WOC entrepreneurs get funding from Backbone Angels

Arati Sharma never expected to become an angel investor. The child of Indian immigrants, she grew up middle class in Canada, graduating from McMaster University with a political science degree, and starting her career as a lobbyist in Ottawa.

“I wanted to be C. J. Cregg from The West Wing,” she tells Fast Company.

However, she found her niche helping out with social media strategy, and developed expertise in branding and project management. She brought these skills to the tech world and landed a job at Shopify during its early days. Sharma played a key role in building up product marketing.

When Shopify’s stock went public, Sharma enjoyed a financial windfall and started investing. But she started to realize that most of her and her husband’s investments were going to white men and a few white women.

“My husband is also South Asian, and all we do is talk about diversity and women in tech, but this portfolio wasn’t representative of what we believed in,” says Sharma. She decided she was going to spend a year investing only in women. But then, halfway through, she realized her portfolio was predominantly made up of white women and that she would need to be even more focused in her goal of diversity.

Sharma and nine other Shopify executives—who’d bonded by often being the only women in the room—decided to create Backbone Angels in 2021. The group’s mission is to fund women and nonbinary entrepreneurs, with a focus on founders of color.

In recent years, venture capital money has gushed forth from investors: Last year, global investments totaled $643 billion, a 92% increase from 2020. Yet female entrepreneurs, especially female entrepreneurs of color, are not seeing their share of the cash. In 2019, women received 2.8% of funding—an all-time high that dropped to 2.3% in 2020. That year, Black woman received 0.64% of venture capital funding, according to Project Diane.

Backbone Angels, in its first year, invested $2.3 million in 42 companies, and 56% of its investments were in companies led by women of color.

“We’re constantly combating bias as women of color,” Sharma says. “We’re often overlooked.” She points out that seasoned venture capitalists often assume she’s yet to cut checks, when her portfolio includes 50 companies.

Sharma cites a noted TED Talk from Dana Kanze, an assistant professor at London Business School, who explains how women founders are treated differently from their male counterparts right from the start. When women walk into a room to pitch, they are immediately put on the defensive. Investors tend to ask questions about how they’ll retain customers, whereas men are asked questions about how they’ll grow their customer base.

Sharma has an inherent understanding of what it means to be a founder. Her passion for products has also led her join Ghlee, a beauty brand started by her brother, which sells ghee-based skincare and lip balm. However, even though Sharma is growing Ghlee, she’s eager to invest in other South Asian beauty products as well. “We’re not in competition,” she says, “and when we’re a category more people will take us seriously, especially investors.”