3 Black Investors Talk About What They’re Looking For in 2023 • TechCrunch
Founders and investors both are preparing for a tough 2023 as the economy shows little sign of recovery. But there are many questions in the air: Will the truckload of dry powder VCs have reached the market? Will there be more layoffs if the pressure on valuations continues? What’s in store for AI?
However, we can answer some questions: some trends are bound to remain, like interest in artificial intelligence, and crypto will continue to be under scrutiny, although the market looks to the future. There are other aspects of the venture world that are unlikely to change, such as the lack of funding for minority and female founders.
To find out how minority investors are planning for 2023, we spoke with three active black investors. For Xfund’s vice president, Jadyn Bryden, the creative economy is a hot spot worth watching in the coming months. “I expect to see continued movement in the creator economy as more people venture out to build their own brands and rely on new tools for content creation and monetization,” she said.
Alexis Alston, principal at Lightship Capital, believes the future will be favorable for companies that build technology to help others do business and reduce costs: “As fast-growing tech darlings start to cut overhead, think I, we will see a strong shift towards companies relying more on sales optimization and content creation tools as a replacement for previously highly redundant teams.”
But investors were pessimistic about capital allocation to Black founders improving next year.
Richard Kerby, general partner at Equal Ventures, hopes more diverse founders will get funding next year, but doesn’t expect a big change. “I think a lot of the narrative that many investors put out about investing in more black founders was mostly just talk and not a lot of substance or actual dollars flowing to black founders.”
We spoke with:
Alexis Alston, Principal, Lightship Capital
Which sectors will you continue to keep an eye on and which trends do you expect to address next year? Why?
I have always been interested in the ever-expanding applications of AI, including generative AI, natural language processing and deep learning. I look forward to seeing how AI can help scale previously human-led areas of business, such as sales, social media, marketing and content development.
As fast-growing tech darlings begin to cut overhead, I think we’ll see a strong shift toward companies relying more on sales optimization and content creation tools as a replacement for previously heavily redundant teams.
What is the most pressing political issue you are watching and how does it affect you as an investor? Want to back a startup that solves any of these problems?
There is a deep undertone resonating right now around the expectations for, or lack of, political oversight of more emerging technology and financial products. Around everything from crowdfunding to crypto, there is a profound lack of oversight that is only now beginning to cause a ripple effect for many of our institutional and consumer investors.
As an investor, the lack of overview has led to ultra-high valuations and unrealistic expectations of exit potential in these nascent markets. Ultimately, the everyday angel investor (who tends to be more representative of the general population than institutional investors) gets the short end of the stick every time.
Given that the percentage of venture capital going to Black founders has rarely exceeded 1%, do you feel that next year will be different? Why or why not?
I’m not sure next year will be any different. If anything, I am very concerned that the number will decline in 2023 as institutional funds either tighten their purse strings or begin seeking criteria for founders that often exclude black founders.