Plenty of pixels have been spilled documenting the mission of Black Founders Matter, from TechCrunch to the New York Times.
What began in 2018 as an apparel company aimed at raising awareness of the dearth of capital allocated to Black founders eventually morphed into a fund and a pledge to nudge venture capitalists toward investments in BIPOC women founders.
On May 31, days before the story about the pledge was published on TechCrunch, the fund presented its founder, Marceau Michel, with an offer to resign.
At first, Black Founders Matter told Michel the deadline to accept was June 7, according to emails shared with TechCrunch. He declined. Throughout June, the fund repeatedly asked him to step down, offering payouts and a seat on the fund’s advisory board. He refused each time.
What exactly happened is still murky. The fund declined to comment, saying it does not “discuss confidential personnel matters publicly,” while adding that it is “confident that the proper procedures were followed and that the transition was in the best interest of the fund and its stakeholders.”
In interviews with TechCrunch, Michel mused about several possibilities for his removal, including a compensation dispute and the fund’s belief he was ill-equipped to perform his job as a fund manager. It’s rare and difficult to oust a fund manager, and it typically only happens in cases of misconduct, fraud, insolvency or when the fund’s health is at stake.
What is known is that Michel is no longer with the fund and his equity has been wholly zeroed out — both Michel and the fund confirmed this. After his removal, an initiative known as the 25 by 25 Pledge, which sought to increase capital and employment opportunities for women of color, became a point of contention between Michel, the fund, and the fund’s managing director, Himalaya Rao. It’s unclear if the controversy around the pledge contributed to Michel’s removal from the fund.
The fund declined to share an update on matters related to Michel’s removal; however, it has since rebranded into the BFM Fund and is led by Rao, who is not Black. Rao, who is of Indian descent, told TechCrunch that the BFM Fund plans to continue its mission of supporting and investing in Black founders. She said she hired a new slate of Black talent to help achieve that objective.
The situation showcases the sometimes fraught reality of operating a fund, where personalities can collide. Michel may no longer be at the fund, but he said his dreams of helping Black founders persist. Rao’s goals are the same.
Both face an uphill challenge — just 4% of all venture capitalists are Black. At the same time, women, a historically underrepresented population among venture investors, are taking more VC jobs than ever before. The turmoil at Black Founders Matter — with one Black investor stepping down and an Asian woman stepping up — shows that continued progress won’t be linear. The industry still has a long way to go.
The backstory
After Michel started selling apparel emblazoned with “Black Founders Matter,” he received a writeup in TechCrunch. During the interview, a TechCrunch reporter asked Michel what he wanted to do besides sell clothes.
“I said I’d love to run a fund that specifically invested in Black entrepreneurs,” he recalled, adding that he made the comment in jest. “That’s how I ended up in venture capital.”
Born and raised in New York City, Michel spent much of his personal and professional life within a local congregation of Jehovah’s Witnesses. He received formal education within the church from the age of eight to 22 before undertaking missionary trips.
He started working at Rogue Venture Partners, a Portland-based early-stage venture capital firm, as an analyst, hoping to learn more about the industry. Around this time, he met Rao, who decided to help him officially turn Black Founders Matter into a venture fund; she would come on as a managing director due to her operational expertise and industry knowledge.
In the beginning, Black Founders Matter struggled to raise money and didn’t see much traction. But after the murder of George Floyd in 2020, it managed to raise millions to invest. Michel and Rao instituted an advisory board in July 2021 to help boost the fund’s legitimacy.
When it came time to sign the manager contracts, Michel said the documents were full of venture jargon he didn’t understand. As a result, he said he missed the part of the contract that stated the board had the power to remove founding fund partners at any time.
“The whole vision behind the 25 by 25 Pledge is that women of color would not be left behind.” Himalaya Rao, managing director, BFM Fund
On May 31, the fund presented Michel with an offer to resign. On June 1, he spoke to TechCrunch about the 25 by 25 Pledge.
Emails later shared with TechCrunch showed the pledge was not finalized when TechCrunch published the story about it on June 3. Who deserves more credit for its creation — Rao or Michel — remains in contention.
On June 7, Michel responded to Rao and the fund, saying he would not leave Black Founders Matter and rejecting the compensation offered. After some back-and-forth, emails showed that on June 22, the fund gave him a June 23 deadline to accept the offer.
That day, he emailed TechCrunch, alleging Rao and the fund were staging a “coup” against him. On June 24, the fund gave him one day to respond to the resignation offer. Instead, he cut their access to the Black Founders Matter website and again declined the offer.
The team then created new emails, designed a new website and rebranded into what is now the BFM Fund.
BFM, take two
By the time Rao met Michel, she had worked at multiple venture funds and built a robust network of industry contacts. She had a significant carry in the Black Founders Matter fund in exchange for performing the fund’s operations and fundraising, portfolio management, capital deployment and compliance.
While declining to comment on Michel’s removal, Rao said she’s excited about what the fund plans to do next. The fund has hired three new people, all Black women, and the plan is to hire two more people this year, including another investing principal. Furthermore, new hires will have equity in the fund and input on day-to-day decision-making, ensuring that the fund remains partially Black-owned and Black-operated.
Rao is also on the hunt for a new general partner, which could be an imperative — one company within the fund’s portfolio told TechCrunch it wouldn’t take any more money from it unless it found a Black GP.
“As we talked about them potentially coming back in or another investment, we made it known that we felt it was really important to have another Black general partner before that happened,” the founder, who asked not to be named, told TechCrunch. “It’s tough to be a fund focused on Black founders if you’ve got no Black founders left.”
Marquita Jaramillo, a newly hired investing principal at the fund, told TechCrunch the fund plans to continue connecting founders with resources to help them scale and that the investing approach will be holistic, meeting founders where they are and helping them grow.
Meanwhile, Rao said the fund will continue working within the local Portland community, including the Oregon Entrepreneurs Network and the Oregon Sports Angels, with whom it created the Emerge Initiative, a drive to provide nondilutive grants to BIPOC founders.
She’s also gearing up to publicly announce the launch of Venture Partners, a nonprofit to help create more diverse fund managers and associates. Jaramillo and the fund’s new associate, Ochuko Akpovbovbo, are graduates of this program.
At the helm of the BFM Fund, Rao said she finally feels free to make decisions that can positively impact the world, which is why she entered this line of work.
“Venture strings are dirty strings.” Marceau Michel
Born in Karimnagar, India, Rao immigrated to the Bronx when she was five years old. She then moved to Connecticut, where she became privy to the stark differences between her native culture and the Eurocentric one prized around her. This taught her an important lesson that would follow her into her career as a venture capitalist: Assimilation is expected and often necessary for survival.
After studying human development at Binghamton University, where she met her wife, Rao received her master’s at Adelphi University and worked as a social worker at an elementary school in the Hunts Point neighborhood of the Bronx. The experience shaped her views on equality as she witnessed the community struggle with a lack of economic and career resources.
“The majority of people in that community were business owners by necessity,” she told TechCrunch. “They had to sell and trade goods in order to survive and keep up an ecosystem.”
Rao said she’s looking forward to explicitly highlighting BIPOC women founders because they remain the most disenfranchised regarding funding and are especially at risk amid the economic downturn.
The precarious status of BIPOC women is the main reason the fund will relaunch its 25 by 25 Pledge and work with other operating funds that focus on uplifting women of color.
“The whole vision behind the 25 by 25 Pledge is that women of color would not be left behind,” Rao added. “We will continue to represent that.”
The new pledge isn’t active on the new BFM Fund website, but Rao said it aims to rerelease it by the end of this year. Michel also intends to keep “championing” the 25 by 25 Pledge and still has access to the old website, though he said he can’t access the results of the initial pledge discussed with TechCrunch.
Michel said his sights are now set on the entertainment industry and that he’s already in contact with production companies about a startup reality show. Like Rao, his goal remains to help Black founders access capital, and he wants to create a Black Founders Matter foundation to give grants to Black businesses. For now, his journey in venture capital is finished.
“I don’t want to give money to Black entrepreneurs anymore with strings attached to it,” he said. “No more venture money … Venture strings are dirty strings.”