How Beta Boom is giving a boost to 'overlooked' entrepreneurs

Beta Boom founder Kimmy Paluch joins Yahoo Finance's On the Move to talk about the disparities in business funding for women and minorities and what Beta Boom is doing to combat them.

Video Transcript

- We're going to turn our attention now to something that we like to talk about with a big smile. And we welcome back to our stream not only Reggie Wade but also Kimmy Paluch. She is the Beta Boom founder. And it's good to have both of you here.

I want to start first with Reggie. And I'm going to turn this over to you to begin this discussion with Kimmy because she is the founder and managing partner of Beta Boom. And it's about impacting and how it invests women, but specifically women of color. So Reggie, I defer to you.

REGGIE WADE: Yes. Kimmy, great to have you on. And we spoke a little bit earlier in the week. And Morgan Stanley actually came out with an analysis that said that overlooked founders of startups could represent $4.4 trillion of opportunity. And we see now that black women are starting businesses at the fastest clip that we've ever seen. How is a Beta Boom helping not only women but people who feel they are marginalized start their new company?

KIMMY PALUCH: Thank you, Reggie, for having me. I'm so excited to be here. That's right. The $4.4 trillion opportunity is real, and we're often talking about how we don't have enough data, but the data is there. And the fact is we haven't seen the needle move in terms of the amount of capital that's going to these groups. So, yes, black women are starting at the fastest pace possible. And they're still only receiving less than half a percent of venture capital dollars.

So our firm is looking at basically leveling that playing field. So we invest, you know, primarily in women and founders of color and other overlooked groups. And what makes us different is we invest a lot more human capital into these companies because writing the check is just not enough. There's a lot of work that needs to be done to tear down access gaps that these founders face.

So we invest, and we then also provide them with a team of product, marketing, sales, and coaches that work alongside them to help them to be more successful and to really influence those outcomes.

REGGIE WADE: Kimmy, we've seen as of late the calls for social justice reform, not only when it comes to things like policing, but in business. Do you feel that the powers that be have more of an appetite to help people of color when it comes to getting capital to their startups?

KIMMY PALUCH: I think yes and no. I think we're seeing, luckily, a big movement and outcry that we need to start being more equitable in how we make our investments. Unfortunately, I think we're seeing a lot of lip service in this area. So many that have come out and said that they're going to start doing things and even kind of the [INAUDIBLE] kind of rules of saying we're going to at least interview and look to these groups.

But the fact is we need systemic reform. This is institutionalized racism and other biases that we're seeing. And so in order for us to really see change in this space, I think we need to be looking at how we make these investments. Where are we getting our deal flow? A lot of times we talk about getting the warm introduction. But if you look at the groups that have been marginalized they're cut out of those networks. So what real action and change are these groups doing?

I think SoftBank's $100 million Opportunity Fund is a great start, and we're seeing that grow. But then we've also seen things like Andreessen Horowitz with a $2 million up to $15 million fund, and that's a fraction of their investments that they make. So I think we're beginning to see glimmers of hope. And with everything with the crisis, we have opportunities that drive conversation.

And now I'm looking for real action because there are many of us making changes, and I think we'd love to see much more capital and real action move toward actually moving the needle.

- Kimmy, I'm curious because you've been in the room with some of the biggest names in Silicon Valley as well as Wall Street-- Bank of America, Google. What's that like for an entrepreneur who's also a person of color?

KIMMY PALUCH: [LAUGH] It's super intimidating. You know, I talk about our startup coaching, and some of that is just instilling belief. We talk about imposter syndrome, and that's basically increased for women and founders of color that are typically not given the social capital that they need and that belief and the representation. We need a lot more stories featured in the media so that people can believe that they deserve to be in those rooms.

So, you know, I think I had in my youth kind of naivete, and I didn't know that I shouldn't be-- should be intimidated in those circumstances. But for a lot of other people, that's not the case. And so I believe that if we can actually prove and show that this is happening, that we are seeing people like Morgan DeBaun and other companies being formed by founders of color, by women, and that the data is showing that, you know, with diverse teams and female founders, the returns are better, that that belief will be instilled and that we will demand that we be in those rooms and demand that we are given those opportunities and to level that playing field.

- Kimmy Paluch is the founder of Beta Boom. We wish you all the best.