Charting the Funding Gap: Black-Founded Startups in VC and ECF

CHART OF THE WEEK 📈

This Chart of the Week examines the quantity of startup deals featuring at least one Black founder in the last 12 months, along with the corresponding percentage of investment allocated to these ventures.

• Black-founded companies only received 1% of Venture Capital (VC) funding in 2022 - a number that is way too low, knowing that 14.4% of Americans identify as Black.

• Black-founded companies receive a much more notable portion of online equity investments, with 6.8% of all Reg CF and Reg A+ equity investments allocated to them in the last 12 months.

• However, their fundraising efforts are underperforming. Despite Black-founded startups accounting for 12% of equity crowdfunding deals, they receive a disproportionately smaller share of investors' funds.

• While the online private market helps mitigate barriers hindering minority founders from accessing capital, further progress is necessary to align the percentage of deals led by Black-founded startups with the funds they receive.

Together with Fidelity Investments

Join the Startup Showcase in Chicago! 🌟

Experience the return of the Startup Showcase on February 29th with 5-minute live pitches from five top-rated startups (rated by KingsCrowd). Engage with the founders of Choose Your Horizon, Infinity Fuel Cell, SapientX, BuildClub, and Pirouette Medical, and listen to a roundtable discussion from some of the brightest minds in venture and private investing.

Network with industry leaders and fellow investors in an event that's redefining investment opportunities.

📍 Location: Drive Capital, Chicago, IL

 📅 Date: February 29th, 6pm CT

PITCH REVIEW 💸

Brief: Personal AI, legally known as Human Ai Labs, Inc., has created a platform that transforms users' digital footprints into an interactive, responsive messaging experience, addressing the challenge of imperfect memory. With 120M parameter personal language models, users can train their AI by uploading files or engaging in conversations, creating a unique, user-owned memory bank. It’s raising $5M with a valuation cap of $30M and a minimum investment of $250.

Key People: Suman Kanuganti, CEO and Co-Founder of Personal.ai, is a notable influence in ethical AI, with a rich background in various technologies and notable achievements like founding Aira Tech. Kristie Kaiser, Co-Founder and Head of UX & Design, is celebrated for her inclusive design philosophy and her contributions to human-AI interaction, earning a spot in Forbes' 30 Under 30. Sharon Zhang, another Co-Founder, brings over a decade of AI expertise, especially in NLP, to the team.

Interested in Personal AI? Access the deal report HERE 🔓📈

Summary

Here's what we like: Personal AI stands out in the fast-growing Artificial Intelligence market with its unique platform that caters to the demand for B2B and B2C solutions for managing and accessing personal memories and information. Personal AI's offering is timely and innovative, as it provides each user a personal memory and can unify their memories within an organization.

The company's product harnesses personal language models with 120M parameters. This technology has broad applications, ranging from enhancing individual productivity to deepening relationships through a responsive and interactive messaging experience. Furthermore, the ability to train the AI with personal data without requiring coding skills democratizes the use of advanced AI for the average user, potentially driving widespread adoption.

Personal AI is backed by an impressive roster of venture capital investors, including BBG Ventures, Differential Ventures, and Jane Street Capital, which supports its capital needs and reduces its failure risk.

With eight patents securing its innovative technology, Personal AI has established high barriers to entry for potential competitors, positioning itself favorably in a market that is not overly competitive. This strategic advantage, coupled with a recurring revenue model, lays the groundwork for a stable and growing cash flow once the company scales its user base and extends its market reach.

Here's what we don't: Personal AI, as a novel innovation, faces several potential hurdles to widespread adoption. One key challenge lies in convincing customers and organizations of its value proposition. Despite signing up, users might struggle to grasp its full potential, leading to underutilization and disappointing outcomes.

Furthermore, determining the optimal pricing strategy to attract customers and maximize profitability poses a significant challenge, as gauging customer willingness to pay accurately remains elusive.

Additionally, data privacy and cybersecurity concerns may deter potential users, necessitating robust measures to address these apprehensions and build trust in the platform's security protocols.

ON THE POD 🎙️

Chris catches up with Sebastian Duque, the co-founder and CEO of Plei. Known as the "Uber of soccer," Plei is an app that's rapidly gaining traction, currently used in 16 US cities. With a mission to make soccer accessible and convenient, Plei has been a game-changer in connecting players and facilitating matches, with over 100,000 games played. In this episode, Sebastian shares his journey, from the early challenges to significant milestones, and provides an insightful look into how technology is transforming the world’s most popular sport.

Listen to the full episode here

STAFF PICKS 🌶️

Floqsta

Floqsta, Inc. offers an AI-based platform connecting solo travelers and millennials for shared experiences. Utilizing a social matching algorithm, the platform enhances solo travel by fostering collaborative planning and motivated travel.

• Valuation Cap: $8.5 million

• Minimum Investment: $100

Knightscope (Debt)

A pioneer in autonomous security robots, Knightscope is undertaking Reg A+ crowdfunding with Dealmaker Securities. Leveraging a Machine-as-a-Service model, the company's award-winning robots enhance law enforcement capabilities with robotics, AI, and self-driving tech. Founded in 2013 by William Santana Li and Stacy Dean Stephens, Knightscope has substantial field experience in disrupting the security industry.

• Interest Rate: 10%

• Minimum Investment: $1,000

Paleblue

Paleblue is revolutionizing the energy sector with its sustainable rechargeable lithium-ion batteries, offering an eco-friendly alternative to traditional single-use batteries. These batteries, available in common sizes including AAA, AA, C, D, 9v, & CR123A, feature fast USB-C charging and an onboard management system, emphasizing fast charging and longevity. Since 2019, Paleblue has sold over two million batteries across 20 countries, reflecting strong market demand for greener power solutions.

• Valuation Cap: $16.8 million

• Minimum Investment: $200