We invest in overlooked and underestimated startups led by women, people of color, and/or LGBTQ+ founders in all industries. We invest in scalable, venture-backable startups whose founders live and breathe their product or service. We look for founders that are destined to be doing what they’re doing. This can be in a variety of industries or business models.
Backstage Capital is a venture capital fund and therefore looking for highly scalable companies that can return our investment 10x or more. Ideally, the market your company is in is large enough to build a $1Billion business out of it and you have a solution to a problem that is levels superior to the alternatives in the market.
We invest in Pre-Seed to Series A rounds, and sometimes beyond. We are looking for ways that you have validated the business for the stage that you are at, and most importantly, why you are the right founder to make your concept a success.
Not necessarily. But we want to see that this venture is important to you and you are invested in the company, and have a path to committing full-time with resources.
Primarily the US at the moment, but we have invested outside of the US with the right opportunities.
We mostly follow by coming into a funding round with existing terms, but we can lead as well. The majority of our investments are $100k and can go up from there depending on your round. We invest via SAFEs, convertible notes, and priced equity rounds.
It depends on our funding cycle. We have so far invested in 180+ companies in the past 5 years. When we are actively looking, it could be a few investments a month.
We do get a lot of applications and work hard to review every company that comes our way.
The process: We gather information about your company through the application you submit. Our investment team reviews applications on a regular basis and decides which companies we would like to follow up with for a further conversation, and follows up with those who are not a fit. The conversation would be with one or more members of our investment team and we will likely ask for further data as needed. This information gathering and discussion process will vary depending on the type and stage of your company. Our team debriefs from there and makes our investment decision. Once our commitment is made, we then sign investment documents, wire funds and execute contracts.
We encourage founders to reapply if you would like, as we know you may have made updates or progress to the business that we are happy to consider again. We also connect back to companies that we wanted to invest in but couldn’t due to our funding available at the time.
We offer our Headliners (portfolio companies) support including mentorship, fundraising support and being included in our active community of other Backstage founders and our network of investors.
Backstage Capital focuses on investing in companies led by underrepresented founders (women, people of color, and LGBTQ+). Most of these founders have been overlooked or underestimated, whereas, as Brittany Davis (General Partner) puts it, “We make it our intention to find these founders.”
We find founders who have good metrics, and we try to stay “industry agnostic,” meaning that we don’t want the industry to play a large role in our decision. We often discover these founders at their early stage and track them for a few years (often investing in them at least one round prior to presenting them to the syndicate), which means that when we present them to you, we’re confident that it’s a great investment opportunity.
Backstage Capital examines traditional investment criteria (team, addressable market, idea, competitors, etc.), while also pattern matching for grit. We’re attracted to strong founder/product-fit, and are hyper-conscious of those indicators that may slip by a more traditional critique.
Backstage Crowd is the name for our syndicate. An investment syndicate describes several people (usually accredited) joining forces to invest in one company. In this case, Backstage Capital & Arlan choose from the “deal flow” (the traffic of businesses to invest in), and then investors (you) will choose whether you want to invest on a deal by deal basis.
The SEC defines what it means to be an accredited investor.
In general, accredited investors meet one or more of these requirements:
– Make $200,000 in annual income as an individual
– Make $300,000 in annual income with a spouse
– Have at least $1 million in personal assets (not including your permanent home)
– There are other ways you can qualify (see your CPA or legal for more info)
Backstage Crowd works with approximately 1,000 accredited investors on 2-3 deals per month. For non-accredited investors, we carefully curated recommended public crowdfunding deals from our portfolio and deal flow, and link those non-accredited investors to these deals on 3rd-party sites (like republic.co, Wefunder, and SeedInvest).
While we must work within the confines of the SEC’s definitions of accredited investors, we are hopeful that one of two things will happen: either you eventually become accredited by these criteria and we will meet you when you do, or the SEC will change the criteria sooner than later. (For more information on Arlan’s thoughts on this, listen to her guest episode of NPR’s Marketplace.
At Backstage Capital, our partners have autonomous investing abilities, but we always collaborate on making decisions. You can rest assured that by the time the syndicate sees the deal, we’ll be all-in as a firm.
Yes. It will be almost the same process, but you may need to prove your accredited status in a different way through our third party back office.
It will vary, but generally it will be $1,000 to $2,000 minimum per deal. In some cases, it will be as much as $5,000 or $10,000 depending on the deal terms.
Previously, it was only 99 (legally), but it’s now 250. Here’s how it works:
If Backstage Capital agrees to support a business, we may negotiate the ability to invest $500,000 out of the $2 million the founders need. Backstage Capital will then take the business to the syndicate, providing company information, deal terms, and supporting documents including a Backstage-generated investment memo. Then, the members of the syndicate decide whether you each want to invest. Usually 30 – 100 individuals will back each deal at $2,000 – $4,000 average, with as little as $1,000 (if the minimum) and as much as $50,000 depending on individual preference.
Backstage Capital manages the deal top to bottom, and the Backstage investment shows up as 1 entity on the company’s cap table (which they appreciate!).
We see ourselves doing 30 to 50 deals per year, but it depends on the deal flow, the appetite of the investors, and how long it takes to close each deal. As a case study, between June and October 2020, we had 10 deals, for a total of $1.6M invested.
In order to verify you are accredited, you will need to upload documents the first time you make an investment. After that, you will need to keep your information current every 3 to 6 months. If you already have accreditation from a third party like AngelList, that is acceptable. The amount of time allowed between needing to upload will depend on which method you choose to prove accreditation. More details inside the deal rooms.
Yes, if Backstage invests in the same round as the syndicate, we will be investing under the same terms. Please note: our information rights will be different than the syndicate’s in most cases.
Generally, it is expected that syndicates have limited contact and updates, since we want founders to be able to focus on their work. Founders will provide updates semi-annually to syndicate investors.
We generally take Seed, Series A, and Bridge rounds to the syndicate.
Venture investing is inherently risky and illiquid. Payouts will be on an individual basis. A lot will be early stage, so that investment will be illiquid for several years.Keep in mind that the process will take time, and there’s always a chance that some businesses will go under. You should think of these investments as a lottery ticket: there’s no guarantee you’ll get your money back.If you have the means, we encourage you to spread your investments out over a few different opportunities.All payouts will be handled by our back office, Assure.
Generally, 1 to 2 x per month.
No. Backstage Capital won’t ask the syndicate to take a risk with a company that we decided to pass on.
That will be determined on a case by case basis. In many cases, there will be extremely limited information rights for the syndicate.
To start, we highly recommend Arlan’s book It’s About Damn Time as well as Arlan’s Academy online courses. If you want to learn more about investing, Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist by Brad Feld, and Angel: How to Invest in Technology Startups by Jason Calacanis all offer great advice and information for both new and veteran investors. Arlan’s podcast, Your First Million, has 3 great episodes to dive into, including this interview with Jason Calacanis, this interview with Paige Craig, and this hour with Arlan on syndicate strategy.