A prominent Black founder just launched a startup that aims to use AI to eliminate unconscious bias among angel investors.
Lauren Washington — who co-founded the Black Women Talk Tech, the largest industry conference focused on Black women — has launched Fundr, an Austin-based platform that aims to diversify the tech industry.
Last week, Fundr’s human-in-the-loop AI system parsed through approximately 450 applicants to choose its inaugural 15-company startup portfolio. Washington aims to raise $1.5 million to invest $100,000 in each startup. Her effort comes as the nation deals with a racial reckoning over past injustices, including a lack of diversity in the venture capital industry, which is made up of just 4 percent of people who are Black.
“This feels different than other times,” Washington told Built In. “There is now committed capital that is being put behind diverse founders. There are significant conversations that are happening, that are not surface-level anymore.”
Washington came up with the idea for Fundr in 2014, after her first company was accepted into the coveted 43North startup pitch competition. Her company, KeepUp, ended up winning the $250,000 grand prize. Most investors would have seen her first-place finish as a signal of the social startup’s potential.
“But I really struggled to raise money after that,” she said.
She entered the venture capital industry with the vague feeling that she was entering a whole new world, one with new norms, language and connections that she needed to navigate, on top of the work she was doing to build her startup. Securing the warm introductions to investors who were primarily senior, white men unfavorably weighted the industry against her, she said.
When she did make it into investors’ boardrooms, the questions she was asked about her business surprised her. Both men and women asked her to defend herself and her business — wondering why she was the right person to do the job — rather than questions about the opportunity she presented. More than once, male investors also asked her why she didn’t want to just get married and have kids, why she wanted to even run a company. Washington doesn’t remember how she responded.
“I’m sure I said something along the lines of, ‘This is my passion, this is what I’ve been wanting to do since I was 11 years old,’” Washington said. “It’s always been hard to respond to things like that. I don’t think I’ve ever really been happy with my answer — you really can’t tell if they’re trying to throw you off.”
At first, Washington assumed she was just fumbling through pitches with investors. But after meeting with members of Black Women Talk Tech she realized her experience was all too common in the tech industry. How founders accessed capital — particularly early stage, seed capital necessary to start their business — needed to change, she decided. Washington launched Fundr with the aim of democratizing who gets to be a founder in the tech industry.
To be listed on the platform, individuals must answer 90 questions, with queries ranging from what their startup’s annual recurring revenue is to a personality test intended to predict the eventual stock price of their startup. In addition to obvious industry questions, Fundr also asks founders about their race, income status and how hard it was for them to start the startup. The algorithm favorably weights those from underrepresented backgrounds, Washington said, as a way to even their odds of receiving investment.
“If you’re looking at historical data within the tech industry, and you’re trying to find those who have succeeded, most of those who have succeeded have been wealthy, white men, right?” Washington said. “You have to offset that.”
After founders fill out their profile, Fundr assigns them a score intended to quantify their chances for success. This metric is intended to help busy angel investors sort through the startup pitches they receive, and eventually replace the need for warm introductions.
So far, 130 angel investors have signed on to the platform, Washington said. She doesn’t think she’ll be able to measure Fundr’s impact for at least five years — when the companies that get funded are able to generate returns — but hopes that, in the near term, Fundr will help acquaint investors with founders who come from different communities.
“It’s not about a pipeline, it’s that you’re not looking in the right places,” Washington said. “Hopefully, that will improve over that time, and they’ll get more comfortable with having founders who look different than them, and change their process for how they let them in.”