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Emerging entrepreneurs, who benefit from DEI efforts, face challenges

by SuperiorInvest

Start-up aimed at solving the dating problem

Naza Shelley, a lawyer living in Washington, D.C., was frustrated using dating apps that she said weren't geared toward professional black women, so she created her own. In 2018, she founded CarpeDM, a dating service app that adds a personal touch with a dedicated human matchmaker. Costs range from $300 to $1,800 per year, depending on services and length of subscription.

Initially, to start his business, he sold his condo, depleted his savings, and raised money from friends and family.

The startup received its largest investment in 2022 from Portland, Oregon-based Elevate Capital, a venture capital fund that invests in underrepresented entrepreneurs, including women, Black, Latinx, other people of color, LGBTQ+ communities or those with regional limitations. access to the capital.

Couples at a dating event for CarpeDM members at the HQ DC club in Washington, DC.

Stephanie Duhue

“That gave us a path to get our seed money, which was very critical because dating apps really need to have funding to be able to get off the ground successfully,” Shelley said.

That considerable influx of capital provided more money for marketing, technology investments and hiring matchmakers. Increasing paying customers and developing investor relationships has helped the company raise additional funds and gain access to valuable advisors.

“I love the category, it really makes people happy when they can find great matches,” said Steve Kaufer, founder and former CEO of TripAdvisor, who recently invested in CarpeDM. “When I find investments where I feel my experience can add value, they usually become my favorites.”

What to consider when investing in a startup

Addressing racial and gender wealth inequality in investment advice prompted Jason Ray to start his own wealth management firm in 2019.

“We found that people who have ambitious goals and want to achieve a better financial future don't have access to high-quality advice,” said Ray, president and chief investment officer of Zenith Wealth Partners in Philadelphia.

Many of the firm's clients are interested in investing in early-stage companies to mitigate stock market volatility and potentially increase overall returns.

Most startup founders initially raise funding from friends and family. Once a startup starts applying for funding, funders must be accredited investors. Typically, individuals can become accredited with an annual earned income of $200,000 or $300,000 for married couples. Individuals or couples may also qualify with a total net worth of at least $1 million, not including the value of their primary residence.

If clients want to invest, Ray says it's important to understand the risk: The investment will be “illequiquid,” meaning that money won't be accessible for many years. And you may never make a profit. According to Harvard Business Review, two-thirds of startups never show positive performance.

To evaluate whether to invest in a startup, Ray says investors should know how the company operates and its competitive advantage. They must evaluate the management team and their track record and, most importantly, understand the terms of the investment.

“If the valuation of the company is too high and you as an investor don't get enough rights or ownership or control or whatever, that may not be the right deal for you,” Ray said.

'Let's keep going up'

Even as seed funding has slowed, Elevate Capital plans to launch a new venture fund in the coming months, expanding its support to diverse entrepreneurs in new regions.

“Like the mountain goats, we will continue to climb and we will continue to do so,” said Nitin Rai, founder and managing partner of Elevate Capital.

Meanwhile, Ray believes that just like the stock market, early-stage investing will also have its ups and downs. Still, he says, “the graph certainly appears to be up and to the right, and people will continue to invest in and support businesses run by black and brown people.”

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