Bridging the Racial Gap in VC Funding
Booth’s Daniel Rogers, ’13, and Seyi Fabode, ’10, have won funding from a new Google program dedicated to bolstering promising Black-founded startups.
- By February 02, 2021
Across the United States, Black founders receive a fraction of the venture capital that white entrepreneurs do. In Chicago alone, just nine Black-founded startups have managed to raise $1 million or more, compared with hundreds of non-Black-founded startups, according to Chicago Inno. These racial disparities in funding are the motivation behind the Google for Startups Black Founders Fund, which provides cash awards and technical assistance to help Black startups flourish. Google recently named two Booth alumni entrepreneurs among its award recipients: Daniel Rogers, ’13, founder of the Chicago-based student-loan program A.M. Money, and Seyi Fabode, ’10, cofounder and CEO of the water monitoring system Varuna Tech, based in Chicago and Austin, Texas.
“It’s a big confirmation of the work that we’ve put into the company,” Rogers said. “Obviously, it’s not uncommon for Booth people to raise venture capital, but for an African American, it presents its own unique challenges. Having a large organization like Google step in and say ‘We believe in what you’re doing’ is a big affirmation and helps us continue to grow.”
Fabode echoed similar sentiments, adding that the award helped affirm the impact his company could have to potential investors.
“There’s the recognition that Black founders have a much more difficult time in raising money to build companies, and this was Google’s attempt to help bridge those gaps,” Fabode said. “We were doing a proper funding round right before Google gave us the money, and the Google award ended up being a catalyst for a few of the folks that ended up investing.”
Below, Rogers and Fabode shared the origins of their respective startups and their plans for using the funding from Google to support their missions.
Fostering Student Success at A.M. Money
Daniel Rogers founded A.M. Money in 2016 to make it easier for low- and middle-income college students to access loans. The startup was inspired by personal experience: after leaving the military and transferring to a four-year college, Rogers couldn’t get approved for a loan without a cosigner.
“There was a very real fear that I’d have to drop out of college, move home, and start from scratch,” he explained. “I tell that story because I think it encapsulates many of the challenges our students are facing right now. As COVID-19 hit, many of our students found themselves in an even more precarious situation: the job they depended on was no longer there. The parents who had been able to support them weren’t able to anymore.”
In addition to providing flexible and affordable financing, A.M. Money offers students hands-on support navigating these challenges to help them stay in school and increase their chances of success after graduation. This includes helping them request additional funding from their financial aid office, file for unemployment, and search for affordable housing. A.M. also hosts virtual “career boot camps,” where students can hear directly from companies about internships and job opportunities.
“It’s meant to help students build their networks and understand what is possible and what it takes to work in certain places, not unlike what happens at Booth as an MBA student,” Rogers said.
A.M. Money actually got its start at Booth, where Rogers participated in the Turner MBA Impact Investing Network & Training (MIINT) program through Booth’s Rustandy Center for Social Sector Innovation, which helps students to source and conduct early-stage impact investments. After graduating, Rogers was able to work out of the Polsky Exchange and participate in the Polsky Incubator—both run by the Polsky Center for Entrepreneurship and Innovation at the University of Chicago—where he took advantage of mentorship opportunities and networked with other professionals in the student loan space.
“These experiences were very helpful early on to help me wrap my head around the broader potential of what’s out there,” he said. “Because of course I have my own personal story, but that’s not the same as having a good handle on how big the market is or how to think about the market.”
Rogers is using the funding from Google to help expand their core lending activities as well as financial counseling, career support, and other A.M. programs for students of color and vulnerable communities hit especially hard by COVID-19.
Safeguarding Our Water at Varuna Tech
Seyi Fabode has long worked in utilities, having begun his career in the energy sector. He first considered switching to water after the notorious 2014 crisis in Flint, Michigan, when lead contamination caused major health issues among the city’s residents. He officially made the switch in 2018, after a flood in his home city of Austin, Texas, overwhelmed the filtration system and contaminated the drinking water. He knew he could help solve issues with water treatment and testing, and so he cofounded Varuna Tech later that year with the mission to give everyone peace of mind about the quality of the water they drink.
“A lot of water monitoring systems rely on old tools and processes that are unreliable,” Fabode said. “What we do is help them work better. We drop sensors in the distribution system, and we pull that data to help them make optimal decisions, reduce violations, and prepare their employees for the future of work in the water system.”
Two of Fabode’s earliest investors are actually former classmates at Booth: Rohini Pandhi, ’10, and Mike Duffy, ’12.
“Back in 2010, entrepreneurship wasn’t as sexy as it is now,” Fabode said. “The view then was we couldn’t get jobs. Those of us at Booth who had entrepreneurial experience made a good cohort of outsiders and we just stayed in touch over the years. Once I was starting to pull the prototypes off the shelf, I emailed Rohini and Mike about investing, and they were immediately on board.”
Fabode has been taking advantage of Google’s tech support to help build out digital mapping capabilities for small and medium-sized water systems, which Fabode said is essential for adopting a proactive, preventive approach to water treatment.
“Digitally representing their operations is bringing them into the future,” he said. “Even if they choose not to work with us, having that representation allows them to truly start to pinpoint where they have problems in their city.”
Fabode also plans to use the Google funding to bring Varuna’s technology to three underserved cities with predominately minority residents at next to no cost. Additionally, his team will train residents in those cities to become water technicians.
“Our mission really is to make sure people drink clean water and prepare water systems for the future,” he said.