Fifth Star Funds

By now we are all too familiar with the unacceptable, yet very sobering reality that only 1% of venture capital is allocated to Black founders. In recent years, more venture capital funds have pledged to make their portfolios more diverse. Yet still, the numbers haven’t changed with any meaningful significance. Over 64% of VC dollars are spent on later-stage companies. For later-stage funds, it is impossible to invest in companies that simply do not exist. Fifth Star Funds conducted extensive research with some of the most respected leaders and institutions to uncover what stage the biggest disparity between Black founders and their counterparts could be found. We discovered it started at Day 1 of an entrepreneur’s journey—that is deemed the “Friends & Family” round. It is at this stage that we learned that white founders disproportionately have access to 22x the liquid wealth to that of a Black founder at the Friends & Family round. It is here at the Friends & Family round, we found a solution to make the venture ecosystem more equitable, ensuring the earliest companies have a shot at the American Dream. Our findings can be discovered here in our white paper. #venturecapital #blacktech #wealthgap Christine Concepción, MBA Stella Ashaolu Kyle Backer Audre Kapacinskas Osayanmo Osarenkhoe Samir Mirza David Pawlan Tim Huelskamp Nate Pelzer Tracey Suppo

We’re back with more #VCTermsDecoded - giving you the info on Discount Rates. 💵🔮 In early-stage investing, "discount rate" is sometimes used to refer to the discount offered to early investors in convertible notes or SAFE notes (Simple Agreement for Future Equity - defined in our June edition of #VCTermsDecoded).  Discount Rates give early investors a reduced price on future equity, compensating them for the higher risk they take by investing early.  The discount rate (in this scenario) would typically be the percentage discount off the future valuation, not an interest rate. #VentureCapital101 #Startups #FinancialLiteracy Want to stay in the FSF loop? Subscribe to our newsletter:

Chicago Tech Week was a blast! Our team had the opportunity to dive into the vibrant Chicago tech ecosystem. This was our Director, Joshua Taylor’s first time in the Chicago tech scene, where he connected with many new founders, funders, and ecosystem partners. We’re eager to deepen our involvement in the Chicago tech and business landscape. If there’s someone you think we should meet with, tag them in the comments!

FSF Portfolio Spotlight: AEGIS. With one press of a button, AEGIS users are instantly connected to emergency authorities, transmitting crucial information without relying on verbal communication. Support AEGIS by connecting Founder & CEO, Tamika Vantifflin, with Angel Investors or introducing her to corporations with a focus on personal safety.

We are fundraising, and we need your support! We’ve successfully raised $125,000 of our $500,000 goal to invest in 12 promising new startups in the Chicago and Houston ecosystems. Your contributions—whether through donations or connections—are vital as we seek out the next wave of visionary entrepreneurs. We’re proud to have backed incredible companies like Eventnoire, Flare FS, Cyber PopUP, and many more over the past few years. Please consider donating through Fifthstarfunds.com, and feel free to share this with your network.

At Fifth Star Funds, we're on a mission to empower underrepresented founders with equitable access to capital. Check out our overview on “4 Unexpected Ways to Get Funding,” helping black-and-brown-owned startups overcome traditional funding constraints and soar to new heights! 🚀💼 https://shorturl.at/FURfQ #FifthStarFunds #StartupFunding #Empowerment #VentureCapital

We’re back with more #VCTermsDecoded - breaking down Valuation Caps. When someone invests in your startup, a Valuation Cap sets the maximum value at which their investment will convert to shares. This means even if your startup's value goes through the roof, early investors get more shares for their money. 🌟 For example, if your startup has a $5M valuation cap and later raises money at a $10M valuation, early investors’ money converts as if the company was worth $5M. They get more equity for believing in you early! 💼💰 In short, valuation caps are a win-win: they reward early investors and help startups attract investment.  Stay tuned for more VC Terms Decoded! #VentureCapital101 #Startups #FinancialLiteracy

Mike Rome, Co-Founder of lightbulb and Startup Advisor at moonwater, Mike has spent the last 15 years scaling early-to-mid-stage businesses. We spoke with Mike on his ‘why’ for supporting Fifth Star Funds as an Unlimited Partner. #SupportBlackEntrepreneurs

We’re excited to share that we have brought on a new full-time Director of Fifth Star Funds: Joshua (JT) Taylor   Hailing from Houston, Texas, JT has extensive experience in the startup world. JT is a black founder himself, has worked several positions in the venture capital space, and has a passion for nonprofits. We are excited for JT to join the Fifth Star Funds community and continue growing the mission. “I joined Fifth Star Funds because I am Fifth Star. I understand the direct obstacles founders are going through and go through in their early stage journey as a former founder and current investor. Fifth Star Funds needs to exist to ensure underrepresented founders have a chance to succeed at the earliest stages of their company building story. The mission and vision is bigger than me and I am honored to be representing Fifth Star Funds.” - JT, Managing Director