VC Funding Is The New Record Deal?
Tyler Shaw/ @tylerevanshaw
As time passes, industries evolve and eventually some of the key players sit at the table with all of the cards. The tech scene has been around almost as long as hip-hop, but the worlds are finally starting to merge. Venture Capital is essentially money that a group of investors places into a startup or business for a percentage of that business with the hopes of a high return (They want to see that hockey stick growth, son). A group of individuals/investors that seeks to invest time and resources into a particular artist with the hopes of a high return is a Record Label. Obviously there are many nuances that differentiate them, but the concept is close enough to liken the two.
Hip-hop started as a form of expression that enabled society's outcast and marginalized to create their ideal sound, look, and style that eventually influenced the world. It was an expression borne of a lack of opportunity- a lack of recognition. KRS-One speaks about this HERE (Start at 14:00). He does a good job painting how exclusion turned into expression. Warning: Excuse the language.
In Silicon Valley, the same problem is happening. Facebook, Google, Apple...all companies under fire for not having enough people of color in their companies. On the flip side, its just as hard for people of color trying to secure funding for their ideas. I read this article over at POCIT that illustrates vividly just how these negative experiences transpire.
So the connection I'm making here is this: In the same way hip-hop was designed to defy the rules set up by the music industry, tech could potentially see the same upset in the nearing future. Silicon Valley will eventually solve the toughest challenges facing a 1st-world-problem, middle-to-upper-class demographic, leaving them to continue creating and investing in companies that aren't innovating, but are rather duplicates that already exist. Top VC's won't have the context/insight to invest in problems outside of their world, so when a good idea comes across their table, they'll likely not see the diamond in the rough. Only the VC's and leaders who come from that particular culture or community will be able to capitalize.
It comes as no surprise then that JayZ, Nas, Snoop Dogg are making moves within the tech industry. Here's a brief overview of their VC Firms, and hopes to the fact that with more people who understand our culture in the decision rooms, we start to see more STEM, coding schools, and companies that can authentically relate, delegate, and engage.
1) JAY Z - ARRIVE
Mr. Carter is up first. It's been reported that Jay Z is building a VC (venture capital) firm with long-time partner and Roc Nation co-founder Jay Brown initially planning to focus on seed investments in young startups. This is significant because it hints at the fact that the technology space may see some diversification in the near future. The ongoing pain of minority founders trying to raise funds from VC's is typically because the context for the problem their solving is out of the realm of the person/people writing the check. Just ask Tristan Walker.
We know him best for Tidal, but he's got a strong portfolio. Check out these stats from Tech Crunch:
Stance – The Jays’ Roc Nation invested in premium sock company Stance’s 2011 Series A of $6 million. It’s gone on to raise a total of $116 million from top Silicon Valley investors, signaling that it’s doing well.
Uber – Jay Z invested in its 2011 Series B when it was valued at just $300 million pre-money. Now it’s believed to be valued at $62.5 billion, netting Beyonce’s husband a massive return
Nas- QUEENSBRIDGE VENTURE PARTNERS
The Queens legend has been quietly building an empire, occasionally stepping into the limelight to drop a verse or two. Remember the summer banger "Nas Album Done" on DJ Khaled's Major Key album? He took the opportunity to throw a slick nod at an up-and-coming hair trimmer, aptly called the 'Bevel Blade'. Well, it just so happens, Nas is not only a spokesperson for the brand, he happened to be an early investor. Other notable investments include Lyft, Dropbox, and (Rap) Genius.
Snoop Dogg - CASA VERDE CAPITAL
Uncle Snoop is no stranger to the spotlight, being consistently relevant for the past 20 years. It's pretty funny, I heard Nipsey Hussle liken Snoop's appeal to that of Mickey Mouse, which makes a ton of sense when you think about it. Cool transcends boxes, and with this latest step in his legacy, this should be no different. They say there's two types of money you can get when looking for investing; smart money and dumb money. Smart money is when the VC can actually provide you insight, knowledge, and connections for your company beyond just the money they give you. Dumb money is when all they have is money. It should come as no suprise then, that Snoop is choosing to be a smart VC, investing in predominantly marijuana based companies. Apparently his firm closed their debut fund with $45 million dollars. Not too bad, Snoop. Not too bad.