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2024年 6月 13日 木曜日

Global Black Syndicate is keen on backing more black-founded startups across the globe

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テクノロジー

When Craig Dixon gets asked why he has an entrepreneurial perspective on life, he quickly refers people to his roots as the child of Jamaican immigrants in the United States.

Both his parents came separately to the United States, from Kingston, Jamaica, in the late 1960s and early 1970s, in order to pursue better financial opportunities. 

“My father was the oldest of seven children, and at age 15 he apprenticed as an electrician because he had no father and he had to help support his family,” Dixon told TechCabal over a call. “After working as an electrician in Jamaica he came to the United States to make more money. My mother came to the United States to further her education.”

Growing up, Dixon was surrounded by family members who were all small business owners. This spurred his desire to become an entrepreneur. He grew up in a family where there was a strong belief that if you want to eat, you have to work.

He studied finance at William and Mary University, the second oldest university in the US. In 1997, he returned to get a doctorate degree at the William and Mary law school. A specialisation in law and finance meant that Dixon got to work at different law firms doing early-stage venture capital financings, corporate counselling, and merger and acquisition deals for public companies. 

While doing this he also tried to start a few businesses that mostly didn’t work out.

“Along the way, I invested in real estate. I tried starting a couple of other companies on the side, including a T-shirt business, which was a total failure,” Dixon said. 

2012 was a turning point for Dixon when a close friend from college spoke to him about starting a business that builds and operates premium sports and wellness centres. They began discussions in 2012 to start a business called The St. James, and in 2018, after raising capital and building a team, they launched the first location. The St. James has since then grown to have three locations in the US with almost 300 employees.

During the pandemic, Dixon felt compelled to start an investment syndicate, the Global Black Syndicate (GBS), to support black startup founders. 

“The global black syndicate is really an outgrowth of my personal journey. I took time to reflect on conversations and encounters that I had with many other black entrepreneurs on the challenges they had and how they can be supported,” Dixon said.

Today, GBS which has invested in 8 startups with an average cheque size of $75,000–$150,000, is keen to invest in more startups founded by black founders across the globe.

テクノロジー Daniel Adeyemi: Why does the GBS exist?

Craig Dixon: In a lot of ways, the idea of a syndicate is no different from some of the rotating savings-and-lending associations that exist in the black diaspora and in different countries. In Jamaica, we call it partner, and in other countries, they call it a susu. This is the way my parents bought their first house, and how many people were able to fund their businesses. So I looked at this and thought there’s an opportunity to band together a bunch of very small cheques to write bigger cheques to support businesses that are overlooked. 

When you think about the distribution of black people across the planet in terms of the number of us that exist on this earth, there’s a tremendous amount of human potential that’s underutilised and overlooked. I also look at the impact black people have on culture and different aspects of the economy and it’s very clear that there is a lot of untapped value there.

テクノロジー DA: How does the syndicate work?

CD:  We identify investment opportunities, conduct due diligence on them, negotiate a set of terms, and then present those opportunities to the rest of the syndicate.

Individual investor participants assess deals on a deal-by-deal basis and they can choose to invest or not based on their own preferences and comfort level. We don’t have a fund. It’s really all about being a part of a network that allows you to get access to deal flow that you can choose to invest in based on your preferences and your comfort level.

We conclude deals within a 45–60 day window.

テクノロジー DA: How does the syndicate support startups beyond money?

CD: I always start with the fact that as an entrepreneur who is still building a company every day, I can really relate to what these founders are going through, have been through or will go through. So I think having somebody who can relate to them in that regard, and who really understands how difficult it is to build a business is very important. We make introductions to investors and people with expertise to help founders and companies achieve their objectives. 

テクノロジー DA: What’s your investment thesis?

CD: We’re sector-agnostic but we have a preference for businesses, that I like to call shovel-type of businesses. And that metaphor is really referencing the California Gold Rush in the United States, where you had a bunch of people who went to California to go strike for gold and then some of them got rich, but the people who really got rich were the ones who supplied the picks and shovels—essentially, the infrastructure necessary to support the exploration of gold. We’re really looking at businesses that are focused on infrastructure, capturing the network effects associated with a trend that many people are going after. 

I believe they are more likely to find success, and even if the company doesn’t become a unicorn, they tend to end up having assets that are valuable that somebody else might want to acquire. 

テクノロジー DA: Can you share some examples of startups the syndicate has invested in?

CD: Sure! I’ll share two examples. One of them is Kinley (formerly known as First Boulevard), a US-based neobank that’s focused on the black consumer.

The company was founded by Donald Hawkins during the aftermath of the social unrest in the United States in 2020 following George Floyd’s death. Hawkins and his team were trying to focus on harnessing the power of the black dollar in the United States for wealth creation. I thought it was an opportunity that also resonated from a values perspective, not just from a financial perspective.

The other one I would highlight would be Bond, which is a marketplace that helps match the client service representatives that work in high-end fashion boutiques like Louis Vuitton, Hermès and others. Before Bond, if you worked at Hermès and I worked at Louis Vuitton, when a client who comes to you regularly for Hermès items is trying to style a certain outfit or look, they don’t necessarily want to wear Hermès from head to toe. They want a mix of different brands. You have the option to only sell Hermès items and leave the client to go look for the Louis Vuitton items.  But with Bond, you can aggregate inventory across brands. So you can search for this inventory at a nearby Louis Vuitton store through Bond and offer that to the client. This way you get a part of the commissions from the sale that the Louis Vuitton store might not have gotten without you.

Bond is simply taking advantage of inefficiency in the marketplace where there isn’t transparency about the availability of different goods.

It’s important to note that if Bond had been a new brand that was going to create and design fashion items, that would not be something that I would be qualified to invest in.

But they’re building digital picks and shovels for fashion that allows people to get access to high-quality goods from multiple brands in a way that’s highly innovative.

テクノロジー DA: What do you look out for in startups you invest in?

CD: First we make sure that the company has at least demonstrated, at some level, product-market fit. Beyond having an idea, it has to be getting some validation, either through some early sales or beta testing or focus grouping, that informs the product or service features. We also look at the company’s economic model and technology stack. In terms of founders and teams, we’re really looking for people who not only know their subject area but demonstrate a level of grit and determination that will carry them the distance, because it’s hard to start a company. And it’s even harder to sustain a company. 

If you think about all of the companies that get started and fail, in many instances, the company didn’t fail because they had a bad idea. They failed because the founding team or the founders were not able to go the distance and push through the challenges that come with starting any new endeavour.  

テクノロジー DA: What are some red flags you look out for?

CD: ​​Companies with no traction. Founders who don’t really want to take the time to answer questions and provide information. Those are two big red flags. There may be other things that come up in the course of conversations that you can’t quite put a finger on, but something wouldn’t feel right. 

テクノロジー DA: What are some trends you’re seeing in the market right now?

CD: It’s a much more challenging investment environment because capital is not flowing as freely as it did for the past two or three years. I continue to believe that fintech is an important sector that will only increase particularly from a global perspective. Proptech is also a noteworthy sector as the real estate industry as a whole is fairly low in terms of its adoption of tech. I think there will be a significant change coming from some of the proptech innovation that is digitising the real estate experience, including how people live and interact with real estate.

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