Jessica Harris invented a hairstyling tool that she believes will revolutionize the hair weave, a process that 22 million African American women undergo every year to give length and volume to their hair. The idea came to her suddenly one evening when she was rushed to attach a hair weave and didn’t have time to go to the salon for the five-hour process. Finding someone willing to invest in her product, however, is something she is still working on six months later.
Harris and her business partner, Dorian Webb, determined they needed $1 million dollars in venture capital in order to make a test product and start manufacturing.
Harris works as a nurse, so initially she had no idea where to go to find investors. “I didn’t even know how to give a pitch or how to conduct myself in front of [investors],”she says.
The Bay Area accounts for 40% of all venture capital invested in the United States in 2012, according the National Venture Capital Association, an organization that tracks venture capital. But while there are billions of dollars available to Bay Area entrepreneurs, accessing that money can be a challenge – especially for nontraditional businesses with minority founders.
For the first four months, Harris and Webb considered using other sources for capital, and even started filling out an application for a $250,000 loan from the Small Business Administration.
Then, in August, they discovered the Bay Area Capital Connections Conference: an annual event where entrepreneurs pitch business ideas to a panel of venture capitalists. The Alliance for Community Development, which hosts the event, looks for companies with minority and female founders who are starting companies that aim to earn between $50 and $100 million within five years. The idea is that startup business founders can use the conference as an opportunity to network with investors and to get advice from business professionals.
Darlene Crane, the executive director of Alliance for Community Development, says that the conference aims to address the widening wealth gap between Caucasians and people of color. According to a report released by the Urban Institute, an economic research organization, in 2010, Caucasian families on average had almost six times the wealth or assets (such as a house, business, or retirement fund) as African-American and Hispanic families.
This year’s conference happened on October 3rd in downtown Oakland. Harris and Webb were selected to present their proposal, along with the founders of four other companies, including two tech startups, a water purification business, and a mobile carwash company. At the end of the day, Harris and Webb’s business pitch was ranked second by the investor panel as the “Most Fundable Company.”
While Webb says that they didn’t find anyone at the conference willing to invest in their company, the investor panel did refer her to potential investors that specialize in hair products. “It was useful to get feedback from the venture capitalists even though they weren’t in our industry,” she says. The panel commented that their product was unique and that this would be an advantage in the search for investors. They also recommended that Harris and Webb limit their search to venture capitalists who fall within the consumer industry.
While there is no data on the demographics of the venture capital community in Oakland, a national survey released by NVCA in 2011 found that of the 600 venture capital professionals who responded, 87 percent were Caucasian, while only nine percent were Asian, and just two percent were African American or Latino.
Crane has high hopes that the conference will have a positive impact on Oakland’s economy, beginning with the five businesses showcased this year. “If these five people can influence 25 others to aim higher, that is a good extension of this conference,” she said.