This weeks focus is racial inequality as it impacts startups and investing. We also continue to look at the debate surrounding social media platforms in relation to free speech and censorship. Sam Lessin writes in the Information and is opposed by Stephanie Mheta and others.

That Was The Week, Issue #22
This weeks focus is racial inequality as it impacts startups and investing. We also continue to look at the debate surrounding social media platforms in relation to free speech and censorship. Sam Lessin writes in the Information and is opposed by Maelle Gavet and others.
Content from Om Malik, Sam Lessin, Maelle Gavet, Jonathan Tower, Reid Hoffman, Jasmin Johnson, Lolita Taub, PitchBook, TechCrunch, Crunchbase News, The Information, The Times, Harvard Business Review, Axios and many more. The topics are the ones that dominated the week.
Andrew Keen from now.tv interviewed me about the Newsletter
Here are this week’s newsletter highlights.
#BlackFoundersMatter, #BlackInvestorsMatter, #BlackFundingMatters
- Black Entrepreneur’s – The Funding Data – Crunchbase News
- Venture Capital needs to move past ‘diversity theater’ – Washington Post
- Prejudice, the details – The Information
- The definitive guide to investing in Black Founders – Transparent Collective
- The Slippery Slope to Censored Speech – Sam Lessin
- Mark Zuckerberg is on the Wrong Side of History – Stephanie Mheta
- Algorithms or Curation – the future of Discovery – Om Malik
- Why Facebook Should be Broken Up – The Full ratchet Podcast
Startups and Strategy
- 4 Observations on the State of Venture – Jonathan Tower
- The disappearence of Unicorns – The Times
- The need to “Return the Fund” – Economics of Venture – Harlem Capital
- The Coming “down rounds” – Techcrunch
- We’re About To See a Lot More SaaS Debt – Saastr
- Rethinking the Innovation Ecosystem – Harvard Business Review
Tweets of the Week
- Paul Graham
- Elad Gil
- Eric Bahn
- Jasmine Johnson
Podcasts of the Week
- Reid Hoffman
- Pitchbook
Blockchain
- Libra on the rise
“Raising money as a black female VC is like crawling through broken glass. Naked. Covered in fire ants.” @MoniqueWoodard @BLCKVC #wewontwait
— Heidi Krauel Patel (@HeidiPatelSF) June 4, 2020
Please listen to this story ???? https://t.co/1NNq7E8reo
— Mark Suster (@msuster) June 5, 2020
The Conversation And The Data: A Look At Funding To Black Founders
- The Black Founder List is an initiative set up by James Norman , Yonas Beshawred and Sefanit Tades to create a network around black-founded, U.S.-based, venture-backed companies.
- We spoke with the co-creator of the list, James Norman , a founder of Pilotly , and a partner at Transparent Collective , which assists minorities in raising funding.
- This is why we’re excited to sit down for a chat with Sydney Sykes , co-founder of BLCK VC , a community by and for Black VCs. You can join this Zoom webinar and ask your own questions, or tune in for the live broadcast on YouTube.
- BLCK VC held a “We Won’t Wait” day of action on June 4, urging VC firms to discuss the ongoing protests and share with their portfolio companies and teams how they’ll respond, as well as to donate to organizations that are fostering change and look hard at their own diversity and strategize on how to improve.
Pattern Matching: The Venture Capitalist’s Dilemma
Pattern Matching is in need of an upgrade, for it leaves tons of talented entrepreneurs on the sidelines. Here are three ways to make it work for the masses.


The Case Against Pattern Recognition
Stop investing in people just because they’re young, have graduated from a brand-name school, and wear a hoodie. Chris Dixon, an early co-founder of the VC firm where I work, Founder Collective…

Black tech founders say venture capital needs to move past ‘diversity theater’
- A few hours after Softbank’s announcement, the investment firm Andreessen Horowitz, an early Facebook investor with $14 billion under management, announced its own initiative: a Talent x Opportunity Fund , a fund that started with $2.2 million in donations from the firm’s partners and will focus on offering training and seed capital to entrepreneurs that “lack the typical background and resources.” Recent efforts masks years of underinvestment, particularly in black women.
- That’s how long it took Softbank, the largest tech investor in the world, to spin up a $100 million Opportunity Fund last week which will invest exclusively in black start-up founders and other entrepreneurs of color.
Top global VC’s demystify unconscious bias in venture capital
- The latest ‘ Ecoystem ’ webinar session brought together leading investors and one of world’s largest engineering and manufacturing companies in a conversation on challenging industry perceptions to break down barriers and unconscious bias to VC funding and innovation.
- Top global VCs and Bosch demystify unconscious bias in venture capital and corporate innovation
As Silicon Valley Turns Attention to Race, Black Entrepreneurs Detail Prejudice
As Silicon Valley Turns Attention to Race, Black Entrepreneurs Detail Prejudice
When Matt Joseph was raising money a few years ago for a startup he founded, Locent, a venture capitalist asked Joseph, who is black, if he had considered creating a record label instead of a tech company.In a different pitch meeting, a group of investors told Joseph he reminded them of Barack …

When Matt Joseph was raising money a few years ago for a startup he founded, Locent, a venture capitalist asked Joseph, who is black, if he had considered creating a record label instead of a tech company.
The Definitive Guide to Investing in Black Founders
The Definitive Guide to Investing in Black Founders
The meeting is only one piece of the puzzle. Learn how to find more black founders and how to build a relationship that will get you in their round. There are four key challenges to VC’s investing in Black Founders.

- When you don’t meet many Black founders, you’re likely not used to hearing about market opportunities you have no framework for.
- When there is an existing company performing well, addressing a problem and leading the market, it’s not out of the norm for Black founders to challenge that position.

The Slippery Slope to Censored Speech
The Information – Sam Lessin
Last week, once again, the topic of content moderation on social networks took center stage. Against the backdrop of explicitly divergent policy decisions by major social media platforms, and in the context of extremely high social and political tensions, the debate exploded on what role those platforms should take in moderating speech.

After watching events unfold throughout the week, I worry that—despite the best intentions and efforts of many—we are already far down the path to censorship of all digital speech under the banner of preventing harm.
Mark Zuckerberg is on the wrong side of history
Mark Zuckerberg is on the wrong side of history
A fellow tech executive supplies a devastating rebuttal to Facebook friends who have drunk the Kool-Aid.

- As someone who has worked in tech for nearly 20 years and built major businesses, I’ve admired Facebook’s stunning growth, and I have tried to remain open-minded as evidence mounted that Facebook drives misinformation and radicalization, encourages hate speech, and incites violence around the world.
- I have many friends who work at Facebook, whom I’ve watched over the years enthusiastically defend the company’s mission “ to give people the power to build community and bring the world closer together .”
Algorithmic discovery of music lacks emotional appeal
- And then a friend recommended watching Other Music, a documentary about a record store in New York City.
- The documentary was a trip down the memory lane and a reminder that discovery is a major part of finding creative endeavors we love.

231. The Full Ratchet Podcast
Crisis Coverage w/ Ramy Adeeb – Why Facebook Should be Broken Up; SV Hype vs Returns; Amara’s Law; and VC’s Track Record Predicting Trends
- Ramy Adeeb of 1984 Ventures joins Nick on a special Crisis Coverage installment to discuss Why Facebook Should be Broken Up; SV Hype vs Returns; Amara’s Law; and VC’s Track Record Predicting Trends.
- When it comes to the economy and the effect of tech on the economy, we’ve seen unemployment fall to an all-time low while the # of people ‘not working’ is at an all time high…
The Silence of the Never Facebookers
The Silence of the Never Facebookers
Even fed-up tech workers are paralyzed by Silicon Valley’s culture.
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- For those on work visas, work choices are determined almost entirely by their immigration status: According to the tech workers I spoke with, they tend to choose larger companies for stability, hoping to turn work sponsorships into green cards.
- Even among American citizens, some tech workers are in the business simply to make money , gain power , and solve problems —even if they create just as many new ones in the process.
I also wish people would take time to explain the difference between a “lifestyle” small business and a venture-fundable startup more often. I didn’t learn about any of this until @HBCUvc my junior year of college.
— Jasmin Johnson (@jasminvests) June 5, 2020
If the startups in a YC batch use some product, that has historically been a near perfect predictor that it will succeed. They’re good judges of technology, and highly motivated to pick things that will work.
— Paul Graham (@paulg) June 9, 2020
Founders often thank their VCs for investing.
But it should be the opposite: VCs should always thank founders for being given the opportunity to invest.
The only reason I can pursue my dream job is that our founders have decided to say YES to me.
I never forget that.
— Eric (@ericbahn) June 11, 2020
I know about the power of chance meetings because Y Combinator is explicitly designed to magnify it. Whenever YC brings together any group of more than about 4 founders for any reason, there ends up being an important conversation between some pair of them.
— Paul Graham (@paulg) June 10, 2020
The biggest danger to the left is friendly fire. Imagine if we just stopped attacking one another for a few months and turned that energy on Trump instead. Because he is laughing his ass off at this kind of thing.https://t.co/ukzx3ZpnS8
— Paul Graham (@paulg) June 11, 2020
Unicorns become rare beasts in a market no longer in the pink
Unicorns become rare beasts in a market no longer in the pink
Investors may not believe in fairies or goblins, but they certainly believe in unicorns. In fact, in recent years the hunt for them has become one of the biggest stories in the investment world.

4 Observations on the Current State of VC
- In many ways, this makes a bearish market like the one we are experiencing now and will likely continue to inhabit for the rest of this year ideal for funding and growing a Seed stage company — a point we covered in detail in a prior post, The Bull Case for Venture Capital in a coming Bear Market .
- On another level, this uptick has a lot to do with the market environment facing a Seed/early stage company versus a more mature one, and the kinds of expectations attached to a Seed investment.
Can Your Startup Return “The Fund”?
Can Your Startup Return “The Fund”?
At Harlem Capital, one of our slogans is “Data Drives Decisions.” We are more data driven than most would expect for an early stage investor, which certainly stems from our finance backgrounds. We…
Note this total dilution is 40%+ without the Series A pro-rata so funds that don’t follow-on will require larger exits from founders.
- As a $40mm fund that is investing in 30 companies, Harlem Capital’s check size range is $500k to $1mm, with our average check being $750k (used in example above).
Are you ready for the coming wave of VC down rounds?
George Arison , founder and co-CEO of Shift , has a few ideas on how entrepreneurs should approach fundraising in “the new normal,” whatever that means.
- In a fundraising world where many companies have been “massively” overvalued, Arison expects these conditions to shape the new normal.
New SEC Rules On Crowdfunding Would Be A Boost To Capital Raising For Startups
New SEC Rules On Crowdfunding Would Be A Boost To Capital Raising For Startups
- This devastation underscores the importance of recent rule changes proposed by the Securities and Exchange Commission to encourage capital formation for business startups, in particular, raising the cap on the amount private companies can raise online via an investment portal under Regulation CF to $5 million a year.
- The unfortunate result is many private market investment opportunities have not been made available to the market opened under Reg CF–the 95 percent of U.S. households that do not meet the minimum standards for accredited investors of annual income ($200,000) or net worth ($1 million).READ MORE
Rethinking the Innovation Ecosystem
Rethinking the Innovation Ecosystem
This successful venture capitalist invests in founders before they have a business idea.

- Matt Clifford , EF’s CEO and co-founder, joins Azeem Azhar to explain why he invests in founders before they have a business idea and other novel approaches to venture capital and innovation.
- HBR Presents is a network of podcasts curated by HBR editors, bringing you the best business ideas from the leading minds in management.
iPod inventor Tony Fadell: ‘I literally had a decade of failure’
iPod inventor Tony Fadell: ‘I literally had a decade of failure’
Before becoming known as the “father of the iPod,” Tony Fadell said he was rejected by 80 venture capital investors when trying to raise funding for his own technology business.

- Fadell was speaking on a panel at the 2020 CogX conference with former colleagues of General Magic, the spin-off company of technology giant Apple , which operated in Silicon Valley in the 1990s but went out of business in the early 2000s.
- (Getty | Christophe Morin) Before becoming known as the “father of the iPod,” Tony Fadell said he was rejected by 80 venture capital investors when trying to raise funding for his own technology business.
Virtual Startup Camp with Elad Gil
Since many of us are WFH I thought it would be fun to do a Startup Series (on Zoom).
It will be a set of 1 hour sessions on startups.
I will cover things like fundraising, M&A, hiring, and other topics.
Apply to attend!https://t.co/wXm8yl3ltx
— Elad Gil (@eladgil) June 9, 2020
Taking startup school from @eladgil will be a lifetime opportunity for any startup! Apply soon! https://t.co/LWbwXGjTad
— shruti@array.vc (@atShruti) June 9, 2020
Germany — we have a structural problem and we need to solve it together
- Our portfolio companies that are located outside the big tech-hubs are also thinking about hiring remotely much earlier because it’s just very tough to attract (senior) talent at scale.
- The total invested capital per year , as well as the number of unique funded companies, underline Berlin’s dominance in Germany: Besides Berlin, there are also other, much smaller German ecosystems on the rise, such as Munich (top 11) or Hamburg (top 15).
We’re About To See a Lot More SaaS Debt
- I argue that standard saas metrics make it possible for founders to scale using debt capital (production capital thats cheaper) instead of solely relying on venture capital (financial capital thats more expensive).
- This set of metrics that Salesforce began to standardize enabled other providers of Financial Capital to more quickly analyze new SaaS companies and invest.
Scoop: Facebook establishing a venture arm to invest in startups
- Facebook has been hiring seasoned tech investors to help lead a new “multi-million dollar” investment fund within its experimental apps team, Axios has learned.
- “In this role, you will manage a multi million dollar fund that invests in leading private companies alongside top venture capital firms and angel investors,” Facebook said in the now-deleted job posting.
The Naive Mistake You Don’t Want to Make When Pitching Your Startup
- As with most accelerators, the program concluded with Demo Day, an event where all the participating companies pitch their startups to a room full of investors followed by a few hours of networking.
- The Naive Mistake You Don’t Want to Make When Pitching Your Startup The first time I pitched a startup to a large group of investors, I made a mistake so naive and embarrassing that nobody in the audience even wanted to consider investing.
Reid Hoffman on the Economy and Volatility
Announcing the launch of In Visible Capital, a new podcast from PitchBook –
- In our inaugural season of In Visible Capital, PitchBook analysts and reporters will dive deep into the all the ways COVID-19 is impacting the private markets and how it will continue to do so into the future.
- PitchBook is already a trusted source on venture capital, private equity and M&A—we’ve been leading the conversation on key trends and events since 2007.
Libra Continues Path Forward, Announces New Brass
Libra Continues Path Forward, Announces New Brass
The Libra Association just filled a key role.

Libra Is Ready for the Digital Money ‘Space Race’: Dante Disparte
Libra Is Not Done Trying to Reach the Unbanked – CoinDesk
Libra’s most vexing challenge may be juggling inclusion and compliance. But policy chief Dante Disparte says the project is not giving up on the unbanked.

- “When they [central banks] take the leap beyond wholesale, which is where most CBDC work is going, and start thinking about retail applications, then we will be in a better world for the fact networks like Libra exist,” Disparte told CoinDesk in a recent interview.
- Whatever you thought of the “unfortunate” positioning of Libra’s first white paper, as Disparte put it, the effort undoubtedly triggered a “space race,” he said, particularly regarding central bank digital currencies (CBDCs).