Giving Compass' Take:

• Village Capital is launching a program that aims to train entrepreneurs of color by pairing them with local investors and partner organizations to understand the intricacies of building a successful enterprise. 

• What are the barriers for entrepreneurs of color when it comes to raising capital and sustaining a business idea?

• Watch an episode in the Unlikely Duos series that takes a look at how to support entrepreneurs in diverse communities. 

Most startups fund their earliest days with money from friends and family, as well as angel investors. But what if your friends and family are not wealthy — and, in fact, are more on the struggling side of the equation? That’s the stark reality for many entrepreneurs, especially those from diverse backgrounds. The average white household has more than seven times the wealth of a black family and five times that of a Hispanic family, according to 2016 data.

To tackle the early funding conundrum, social enterprise accelerator Village Capital created an initiative called VC Pathways to help early-stage African American, Latinx and female founders get on a solid path to raising money.

The program is aimed at founders who are too early-stage for the usual three-month Village Capital program but have a prototype and, perhaps, a pilot under way. There’s a one-or two-day training when entrepreneurs receive the most important parts of the usual Village Capital training. But the focus is on setting milestones for important points in the process, from friends and family fundraising up to an IPO.

Specifically, entrepreneurs are given several milestones to reach over three months. To help achieve those goals, they’re paired with an angel or local investor, with whom they meet regularly. Each local program works with a different organization that acts as a supporting partner. Ultimately, not every entrepreneur will decide that pursuing venture backing is the right move, and that’s OK.

In other words, the goal is for founders to learn an important lesson that generally takes some entrepreneurs a while to figure out: whether they have a business with the potential for high-growth or an enterprise that is promising but not of potential interest to VCs.

Read the full article about connecting entrepreneurs with startup funds by Amy Cortese at B the Change