Samer Yousif has spent his career building entrepreneurial and investor ecosystems and is on a mission to bring racial equity to the venture ecosystem. Samer shared with us how BLCK VC and Investors of Color aim to increase the capital flow to Black entrepreneurs by empowering a new generation of Black investors.
Q: You have two important roles: Interim CEO of BLCK VC and Managing Director and Co-Founder of Investor of Color Network. Before we get into the mission of those organizations, tell us about the path that brought you to this work.
Samer: I've always been focused on closing the racial wealth gap, and I got firsthand experience by launching a fintech, which failed. Through that experience I learned a lot about the ecosystem in which entrepreneurship happens, including how capital flows. That got me interested in policy, so I pursued a Master's degree in public policy, focusing on racial equity in the entrepreneurial ecosystem. Not only did I learn how policy is made, I also learned how the execution of that policy affects allocators, entrepreneurs, banks, and other financial institutions. And that led me to focus on how implementation of policies can be used to bend the arc towards a more equitable ecosystem, including funding for entrepreneurs.
After getting my Master's degree, I worked for a U.S. State Department contractor, organizing and funding incubators and accelerators and building out angel investor networks in the Middle East, Latin America, and Southeast Asia. As part of that work, a colleague and I organized the largest investor syndicate across the Mediterranean based out of Egypt. After building that network, we asked ourselves: if we could build out a successful investor ecosystem in Cairo, why couldn't we do the same in Houston, LA, and New York and create a syndicate of investors of color committed to investing in founders of color? We answered that question by creating Investors of Color, which is a group of Black, Hispanic, and Asian investors – angels, VCs, and family offices – committed to investing in entrepreneurs of color in order to help their communities build wealth and achieve social mobility. Following the murders of George Floyd, Brianna Taylor and others, I realized I wanted to do this work full-time, not just spending my nights and weekends on building and running Investors of Color. In November 2020, I joined BLCK VC as the chief of staff – the first employee --and I've been there ever since.
Q: It's widely known that only a fraction of the billions of dollars of venture capital is invested in entrepreneurs of color. How does your work with BLCK VC and Investors of Color aim to address that gross inequity?
Samer: The statistics are terrible and getting worse. According to Crunchbase, in 2022 only 1% of venture capital was invested in entrepreneurs of color. There are a number of ways you can get more capital flowing to entrepreneurs of color: private sector investors providing non-dilutive or very early stage capital, and public sector and government entities directing capital and resources to these entrepreneurs. At BLCK VC, we take a third approach. Our theory of change is that if we're able to shift who the allocators of capital are, what networks they're coming from, what problems they want to solve, and what founders they connect to, we'll be able to change where that capital is flowing. But we have our work cut out for us. Our research shows that Black VCs represent only slightly more than 3% of all VCs and, to the extent they are affiliated with traditional firms, they tend to be on the junior side. Although more senior Black investors are leaving established firms to start their own funds, we found that the size of first-time funds they were raising was close to half the industry average, and it was taking them longer than their peers to raise that capital. However, our research also found that Black fund managers and Black partners at VC firms are four times more likely than their non-Black peers to back Black founders. And more than half of them are either mentoring or hiring other Black venture investors. All this tells us that if you move one side of the needle (who's allocating capital), you can start to shift where the capital is going. That's the specific role both BLCK VC and Investors of Color are playing in the ecosystem.
Q: Tell us about the work of BLCK VC.
Samer: BLCK VC has three goals: increase the number of Black venture investors at all levels, from analysts to GPs; advance the careers of existing Black investors to increase the amount of assets under management in our community; and provide relevant, accurate data on the Black venture and tech ecosystem.
To achieve those first two goals, we develop programs to support and accelerate people at different inflection points in their career paths, whether they are existing venture investors or are just breaking into venture. Our Black Venture Institute targets mid- to senior-level executives and has trained over 220 Black executives, operators, founders, athletes, and entertainers to become check writers. Those check writers have made over 400 angel investments and six of them have launched their own funds. Many of the alumni of the Black Venture Institute have gone on to launch the Cap Table Coalition, which is helping to get even more diverse angel investors on cap tables. For more junior talent trying to break into analyst and associate roles at venture firms, our Scout Network trains them to be scouts and angel investors. We also have a mentorship network which is designed to help junior employees at venture firms navigate the system so they can succeed and get promoted. BLCK VC is the largest community of Black venture investors, with chapters in New York, Los Angeles, San Francisco, Washington, D.C., Chicago, and Atlanta, and we plan to launch chapters in Miami, Houston, and Boston later this year.
In terms of our third goal – providing information on the Black venture ecosystem – our inaugural State of Black Venture Report presented data on the relative number of Black partners at venture firms and Black fund managers, and on the impact those investors have on the ecosystem. We will be publishing our second State of Black Venture Report in February, and we're planning a launch event at the end of February to spread the word.
Q: BLCK VC has partnered with some very prominent firms like Sequoia and Lightspeed. How are you leveraging those relationships and others to drive change in the venture community, which is largely run by white men?
Samer: We don't have the capacity to create all the change we want to see. We need the established firms that have immense influence – like Sequoia, Lightspeed, and NEA – to understand our mission and hire more Black venture investors, promote more Black partners, and invest into more Black-founded companies. It's critical for these firms to create structures in which Black investors can be successful and build their careers. As leaders in the industry, if they don't change, the rest of the industry won't change. As a result, they have an asymmetric impact. Our partners are pretty honest with themselves and appreciate the challenges we are addressing. They are supporting us both programmatically and financially. For example, Salesforce Ventures is the sole partner for our Black Venture Institute, and Sequoia and Lightspeed joined us in launching our Scout Network.
Also, as a professional organization in the industry, we can share information with the established firms about what we're seeing in the market and what is needed to change the status quo. We can also have some really candid conversations – with established firms and with potential LPs – that Black venture partners or Black fund managers may not feel comfortable having.
Ultimately, while we can do a lot of this work ourselves, we need the established firms at the table and to be part of our success.
Q: What are your goals for BLCK VC over the next 3 to 5 years?
Samer: That's a question that we're actively answering right now, as we build out our three-to-five year strategic plan. Whatever the details, that plan will be aligned with our goals of increasing the number of Black investors, advancing their careers, and providing data on the state of the Black venture industry. We will continue to iterate and expand on our existing programs to offer additional resources and support. We're also building out a new initiative focused on providing Black fund managers the resources and the LP capital necessary to scale their firms. We announced this initiative at Art Basel in Miami last December, and CapitalG and Google Ventures are already heavily involved. Getting more institutional LPs to invest in Black fund managers is a huge challenge. There are structural barriers, like minimum investment size and limits on equity ownership, which prevent institutional investors from investing in Black fund managers, who generally manage smaller funds. And there are gatekeepers, like consultants and advisors, who create barriers to access to the decision makers. However, public pension funds, in particular, represent the largest aggregation of Black wealth. So, I think there's opportunity there, but it requires a lot of education and initiatives like the one we just launched.
We will continue to expand our community, launching more chapters, facilitating more deal sharing, encouraging more hiring and recruitment, and introducing LPs among fund managers in our community. We also want to focus more on policy and advocacy, leveraging the influence of some of our members and joining coalitions to lobby for institutional change. We see NAIC – the National Association of Investment Companies – as a good model for us with their focus on diverse allocators and alternatives, and LP roadshows.
BLCK VC has grown rapidly since it was formalized as a non-profit three years ago. So, top of mind is the need to ensure that the organization is built to last.
Q: Do you have a call to action for those of us who care about building a more equitable and inclusive ecosystem?
Samer: It depends on what part of the ecosystem you sit in. If you are a service provider, you can provide services and offer up talent. If you are an individual investor, you can take a hard look at your investment thesis and current portfolio and consider how you can diversity it. If you are an institutional investor, you can consider launching an emerging manager program. At BLCK VC, we're eager to have conversations with anyone interested in changing the system and joining us on this journey. We definitely can't do it alone.