Women-founded AI startups see a boost in VC funding

Funding to U.S.-based AI companies with at least one woman founder has steadily increased over the past few years, according to Crunchbase data.

Last year, such companies raised $3.61 billion out of the $23.5 billion allocated in total to U.S. AI startups, or around 15.38%. That is a steady year-over-year increase. In 2021, for example, AI companies with at least one woman founder raised 13.2% of all capital raised in the sector. In 2020, that was 11.6%, and 11.5% in the pre-pandemic year of 2019. This is exciting.

Usually, in times of a venture pullback, women and people of color are negatively affected as investors retreat to the traditional networks they deem safe. Keep in mind that it’s possible that this data is slightly inflated because it counts all companies with at least one woman founder; usually, all-women teams raise much, much less than mixed-gender teams, giving way to the narrative that the presence of a man always adds — or, in this case, sustains — the value of a woman.

Women-founded AI startups see a boost in VC funding by Dominic-Madori Davis originally published on TechCrunch

AI is the next frontier — but for whom?

A few weeks ago, a founder told me it took three hours of endless clicking to find an AI-generated portrait of a Black woman. It reminded me, in some ways, of a speech I saw three years ago when Yasmin Green, the then-director of research and development for Jigsaw, spoke about how human bias seeps into the programming of AI. Her talk and this founder, miles away and years apart, are two pieces of the same puzzle.

Discussions about diversity are more important than ever as AI enters a new golden era. Every new technology that appears seems to be accompanied by some harrowing consequence. So far, AI has contributed to racist job recruiting tactics and slower home approval rates for Black people. Self-driving cars have trouble detecting dark skin, making Black people more likely to be hit by them; in one instance, robots identified Black men as being criminals 9% more than they did white men, which would be put under a new light if judicial systems ever begin adopting AI.

“As AI pervades society, it is critical for developers and corporations to be good stewards of this technology but also hold fellow technologists accountable for these unethical use cases.” Isoken Igbinedion, co-founder, Parfait

AI ethics is often a separate conversation from AI building, but they should be one and the same. Bias is dangerous, especially as AI continues to spread into everyday life. For centuries, doctors once judged Black people on criteria now deemed racist, with one prevalent belief being that such people experienced less pain. Today, algorithms discriminate against Black people; one study from 2019 found that an algorithm used by U.S. hospitals “was less likely to refer Black people than white people who were equally sick to programs that aim to improve care for patients with complex medical needs.”

Right now, bias appears in various AI subsectors, ranging from investment to hiring to data and product execution, and each instance of bias props up others. Eghosa Omoigui, the founder of EchoVC Partners, told TechCrunch that though AI can be “incredibly powerful,” society is still far from “flawless” artificial intelligence.

“This means that the likelihood of AI bias in outcomes remains high because of the excessive dependencies on the sources, weights and biases of training data,” he said. “Diverse teams will prioritize the exquisite understanding and sensitivity necessary to deliver global impact.”

Omoigui’s brother, Nosa, the founder of ESG compliance regulator Weave.AI, reiterated that point. Many of these models are black boxes, and creators have no particular insights into the inner workings of how a prediction or recommendation is achieved, he said. Compared to Wall Street, AI is practically unregulated, and as the level of governance fails to match its growth, it risks going rogue. The EU proposed steps to reduce and account for bias in AI-powered products, with some pushback, though the proposition itself puts it slightly ahead of where the U.S. is now.

In fact, Eghosa said many investors don’t care or think about diversity at all within AI and that there is a groupthink mentality when it comes to machine-led capabilities. He recalled the reactions investors gave him when he helped lead an investment round for the software company KOSA AI, which monitors AI for bias and risks.

“Quite a few investors that we spoke to about the opportunity felt very strongly that AI bias wasn’t a thing or that a ‘woke product’ wouldn’t have product-market fit, which is surprising, to say the least,” Eghosa said.

AI is the next frontier — but for whom? by Dominic-Madori Davis originally published on TechCrunch

Product profile: Talking about women in STEM with Ketaki Vaidya

As the new year begins, it’s a time for self-reflection and improvement both in your career and personal life. In this Product Profile, we speak with Ketaki Vaidya, Product Manager, at technology platform Oracle to discuss working in tech as a woman, and initiatives are being introduced to address inequality.  [...] Read more »

The post Product profile: Talking about women in STEM with Ketaki Vaidya appeared first on Mind the Product.

All Raise CEO steps down again

Less than a year after assuming the role, All Raise CEO Mandela SH Dixon has stepped down from her position at the nonprofit. The entrepreneur, who previously ran Founder Gym, an online training center for underrepresented founders, said in a blog post that the decision was made after she realized “being in the field working directly with entrepreneurs everyday” is her passion. Dixon said that she will be exploring new opportunities in alignment with that.

Her resignation is effective starting February 1st, 2023. She will remain an advisor to the Bay Area-based nonprofit.

This is the second chief executive to leave All Raise since it was first founded in 2017. In 2021, Pam Kostka resigned as the helm of the nonprofit to rejoin the startup world as well; Kostka is now an operator in residence and limited partner at Operator Collective, according to her LinkedIn. With Dixon gone, Paige Hendrix Buckner, who joined the outfit as chief of staff nine months ago, will step in as interim CEO. In the same blog post, Buckner wrote that “Mandela leaves All Raise in a strong position, and I’m grateful for the opportunity to continue the hard work of diversifying the VC backed ecosystem.”

Dixon did not immediately respond to comment on the record. It is unclear if All Raise is immediately kicking off a permanent CEO search.

The nonprofit has historically defined its goals in two ways: first, it wants to increase the amount of seed funding that goes to female founders from 11% to 23% by 2030, and, second, it wants to double the percentage of female decision-makers at U.S. firms by 2028.

In previous interviews, Dixon said that the company will work on creating explicit goals around what impact it wants to have for historically overlooked individuals. The data underscores the challenge ahead. Black and LatinX women receive disproportionately less venture capital money than white women; non-binary founders can also face higher hurdles when seeking funding, as All Raise board member Aileen Lee noted in the blog post.  The nonprofit has created specific programs for Black and Latinx founders but has not disclosed a specific goal for the cohort yet. These disconnects can be lost if not tracked. All Raise’s last impact report was published in 2020 and they’re working on bringing that analysis back, Lee tells TechCrunch in an interview.

“All Raise is in great hands with Paige as interim leader and we’ve got a lot of exciting things that we’re shaping and scaling,” Lee said. “We have to all continue to link arms to try and continue to make improvements for our industry…we’ve made good progress that we can’t let up.”

Since launch, the nonprofit has raised $11 million in funding, and opened regional chapters in New York, Boston, Los Angeles, Chicago, DC and, soon, Miami.

All Raise CEO steps down again by Natasha Mascarenhas originally published on TechCrunch

Funding for Black founders remains dismal — where do we go from here?

Last week, TechCrunch reported that Black founders in the United States raised 1% of the $215.9 billion in venture capital allocated last year. That is not to be confused with the 1.3% raised in 2021, the 0.8% they pulled in 2020, the 1% they got in 2019 or the 1.1% raised in both 2018 and 2017, according to Crunchbase data.

In case it’s not obvious why these figures are so dreadful, it’s worth noting that Black Americans make up more than 13% of the population.

Each time these numbers are published, there are always a few people posing the same question: Where do we go from here? Is the next step looking at alternative funding, or is it staying on the battleground, always ready to fight?

It’s stunning that, always in the quest for equality, separation is always the safe place in America. Separate schools, separate neighborhoods, separate hair care aisles, separate funding tracks.

Brandon Brooks, a founding partner at Overlooked Ventures, said this is the time to get creative with funding and pointed toward Small Business Development Centers and grant programs as a way to get by.

James Oliver, the co-founder of the app Kabila, cosigned that, saying it’s time for Black founders to be scrappier than ever to get funding. “Period,” he told TechCrunch.

Oliver, who is based in Atlanta, is leveraging relationships to raise a pre-seed and angel round by tapping into local resources, such as the Atlanta Tech Village, and is also raising “founder rounds,” in which other founders invest in his company.

“It generally sucks being a Black founder fundraising right now,” he continued, adding that he once had an investor who funded early-stage companies pass on his idea because he didn’t have a built product. (Typically, these investors back ideas, not products.) “When your back is against the wall, that is when you find out what you’re made of. Leverage your relationships, give first to others, which unlocks giving to you, and let’s get scrappy, y’all.”

Funding for Black founders remains dismal — where do we go from here? by Dominic-Madori Davis originally published on TechCrunch

Natives Rising wins backing to help Native Americans into tech and startups

According to the National Center for Education Statistics, Black, Latina, and Native American women represent approximately 16 percent of the total US population, but make up only 4 percent of students obtaining bachelor’s degrees in computing. On this trend, women of color receiving computing degrees will not double until 2052 — by which time they would be an even smaller proportion of all graduates. And out of this data emerges the fact that Native American women are the least likely to benefit from the wealth and opportunity of the tech industry, and of those obtaining computing degrees, only 0.1% of them are Native women.

So it’s perhaps appropriate that over this past weekend, a new nonprofit community organization comprising of a large network of Native Americans in tech has had a big boost.

Natives Rising has now received grant funding to support and grow the number of Native American women graduating college with computing degrees, as well as provide a path towards entrepreneurship.

The grant was from the Reboot Representation Tech Coalition, a group of 21 tech companies which aims to double the number of Black, Latina, and Native American women receiving computing degrees by 2025, by making philanthropic investments in relevant programs.

Natives Rising now aims to recruit Native women to join the tech industry, plus provide scholarships, mentors, education, and workplace opportunities.

In a statement Dwana Franklin-Davis, CEO, Reboot Representation said: “Building culturally relevant education and pathways can build bridges by showing Native American students how tech relates to their experiences. We’re proud to partner with Natives Rising to create vibrant, viable pathways in tech.”

Currently, only 3 percent on college-level programs get philanthropic funding whereas 66 percent is spent on K–12 programs, showing a wide gap where an untapped opportunity exists.

Natives Rising also runs the Natives Rising Founders Circle as an incubator for Native founders, especially founders interested in venture capital funding.

Danielle Forward, CEO, Co-Founder of Natives Rising added: “Native Americans are the most impoverished group in the US, a vestige of intergenerational, systematic disenfranchisement. They are also being hit the hardest by inflation right now, as a result. While the tech industry is slowing down on hiring, tech jobs remain one of the most economically empowering, in demand job opportunities of the future, especially for those who desire remote work.”

Prior to Natives Rising, Forward (Cloverdale Rancheria of Pomo Indians) was a Product Designer for 5 years at Meta. Co-founder and Chief Impact Officer Betsy Fore (Turtle Mountain Chippewa) joined after previously co-founding Wondermento and Tiny Organics. Hannah Cirelli (Quechan Tribe of Fort Yuma) joined as co-founder and Chief Community Officer, in addition to her current role in diversity at Uber.

Natives Rising is a nonprofit organization with Indigenous community members spanning over one hundred tribes. While focused on the US, the organization has developed an international following to economically empower Indigenous communities through tech careers and entrepreneurship.

Natives Rising wins backing to help Native Americans into tech and startups by Mike Butcher originally published on TechCrunch

Female Invest acquires sustainability-focused investment platform Gaia Investments

When Female Invest launched in 2019, it did so with the goal of creating a community where women who wanted to invest in the stock market, but weren’t sure where to start, could gain the knowledge and confidence to take the plunge. Now, its users will be able to do so all within the Female Invest platform.

The Copenhagen-based startup announced the acquisition of fellow Danish fintech Gaia Investments this week with plans to integrate the trading platform, which focuses on investing in companies with sustainability goals, into its app. The purchase price of Gaia was undisclosed, but the startup raised at a $3 million valuation, three months prior to the transaction, Female Invest told TechCrunch.

For Female Invest co-founder and partner Camilla Falkenberg, adding the ability to invest directly through Female Invest is a great next step for the subscription edtech platform.

“Since day one, we have always been very focused on building the features and products that were requested by our community,” Falkenberg said. “And we get requests every day for the possibility to trade directly through us.”

She added that she thinks the platform gets that request so often because its users trust it. A recent survey of customers found that 96% of them would trust Female Invest with their money more than their bank.

Female Invest has spent the last year building up the company in a way to more easily integrate trading, too. Falkenberg said since they raised their $4.5 million seed round last November, they’ve built out an app, expanded their tech team and raised an additional $3 million in funding.

But when they came across Gaia Investments in July, they realized it might make more sense, and save time, for Female Invest to partner with an existing trading platform as opposed to building their own.

“Gaia has a strong brand here in the Nordics and such a strong focus on ethics and sustainable investing, something we are also very interested in,” she said. “As the talks progressed, it became more and more clear it was a great move for us.”

The team at Gaia felt the same way, Mads Sverre Willumsen, a co-founder and CTO told TechCrunch.

“We knew Female Invest and saw the journey they had been on in the past three years,” he said. “After we talked and saw we had alignment, the decision was not that difficult.”

The two companies also shared similar founding stories — both looked to create an investing product that they felt was needed and didn’t exist.

For Female Invest, it was in 2019 when the founders realized there wasn’t a good resource that taught women how to start investing. For Gaia, it was when co-founder and CEO David Bentzon-Ehlers’s mother asked him in 2020 if there was a safe place to invest in sustainable companies, and his realization that the platform she was looking for didn’t yet exist.

While it isn’t super common for startups to get acquired so early in life — Gaia had just completed a TechStars accelerator program a few months earlier — Sverre Willumsen said the transaction made sense for Gaia because they were more interested in expanding the reach of their product than being startup founders.

“I didn’t become a founder in the first place to be a founder,” he said. “I did it because it was an opportunity to make a lot of innovation and a difference for people quite quickly.”

The current Gaia users will be offloaded — with their money returned in full — in the near future as the platform starts to integrate into Female Invest. Falkenberg said from there they don’t have a specific launch date yet for Female Invest users, but that the ability to trade will launch first in the European Union and in the U.K. after that.

Consolidation of early-stage startups has been a rising trend this year, and as the fintech sector has struggled in 2022’s uncertainty, it seems wise that some of these smaller companies will combine to avoid getting left behind. I’m sure we will start to see more of this heading into next year.

For Female Invest though, the long-term plan, regardless of market conditions, is all falling into place.

“Our vision is to create an extremely user-friendly, and easy to navigate, platform with a focus on sustainability to invest in the values that matter to them,” Falkenberg said. “We have a very loyal user base who is just waiting for us to launch the next product which is a great starting point.”

Female Invest acquires sustainability-focused investment platform Gaia Investments by Rebecca Szkutak originally published on TechCrunch

Long live the vibe capitalist!

Last week, many investors were left with egg on their faces after FTX’s valuation went from $32 billion to zero in a New York minute. VCs were left wondering, “What the hell happened?” And they’re still wondering, “Wait — did I do something wrong? Is it me?

Why yes, actually, it is you.

People are led to believe that, for the most part, investors are clear-eyed, data-driven people who carefully explore the financial underpinnings of the companies they invest in. There is little room for emotions like jealousy or the fear of missing out (FOMO). Of course not. And these people investing billions of dollars surely have their eye on the ball, right?

Well, not exactly.

In a surprisingly honest tweet today, former SoftBank COO Marcelo Claure, who stepped down in late January after a reported battle over pay, had this to say about the FTX fiasco:

This is from the same guy whose former firm also invested significant money in WeWork, another spectacular example of poor judgment on the part of investors. Steve Jobs once said, “Everything around you that you call life was made up by people that were no smarter than you.” At the time, Jobs was talking about building products, but evidently, this also applies to the people funding the startup ecosystem.

While it’s good that Claure was so open, honest and reflective, perhaps we should all remember that investors are not any smarter than anyone else. They’re human after all, and their classic lack of self-awareness combined with venture enthusiasts’ myopia is perhaps the problem. Most investors and the founders in whom they invest are white men, and you get double points if you went to Stanford, Harvard, or MIT. These folks are handed the mantle of genius in all that they do and touch. The next Warren Buffet is rarely if ever, predicted to be a Black man.

Long live the vibe capitalist! by Dominic-Madori Davis originally published on TechCrunch

These folks are working to bring more diversity to the venture LP investing pool

When you think about diversity in the startup ecosystem, one area that could be overlooked is the limited partner pool. These are the folks who contribute to the larger funds or individual investments. They don’t necessarily have the same influence over deals that VCs do, but they are a key piece that provides the cash to grease the startup funding framework. Having more heterogeneity in this part of the system ultimately helps bring more diversity to cap tables.

One of the reasons that LPs aren’t more diverse is likely due to the fact that the VC firms themselves typically aren’t. If the partners at investment firms are seeking limited partners, they are probably going to reach out to their own networks, and that tends to be people who look like them and run in the same circles. Since the vast majority of VC partners are white and male, it’s a hard pattern to break. In fact, it takes a concerted effort to get people involved who have been left out of deals in the past.

This isn’t just about diversity for diversity’s sake, either. It’s also about wealth creation, who’s being included and who’s being left out. While venture investing often involves many misses, when a deal hits, it can bring generational-changing wealth for the investors who got in early. If the cap table is confined to mostly white men, that leaves out a lot of people who have been historically underrepresented across society.

A number of folks with access to deal flows are attempting to change this on their own, some as a side hustle, working to bring in a more diverse set of people to the investor pool. As an example, last year we wrote about Amanda Robson, a partner at Cowboy Ventures, who has started in an informal angel network of women and non-binary folks, who have means but have never been asked to be included in deals before.

“I had a number of friends who had recently within the past couple of years become VP-level at different companies, and they had an interest in angel investing, and they had the means to at that point, but they didn’t have access,” she told us at the time.

Robson created her network to give the same access that their male counterparts are getting. She has built this network on her own in her free time, because she recognizes the importance of bringing historically underrepresented groups to the cap table. And she’s not alone. We spoke to several folks who are making a concerted effort to get more people involved, some doing it in addition to a demanding full-time job.

People with money, but no access

There are plenty of people from historically underrepresented groups who have the money to invest, but typically haven’t been asked or don’t know how to go about it. These aren’t just people in the tech industry, either — it’s a variety of wealthy professionals who have been left out of the startup investment process.

Shruti Challa and her husband, Patrick Ekeruo, launched Community Growth Capital this year to give people like this access to later-stage deals with the goal of democratizing growth-stage cap tables. This is in addition to their day jobs. Challa is CRO at hospitality startup Sonder, while Ekeruo is assistant general counsel at fintech startup Brex.

The couple has been involved in investing on their own, including investments in SpaceX and Robinhood, but they want to create a network to bring in people they know, who have not been asked to be involved in startup investments.

“Our goal is to give access to these underrepresented minorities and help them close the generational and racial- and minority-driven wealth gap that exists, even for people at higher [income] levels,” Challa told TechCrunch.

Ekeruo said that there are founders out there who want to diversify their cap tables, but don’t know where to start, and firms like his and Challa’s can help.

“There’s a growing chorus that understands that diversifying every piece of the tech ecosystem is important, including the cap table, and we bring our diverse LPs to the cap table and to our growth equity partners, who in turn can offer that to founders who want to diversify their cap tables because they recognize it as a problem,” he said.

He says that going for the later stage companies also lets them bring more tangible financials to a new investor than angel investing where you are basically investing in a person or a team with an idea. “When I’m talking to somebody who’s used to doing public company investing, it’s much easier for me to  say, ‘Look, this company has a product, has product market fit, they are raising $75 million in order to grow revenue because they expect to go public in four to five years.'”

The Cap Table Coalition (CTC) is another group trying to pull in investors that have been historically left out of the investing process. Richie Serna, whose day job is CEO at payments startup Finix, helped build CTC. The network of 775 investors, many of whom are from historically underrepresented groups, grew from his own contacts and exploded from there.

The firm helps people get involved by making it possible to write much smaller checks, especially in later-stage rounds.

“I think one of the issues is that after the seed round, every investment is probably like a minimum $50,000 to $100,000 to get onto a cap table just because of the sort of administrative work that’s involved. And so by forming one SPV… people can invest $5,000 to $10,000 and start to build a portfolio that way [and we can include a lot more people],” he said.

Expanding the pie

When you include a wider variety of people in investing, it can impact the entire system from the cap table to the boardroom to founders, executive teams, and workforces, and it can lead to more diverse wealth creation over time because some percentage of the startup investments pay out.

What’s more, when investors and founders can draw on these communities, it acts as proof that there is vast untapped potential, something that should get any investor’s attention. Gaingels is an established angel investment firm that focuses on getting people from the LGBTQ community into venture investing, but also welcomes others.

General partner Lorenzo Thione said that the group of people involved in venture investing in the past has been very narrow, and he sees that as a missed opportunity by the venture community.

“There is untapped potential and untapped opportunity, both from a capital and talent point of view, that did not get put into that multiplication engine that is venture. There’s also a social justice equity component that says, ‘Look, we’ve got this engine that can create opportunity, talent, jobs, innovation and wealth,’ and systematically groups of people have been left out of it,” he said.

He believes that it’s now time to expand access to these wealth-creating opportunities to everyone. “We scaled venture up, and now we need to scale it out and basically make sure that we break apart those networks of access that have made it impossible for people who had the talent or the means that might not have the opportunity to basically break into it.”

Challa pointed out that it’s not necessarily out of ill will that people are being left behind; it’s more of a systemic problem. “I will say, though, it’s not out of [malice]. And that’s something that’s been actually quite nice to figure out is that I do genuinely believe founders want diversity.”

“Maybe because they are white males, they don’t have those natural networks. And it’s really hard being a founder and you have to do a lot of work on building your business. So it can be an extra effort to [seek out diversity in your cap table],” she said.

She’s right that there are so many things to think about when it comes to building a startup. That’s why Community Growth Capital and others like them are helping by bringing in a more diverse group of investors, and that can help lead to more diversity across the entire startup ecosystem. Getting more diversity in the cap table is just the start.

These folks are working to bring more diversity to the venture LP investing pool by Ron Miller originally published on TechCrunch

TaTio AI-based work simulations help diverse job seekers showcase their skills

As companies look to build diverse workforces, the biggest problem seems to be sourcing candidates from historically underrepresented groups, often because companies don’t know where to look. TaTio, an Israeli startup from a couple of HR veterans, has built a platform to help connect companies to candidates who have the skills, but may lack a traditional resume.

Today the company announced a $5.3 million seed investment.

TaTio CEO Maya Huber says she and her co-founder, COO Mor Panfi, have over a decade of experience running HR companies. They personally experienced the frustration of trying to place people from a variety of underrepresented backgrounds, and the biggest problem was getting candidates through the resume review stage.

“Every solution out there was still relying on resumes as a first step for people to apply. And we thought that there must be a different way because through the years as we worked with different types of underrepresented populations, we found that the resumes often did not reflect a person’s actual skills,” Huber explained.

The company developed a solution to help companies fill open positions with workers who are qualified, but lack traditional credentials. “These hidden workers are disproportionately from underrepresented groups. TaTiO sources and vets job seekers with their AI work experience simulations and provides employers with pre-qualified candidates to interview,” she said.

The company has built a two-sided marketplace. On one side they source candidates and then build tests that simulate the job the person is applying for. The idea is if the person performs well enough, they should be able to do the job. But the important thing is that it gets them over the resume hurdle.

“We track candidates and we engage them through tests that simulate the core tasks of the job…So if you’re applying for a job as a sales representative, you will have 20 minutes to close three deals. We give you a pipeline of leads you need to qualify and create interactions with prospective clients,” she said.

Using an underlying machine learning model, they judge the candidate’s performance and give them a score, and then match the candidates to the job openings with the goal of placing them in a job.

The company says that these models should improve over time as they collect more data on each simulation type. For now, the goal is to find a person who will be a good match for an open job with a particular employer, but in the future the company hopes to surface skills beyond what was explicitly being tested for.

They find candidates from a variety of sources including partnerships with NGOs and continuing education and training programs that work with underprivileged populations.

The challenge will be measuring the results. It’s difficult to know how many of the candidates are from underrepresented groups unless they self-report. The hope is that by working with the companies using their service, they will be able to collect more data on the connection between their diversity hiring success, and the use of the TaTio platform. Huber says the companies using the platform are already reporting improvements, with some increasing their diversity hiring by 25% since they have been using TaTio.

The company currently has 16 employees with over 75% women, although they are still trying to get more women in the engineering group. They also have age diversity with some employees over 50 and some just starting their careers. So they are trying to practice what they preach in terms of diversity.

Today’s seed round was led by Mensch Capital Partners and Cresson Management with help from Cerca Discovery, Tau Ventures Ltd., Techstars, GoodCompany and a number of other industry angels.

TaTio AI-based work simulations help diverse job seekers showcase their skills by Ron Miller originally published on TechCrunch