Harlem Capital Managing Partner Believes Some Founders Are Ill-Advised: ‘We Push Young Companies Towards VC When Most Shouldn’t Raise’

The business and tech industry has created two flaws, according to Henri Pierre-Jacques, a managing partner at Harlem Capital.

Sharing his thoughts on the investor ecosystem on Linkedin, he said: “young companies are now all called ‘startups,’ implying they are tech-focused when most aren’t […] We push all young companies towards VC when most shouldn’t raise venture capital.

“There aren’t enough ways for young companies that aren’t startups to get growth capital, so they have been essentially forced to become ‘startups’ to target VC.”

For context – back in March of 2020, Harlem Capital closed a $134 million round for their second fund to help make their goal a reality.

It is truly an accomplishment for a Black-led VC firm, where only 3% of investment partners are Black, and it has invested in the likes of Kenyan insurtech Lami Technologies, which is set out to increase insurance penetration in Kenya and the rest of Africa.

Pierre-Jacques, whose company has a mission to change the face of entrepreneurship by investing in 1,000 diverse founders over 20 years, says that what is needed is a bigger pool of financing opportunities for founders.

“We have to create more financing for our early-stage companies to continue innovation outside the tech industry. I’ve personally only seen the following options: SMB loans, often small, nondilutive funding from govt or pitch competitions, revenue-based financing, which only matters post-launch.

“What are some other options you’ve seen?? Provide links in comments as well please. My view is that there needs to be an aggregation of individual capital that can provide $100k-$1M checks to non-technical companies targeting 5-10% returns.”

“These returns are too low for traditional funds given the risk so it has to be individual and/or public capital in my opinion.”

This isn’t the first time he’s used his LinkedIn platform to share his thoughts on the industry or his advice and wisdom to both fellow VCs and founders.

In one other post focused on raising VC funds – he answered a crucial question asked by many – how much should I raise for my first VC fund?

Here are the key things he believes must be answered when raising:

What’s your fund strategy?
Why are you uniquely qualified for this strategy?
What type of LPs are you targeting?
Who are you already connected to? What’s your fund strategy

Why are you uniquely qualified for this strategy?
Picking the numbers is only step 1, but how do you execute that strategy is critical, he added.

Abbianca Makoni

Abbianca Makoni is a content executive and writer at POCIT! She has years of experience reporting on critical issues affecting diverse communities around the globe.

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