and entrepreneurs, the platform could make a dent in the disparity of access to investor relationships that black entrepreneurs face.

Obviously, it will take much more than a platform to change long-established behavioural barriers. That’s why the work at Qodeo is about more. It’s about recognising bias for what it is and actively democratising the system.

For entrepreneurs, it saves hundreds of hours and thousands of dollars finding the right investor.

For investors, it cancels out the noise and automatically filters out the wrong deal flow leads, so they can realise greater returns, fast.

It’s about making the system work better for everyone. And it’s about time.

Just like in love, there’s a perfect match for every entrepreneur and investor, and Qodeo saves time kissing frogs. It takes five minutes to set up a profile and entrepreneurs enjoy a low, accessible monthly fee of $9.95. Sign up today!


Stephen W. Fusi

​​Stephen W. Fusi is an industrialist and educator. Stephen currently serves as the Managing Director of the Center for Entrepreneurship and Innovation at Duke University’s Fuqua School of Business.

Prior to joining Fuqua, Stephen held executive leadership roles in marketing and brand management at Fidelity Investments, Starbucks, C. R. Bard and Procter and Gamble. Stephen is also an angel investor focused on technology businesses in Africa, and founder of Posh Provisions Limited, a food processing and manufacturing business in Cameroon.

Stephen obtained bachelor’s and master’s degrees in electrical engineering from the University of Wisconsin – Madison and an MBA from Duke University’s Fuqua School of Business.

Stephen served on the board of Note in the Pocket, Inc., an organization which provides clothing to impoverished and homeless children in Wake County, NC.

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