Lauren Washington, Fundr CoFounder, joined Yahoo Finance to discuss her platform Funds which aims to eliminate bias from startup investing.
- Welcome back to "Yahoo! Finance Live." You've probably seen some of the really staggering statistics around venture capital and people of color. And I'm going to throw out one of them here, which is that 1% of Black founders receive venture capital funding. And that compares to 77% of their white counterparts. And it's about 2% for Hispanic business owners as well. So you can see by that chart we have a lot of work to do. Someone out there that is doing some of the work is Lauren Washington. she's Fundr co-founder. And I want to talk with you. First of all, what is Fundr? What is your mission right now?
LAUREN WASHINGTON: Absolutely. So Fundr is combining the power of AI and portfolio diversification so that every founder has the opportunity to get funding to build their scalable business, and also, every investor has the opportunity to get access to those businesses and maximize their ROI. So essentially, we're automating the process so that we can remove bias from it and make sure that the best companies are really getting the funding that they need in order to build.
- In fact, you look at 90 separate pieces of data in the due diligence that some of us would have to do on our own. You do that for potential investors. It seems like it makes it much easier to identify an appropriate company.
LAUREN WASHINGTON: Absolutely. So by using those 90 different pieces of data. And they're all areas that you would normally use for due diligence when you are looking at early stage startups, everything from team, to market, traction, to the overall background of those people building these businesses. But we're actually quantifying that. And by quantifying it, we are able to remove some of the subjective bias that tends to come into the investing process and also open up access to these different investors that they may not have had access to before.
And then we're also making sure that we're automating that process from start to finish. So the evaluation uses the algorithm. We are connecting investors to the startups building a portfolio of 20 different companies so that they can diversify their investment upfront. And then we take care of all of the dirty work, everything from standardized term sheets to in-app auto signing, automatic fund transfer, monthly reporting so that we can even the playing field for investment.
- So there are some people that say getting that check is just sort of the first part of it. There is the community. There's the mentorship that needs to go around this as well because look. You could get written a check to have your startup, and there's many more challenges there. So what happens beyond that?
LAUREN WASHINGTON: Absolutely. I think that getting investment is the first step. But it's a really important step that a lot of people, as you mentioned earlier, have been left out of. And it's not just about race. It's not just about gender. A lot of it is geographical. A lot of it is about whether you have connections to people who have money, particularly in those early stages. And so, for me, I created Fundr because I had issues in my first company. This is the fourth business that I've started.
My first business I won $250,000 through the 43 North competition. That should have been a signal to investors that I was someone to invest in. And yet, I really struggled, not only with the lingo and the understanding process, but then also with access and bias that I faced in the industry. And then after creating my next business, Black Women Talk Tech, which has grown to become the largest conference in the world. We have an audience of 30,000 people. And hearing that story over and over again, I understood that it's not about the fact that they can't create great businesses. It's about the fact that they aren't given the same ammo that they need in order to build their businesses to create a scalable company.
- Lauren, I'm glad you brought up the fact that you are no stranger to this. You've done this four times, and you are a successful entrepreneur. My colleague Jen said something in the last hour because we got news from back today that they want to change boards of directors to be more inclusive of women and underrepresented minorities. And Jen appropriately said, because someone is saying they only have a year, and that's not going to happen. It's too fast. Jen said they've had decades to do it. For you, having Thundr, it seems as if you no longer have to wait. But how frustrating is it for entrepreneurs who get shut out simply because they are not part of the network at the table?
LAUREN WASHINGTON: It's incredibly frustrating. It is an additional burden that you have to deal with as an entrepreneur. It's hard enough running a company and building something. But when you know you're not being treated fairly, and you know that those goalposts are always moving, it adds that extra weight to what you're doing. So I think you're absolutely right. They have had decades to do this.
And we're seeing some shifts, particularly because of the social justice conversations that have happened over the summer. And we're moving in a way that is becoming productive and making some quick change. But I think we have a long way to go. And it seems like now is the right time for something like Thundr because those conversations are happening and people are more open to exploring how their process. Particularly in investing-- needs to change to make it equitable and access and create access for more people.
- Lauren Washington, thanks so much for talking to us about the process that you guys have taken there. She is the co-founder of Thundr. Great to talk with you.
LAUREN WASHINGTON: Thank you so much.