Editor’s Note (Jonathan Allen): Like everyone else, the pandemic took me by surprise and resulted in a lot of complicating factors that affected my plans for EQ over 2020-2021. I regret not publishing this recording sooner, but I had been saving it to launch a regular podcast that never quite came together. Also, this conversation wasn’t originally recorded as a podcast, but the conversation was so good Arlan gave her blessing to convert it into one. However, I lost a bit of confidence, editorially over 2020-21 and then when you hold something back for too long, you can never quite let it go.

Anyway, thanks to a shout out by LaShana Lewis on Twitter this week, I just felt there’s no time like the present. This conversation may be more than two years old, but it’s as relevant as ever. It’s difficult to explain how much this conversation meant to me, but talking to Arlan then, made me braver in ways that I started to scratch the surface on over the pandemic, but really have just begun to find my voice around now.

I remember having talks with @jc1000000 about this. We still need investors who target underestimated founders. 😬 https://t.co/K0uXRmOnPC

— LaShana (Shän) Lewis 🏳️‍🌈 (@lmlewis517) March 6, 2022

EQ caught up with Arlan at the Vision Conference in 2019 and talked to her about the challenges she faces raising a venture capital fund. At the time of our original discussion, Backstage had raised more than $7 million and invested in more than 130 startups led by underestimated founders. Read on to find out what she had to say.

Grabbing the Attention of Potential Investors

“I tend to gravitate towards people who are already listening,” Arlan says. There are plenty of people out there ready, willing and able to invest in something different, she says, and so it’s to them that she diverts all her energy. 

There are also a lot of people who don’t want to invest in this way. Arlan doesn’t see it as her job to convince them otherwise. “For me, that’d be wasted energy,” she says. 

“It may be that I’m choosing the path of least resistance. But to me, it just seems more strategic to find people who are seeking out something.”

Keeping An Open Mind In a Sea of Noise

“There’s no way to please everybody,” Arlan believes. At the same time, she keeps an open mind because, she says, she just might hear something that’ll change the way she thinks about something. 

“People who are just simply standing on the sidelines, who are upset about something but who have no solution are just noise to me. I have to move on because if I didn’t, I’d sit and just wallow in it all,” she adds. 

Challenging Stereotypes

“Just because there’s another black gay woman in the room doesn’t mean they’re going to agree with me, and that’s a good thing,” Arlan says. 

“I can’t represent everyone. I don’t represent everyone.” 

Arlan reckons that there are five key black women players in tech. They’re constantly mistaken for each other, she says, and any of them could be asked at any one time onto a panel discussion to represent a particular point of view.

Arlan rejects such tokenism. “My favorite panels or favorite discussions are with these black women, especially when we don’t agree with each other. Great! Challenge me, please,” she says.

Understanding Venture Capitalists

“When you look at funds of $100 million or more, contributions could come from endowments, foundations, insurance companies, corporations and individual families who can put a million to 5 million in,” Arlan says.

She sees hundreds of these sorts of funds being set up all the time. The figures involved may seem huge, but they’re nothing out of the ordinary. Mega corporations are more likely to play their part further down the line in terms of mergers and acquisitions, for example, she says.

Arlan only accepts contributions from investors who are both mission and performance driven. “They’re both because that’s what we are,” she says. “There are very few people who are only mission driven. People want to see returns.” 

Being a new organization means there’s a different level of perceived risk. That makes things tough, but Arlan remains philosophical, “It just is. It wouldn’t matter if I was a white dude. It’s hard for investors to underwrite. Everything we’ve done is probably a hundred times harder than it seems.”

Balancing Value with Check Size

Arlan has always placed great emphasis on adding extra value to financial investment. Once she understood the reality of how much money she could raise, she made it her goal to invest in a hundred hand-picked companies. 

It was a bold move. It also meant she had to consider a lot of companies before engaging what she calls her ‘discerning palate’ to whittle the number down to the magic one hundred number.

Relatively speaking, the amounts of money have been small, ranging from $25k to $50k. Investors, she says, understood that there were good reasons to spread the money across a broader range of players. 

For the entrepreneurs she engaged with there was huge and significant value in simply being a Backstage company. That in itself brought great caché. 

Leading by Example

When you listen to Arlan, you can’t help but be struck by her integrity. It’s so obviously authentic and seems to act as a filter in everything she does. At the same time, she’s a realist who wants to make every day count. 

“I want to lead by example. I love that I’m being held accountable by my peers. That’s really exciting to me,” she says. The power of being an example is the biggest strength she has, she says, and far greater than anything money could buy.

She knows she can inspire others to be able to speak their mind or to dream bigger. She and her portfolio of companies embolden each other so that they know that there’s more than they all imagine available to them.

Arlan picked up a favorite mantra from an actress she admires, ‘Think carefully about what you want, because anything you want will happen.’ It struck a chord. 

She firmly believes that if she thinks strategically enough about something she believes in and then goes for it, the likelihood is that it will happen. It’s helped her to think carefully before focusing on her goals. 

Being Media Savvy 

Arlan understands the impact that the media can have in bringing about fairer and better representation. Using it to achieve this is a skill in itself. She thinks things through so that she’s sure that the final outcome of whatever she says or does has maximum benefit for leveling things up where there’s inequality.

She’s had offers that could have made rich and famous quickly but she’s rejected them because they would have ‘moved the needle the wrong way,’ as she likes to put it.

There’s more value in having greater control so that your stories are told accurately, even if that means making less money from them, she believes. 

When she appears in a magazine, she meets plenty of women of color who’ll say, ‘I feel like I can do more now that you’re on the cover. I can dream bigger simply because of that.’ 

Bring it On!

Some final words from Arlan, “I think a lot can be addressed by more people of colour and more women having greater ownership of things. If I can be a part of making that go from a 10 to a 12, then let’s crank it up.”