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

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

Why do black and discriminated against founders need to be helped? "Isn't America based on equality already? Our constitution was made so all citizens could have equal rights and opportunities, right?" "I dont think we have much racial discrimination anymore, isn't it 2024?" Well, according to a few statistics you may or may not know, there are several reasons why this is the perfect time why black founders need support more than ever and why Fifth Star Funds exist. 1️⃣ Historical and Systemic Inequities: Access to Capital: Black entrepreneurs receive less than 1% of venture capital funding annually in the United States, despite representing about 13% of the population . Network Disparities: Studies show that 77% of venture capital is concentrated in just three states: California, New York, and Massachusetts, where the Black population is relatively smaller, limiting network opportunities for Black founders . Bias and Discrimination: Research indicates that investors are more likely to fund startups led by people who share their racial and gender background, which can disadvantage Black founders . 2️⃣ Economic Empowerment: Wealth Gap: The liquid wealth of white families is roughly 22 times greater than that of Black families. Supporting Black entrepreneurship can be a significant step towards reducing this gap . Job Creation: Black-owned businesses employ approximately 920,000 people, contributing significantly to employment within Black communities . 3️⃣ Innovation and Market Potential: Diverse Perspectives: Diverse teams are 70% more likely to capture new markets, and companies with more diverse management teams have 19% higher revenues due to innovation . Untapped Markets: Black consumers have a spending power of over $1.4 trillion, indicating significant market opportunities for businesses that understand and cater to their needs . 4️⃣ Social Justice and Equity: Representation: Less than 1% of venture-backed founders are Black, highlighting the underrepresentation and the need for greater inclusivity in the entrepreneurial ecosystem . Fairness: Providing equitable opportunities in entrepreneurship helps ensure that everyone, regardless of race, has the chance to succeed and contribute to economic growth. 5️⃣ Community Impact: Role Models: Successful Black entrepreneurs serve as vital role models. Studies show that mentorship can increase the success rate of new businesses by as much as 50% . When one rises, hopefully we can all rise as a nation and change the trajectory of history starting with Fifth Star Funds. #fundraising #business #venturecapital #investing #diversity

This term might sound fancy, but it's all about keeping things simple!  A SAFE note, which stands for *Simple Agreement for Future Equity*, is basically an IOU for investors in the startup world. Imagine you're an early-stage startup with a brilliant idea, but haven't quite figured out your official valuation yet. An investor sees your potential and wants to jump on board, but doesn't want to pin down a price just yet. That's where SAFE notes come in! The investor gives you money upfront, and in exchange, they get the promise of shares in your company at a discounted rate or a valuation cap (whichever is better for them) when you have a bigger financing round down the line. Think of it as a handshake deal for future ownership, with some built-in flexibility for both sides. Stay tuned for more VC Terms Decoded where we'll break down valuation caps, discount rates, and why they matter! Want to stay in the FSF loop?https://shorturl.at/fnrsx  #VentureCapital101 #Startups #FinancialLiteracy

🎉 Exciting News! Fifth Star Funds has officially received 501(c)(3) status! We can now scale our mission of empowering underrepresented founders nationally and control our own destiny as we work towards closing the wealth gap. Read the full announcement and learn more about this milestone in our latest post!  https://shorturl.at/EKSuo #FifthStarFunds #CloseTheWealthGap

Venture funds can’t invest in companies that don’t exist.  Again: venture funds can’t invest in companies that don’t exist. There are over 6,000 investment-ready black founders in America per year whose businesses are never given the opportunity to get off the ground. The Friends and Family funding round is essential to launching a business. Lack of access to the Friends and Family round prevents thousands of black-owned businesses to launch. Fifth Star provides 'Friends & Family' investment to underrepresented founders. Donations and support create an evergreen fund that will empower entrepreneurs for generations to come.  Join the movement. Subscribe to our newsletter: https://shorturl.at/fnrsx #SupportBlackEntrepreneurs #InvestinEquity #ClosetheGap