Mujhid: Overlooked VCs

16 minutes, 2 links


Updated February 11, 2023
Better Venture

Hadiyah Mujhid (HBCUvc)

Hadiyah Mujhid is the founder and CEO of HBCUvc, a non-profit mobilizing the next generation of venture capital leaders to increase access to capital for communities historically overlooked. In our conversation, Hadiyah shares how HBCUvc is developing, connecting, and mobilizing the next generation of venture capital leaders in communities where entrepreneurs face barriers: they run (educational) programs, build inclusive networks with existing communities, and help VCs jump over “wealth barriers” with their own pool of capital. All of these initiatives empower a new generation of Black, Latinx, and Indigenous VCs to take HBCU culture into VC.

Interviewed February 2021

Bringing HBCU Culture into Venture Capital

Erika Brodnock (EB): Hadiyah, you are educating VCs around the HBCU [historically Black colleges and universities] ethos. Can you tell us how that is different from traditional VC?

Hadiyah Mujhid (HM): When we are thinking about developing the next network or next generation of investors, we do anchor in HBCU ethos, which is not a formal ethos. It is a unique American experience, where people throughout the diaspora can go to a place and participate in educational and professional opportunities, and at least in the United States, do not have this invisible layer of racism, or this invisible layer of being the diversity token. It is one of the few environments outside of your home environment where these multi-layered identities that you have, such as being Black, are not something that you see as a barrier.

In that sense, HBCU culture is very affirming. It is also encouraging and inspiring, and it facilitates the environment for students to thrive. It shows the vastness of the diaspora and the diversity of Blackness. It shows the students that there is not one way to be Black. It encourages freedom and liberation.

When we say that we are rooted in the culture of HBCUs, especially when we teach venture capital, we want our next generation of Black, Indigenous, and Latinx venture capitalists to be rooted in their own cultural competencies—not to run away from that—and to come to the table understanding that those cultural competencies are the value added.

Connecting the HBCU Community to Traditional VC Networks

Johannes Lenhard (JL): Venture capital is a relationship business, both when it comes to recruiting into VC, but also when it comes to investing. It is based around university friends, company networks, etc. What are you doing specifically to build up a new, much more diverse, Black VC network—in a sense, a second pillar that in and of itself functions?

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HM: Those tight networks and relationships, which are usually anchored in universities that exist in traditional VC, we also have them in our program. Those connections and those relationships are already there. We do not have to recreate that. It is important for us that we are not creating separate but equal. We are not creating a separate silo of networks in this VC network that will operate independently. It is important that we build strong bonds with the community of existing networks.

One of the ways that we do that is by teaching them just how important the existing relationships that they have within their HBCU community are. We start with how they are formed and allow them to leverage the ways that they built these relationships. Once you show them that informal relationship building is happening, and show the ways that they are doing it, it provides a pathway for them to intentionally create those networks. They have the blueprint to build strong relationships with this existing ecosystem, which is rooted in networks.

EB: What are the practices and programs that you use to build up the network? There are so many new networks forming at the moment, particularly for Black and Brown founders; are there good practices that you would share about some of the things that you have done, to enable strong foundations?

HM: You have to create the unicorns. At the same time, there is still work to be done while the unicorns are being created. After there is the awareness of just how important relationships are and the intentional drive to create more of them, we then create opportunities for these relationships to happen. Before COVID, it was in-person retreats, where we put people in the same room, and they did not have the distractions of their day-to-day, and they could really get the opportunity to get to know each other. You spend three days in this beautiful location and get to know up and rising Black VCs with different backgrounds. How do we create those opportunities to put everyone on equal footing, just to build strong friendships?

With COVID, we still want to create these experiences and we are moving along alongside society as we learn how to create new relationships without in-person interaction. We are still creating these opportunities for people to connect, but it looks very different, whether it is through various tools like Zoom, or other networking tools.

Building Inclusive Networks beyond the HBCUs

EB: Are you using the Kauffman Fellows Program, for instance, to support Black VCs, to get their foot in the door and to build networks? I completely appreciate that there is the opportunity to create a network within the HBCU community, but I wonder if that recreates the same thing too, in that if you did not go to a HBCU as an entrepreneur or as a VC, you could end up locked out. It would be the same Harvard-Stanford network, but just for HBCUs only, and even though lots of Black people go to HBCUs, there are still millions that did not. How do you incorporate the rest of the ecosystem, as well as ensuring that you do not end up just recreating the same problems?

HM: Our HBCU program is one of four programs. Our HBCU students or participants in our program are only a third of the people that we support across all programs. Second, in the program itself, we teach the systemic issues of venture capital. There is an awareness that because of these siloed communities, we have created limited opportunities. Now that you know that they exist, and being rooted in inclusiveness, how do you break out of these in use? You informally created these communities, now how do you break out of this to intentionally build relationships outside of just your neighbors within reach?

EB: How do the programs work? What do they look like?

HM: Each program is slightly different, but we are anchored around teaching modules. We have foundational classes that we teach, a lot of them are educational and a lot of them are soft skills—such as, how do you build a relationship intentionally and, at the same time, leave room for serendipity? For the HBCU program, which runs throughout the academic year, there are scheduled classes and activities where relationships can be built not only within the community, but also with existing partners and leaders in the industry.

Our summer program is open and is not HBCU-specific. It is anchored in more of an apprenticeship model, where you are placed in a paid internship program at a firm, but you spend two weeks full-time in an immersive experience that brings these fundamentals upfront—the foundations and histories of VC, the soft skills, the motivations of a VC (which is something that we have to teach). There is a classroom-style curriculum to it, as well as a component where every opportunity or every interaction is adopted, building a line of relationships.

Securing GP Commitment without Personal Wealth

JL: One thing that is complicated when it comes to becoming a VC is the commitment of GPs. In order to start a fund, you need both a track record and cash. You basically need to be wealthy. What can you do about that with your programs?

HM: There are a couple of things. There is absolutely the ability to develop your own track record and your ability to show that you can find entrepreneurs, who will go on and generate the returns that VC deems worthy. Traditionally, building your own track record came through you using your own wealth to demonstrate that first. Within the past 10 years, we have seen that shift slightly, where people have shown that they have the opportunity to access these entrepreneurs without using their personal wealth.

In traditional VC, I would use my own personal wealth as a demonstration that I have done this, but then go out and raise larger capital. The end factor was that I was always managing someone else’s money. We are ultimately seeing LPs just want that return. If you are able to show that you have that potential of a return, what we have seen are some LPs becoming a little bit more lenient on how much the GP commits. We are also seeing the development of other programs where you can develop your track record without using your own capital—maybe it is just developing an entrepreneur support company. I have seen people develop their own portfolio of companies that they support without using money.

One of the ways that HBCUvc is very specific about doing this is that we have created our own fund or pool of capital that our fellows could use after developing their own track record and give entrepreneurs a stipend through this fund. It creates a financial relationship with entrepreneurs, and then they work with entrepreneurs to develop that relationship to support them to grow.

Holding The Industry Accountable for Real Change

EB: What is next for HBCUvc? What is the next barrier that you are hoping to not just attack but to fundamentally change?

HM: In the last five years, there has been a lot more awareness of the impact of the industry and how racial inequities exist within the industry. What we have seen as a result—which is all good—is a lot of programs that are similar to ours, who are helping to develop this pipeline of investors who were overlooked. However, I do not think it is the total solution. When you look at the people who are leading these efforts, a large percentage of us are coming from the communities who are impacted by it. We are trying to solve a problem that we did not create.

There is a huge amount of work for the institutions that have created the structure, to truly understand the barriers and take serious actions to remove them. Right now, there is a whole system that is to this day upholding barriers that prevent talented people from entering the industry and prevent talented entrepreneurs from receiving funding to grow their business. The industry has to take a serious effort in going beyond diversity-speak about the barriers and commit to serious action to eliminate that. When I think about what is next for HBCUvc, it is important for us to shift the culture for the institutions to understand how complicit they are and for them to drive serious action to remove the barriers.

EB: It is one of those age-old issues that I fight against on a day-to-day basis. I am constantly asked to help companies to shift and restructure the way in which they are built and the way in which they operate. But they never want to pay me a fee.

HM: The lack of understanding of how that perpetuates the issue they want to stop is ridiculous.

EB: What you have said there is interesting, around the fact that you do not want to be responsible for solving the problem that you did not create. How does that stack up and what has your experience been of situations like this? What would you say would be the best way out of this? What is the solution?

HM: It is asking us for a solution. We do not own the solution, because we did not create the problem. We care about the solution because it has impacted us and we are tired of living like this. We are going to keep fighting for it, because we are fighting for our own survival. In the United States, one of the strongest impacts in the capitalism system is slavery. Using Black bodies and Black laborers to create the system and build wealth. The United States’ capitalism system was first built on stolen land. We took the assets from Indigenous peoples, and then we stole people to build up the land. Some of the guidelines around capitalism have changed, but I do not think that many people understand that this concept of the devaluation of Black and Brown bodies in their labor still exists.

We are formed as a not-for-profit organization. We are not operating to create a profit, but it also does not mean that money is irrelevant in how we operate. We have full-time staff that need to be paid, they need to feed their families, and all of our staff identify as being Black or Brown. When we talk to our for-profit partners, we talk about this commitment in both a time commitment and an awareness, this intentionality to learn, to improve, but also a financial commitment to support this organization to make a change.

It is interesting how after explaining the history to the institutions, around 50% of the time we get pushed back on the financial push. It is mind-boggling to see that. One of the largest firms we have been in conversations with has said, “We are in alignment with your mission, we want to change.” We say, “Great, are you able to make a financial contribution?” They say, “No.”

EB: I am not surprised at all. I would also not be surprised if that was an institution that put up a black square on Instagram. I too am tired of the performance. You do not get to pretend that you do not understand that it is wrong to ask people to work for free. We shall—even if not overcome yet—write it down.

Feinzaig: Female Founders Alliance

Leslie Feinzaig (Graham & Walker, Female Founders Alliance)

Leslie Feinzaig started one of the biggest communities of female founders, the Female Founders Alliance. At its core is a simple principle: you are stronger together. Over the last few years, it has developed from a mentoring and sharing community to running an accelerator and a VC fund, Graham & Walker, all with a focus on female entrepreneurs. Leslie is hopeful and is seeing the fruits of her and others’ hard work, but she worries about the increase in women leaving the workforce and the lack of support when it comes to childcare and parental leave policies.

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