Arlan Hamilton is a trailblazing black woman who built a venture-capital firm from scratch.

She also is part of the response to a 2017 article in Fast Company called: “Why Venture Capitalists Aren’t Funding the Businesses We Need.” 

In 2015, only 5 percent of capital went to female founders and just 1 percent went to blacks and Latinos, and 75 percent-plus of funding went to Massachusetts, New York and California. Most venture capitalists are white upper-class males who went to elite universities who invest in companies started by people like them. Not all of them have sterling track records.

Hamilton, 38, a former band manager from Texas, spent three years living hand-to-mouth studying the VC trade in California. She finally convinced some folks with money in the Bay Area to back her.

Her inaugural Backstage Capital seed funds of about $5 million have gone to 100 startups around the country in which at least one founder is a woman, minority or LGBTQ person.

“These entrepreneurs were overlooked because of the color of their skin or gender,” said Hamilton, who was in the Twin Cities recently. “It is an absolute [investment] opportunity. I’m just giving them a chance.”

The early returns have been favorable. Backstage is reloading with a $30 million-plus fund focused entirely on black female-led companies.

Investors include Bay Area angel investor Susan Kimberlin, internet pioneer Marc Andreessen, Slack CEO Stewart Butterfield and Box CEO Aaron Levie. Backstage also is considering a business accelerator space in the Twin Cities. It has invested in a couple of local companies.

Hamilton spoke at a forum this month sponsored by the Center for Economic Inclusion, the organization focused on strategies to help close the troubling gaps in minority education, opportunity and wealth.

The good news: Minority employment in areas such as business services and technology is growing at up to twice the rate of the overall job market in the Twin Cities, also a reflection of emerging demographics. The bad news: The Twin Cities boasts some of he highest wealth-disparity levels in the nation.

Center for Economic Inclusion CEO Tawanna Black, a veteran of the corporate and foundation worlds, said the year-old center is the first such organization in the country exclusively dedicated to advancing “economic inclusion” in a major metropolitan area.

The center’s board is chaired by retired Health Partners CEO Mary Brainerd and includes key people from business and foundations. It’s a data-driven outfit focused on turning disparities into integrated economic opportunities that will grow the economic pie for all. The McKnight and Saint Paul foundations also are on board. A big challenge is getting more equity capital to fledgling and veteran minority owners, moving to the next stage.

“Capital is the biggest challenge,” Black acknowledged. “We now have [business-accelerator programs] that have benefited some.

“But how many of these programs and pilots will it take to shift the paradigm in investors eyes to what … if you are a VC or a banker … what would it take to envision a business owner of color in which to invest.”

To be sure, the Twin Cities can boast some minority-owned successes.

Thor Cos. started out nearly 40 years ago with Richard Copeland and his tools and a truck. Today, the north Minneapolis-based developer-contractor is Minnesota’s biggest minority-owned firm with revenue of nearly $370 million and 250-plus employees. On the smaller end, Clarence Bethea, founder of low-cost, consumer-product warrantor Upsie has raised enough capital to chart a growth course after several lean years.

Traditionally, minority-owned businesses have been bootstrapped and raised debt capital, often through a nonprofit lender-adviser, such as MEDA, WomenVenture or Community Reinvestment Fund, sometimes in concert with a supporting bank. Jashan Eison, who bought then-shrinking H&B Elevators of north Minneapolis several years ago, used MEDA to get going. H&B, a growing manufacturer on the Northside, today is bank-financed.

The sources of equity capital are growing slowly for minority entrepreneurs. Hamilton has emerged a beacon to other efforts around the country.

Twin Cities Startup Week, including Minnesota Cup and the MEDA $1 million business challenge, has broadened its diversity focus. Scott Burns, business owner and investor in Upsie through Matchstick Ventures, said investors are starting to tap diverse opportunities.

This is not just altruism. About 200 business people, wealth managers, philanthropists and even a few VCs showed up at the Powering Inclusion forum this month to listen to Hamilton, Black and several minority entrepreneurs.

A growing small business, whomever owns it, generates wealth and jobs.

“I am patient capital,” Hamilton said. “You have opportunities in the Twin Cities. And the time is now.”


Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at