Startup founder Melissa Hanna says more Silicon Valley investors need to be courageous and invest in people 'who are not like them'

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Melissa Hanna is the co-founder of Mahmee, a Los Angeles-based prenatal and postpartum care management platform that looks to increase positive health outcomes for moms and babies.
In 2015, Mahmee participated in the early-stage venture fund and seed accelerator 500 Startups, and Hanna soon found herself in fundraising talks with other potential investors.
When pitching her startup to Silicon Valley investors, Hanna said she was questioned incessantly about her background and credentials, a fact many founders of color face in an industry that gives 0.0006% of capital to black women.

Melissa Hanna worked hard to be able to sit across the table from some of Silicon Valley's top investors. However, she didn't think she would be called "spunky" and "cute" — especially not while pitching her all-in-one platform for managing care of pregnant women and children, Mahmee. But she did.

"One of the challenges underrepresented founders, like myself, are facing today is we don’t have the typical backgrounds compared with the previous generation of founders in Silicon Valley," she told Business Insider. "We don’t fit in to the San Francisco, Palo Alto white boys club."

It should come as no surprise white men receive the bulk of venture funding. Investors are more likely to give capital to those who resemble them — on paper and in person. And even though companies built by black women generate millions of dollars, they receive 0.0006% of venture capital, according to Project Diane. However, statistics like this are not stopping founders like Hanna.

black women start ups venture capital funding chart

Held to a higher standard

Hanna founded Mahmee in Los Angeles with her mother, Linda Hanna, in 2014 when they saw the disconnect between large healthcare providers and the networks of independent maternity care professionals who are not doctors, like nutritionists or lactation specialists.

In 2015, Mahmee participated in the early-stage venture fund and seed accelerator, 500 Startups, while Hanna and her team built out their all-in-one platform, which connects healthcare systems with maternity experts. Soon, she was in fundraising mode: face-to-face with high-level venture firms.

But after leaving one meeting a few years ago, she felt distraught. In a room full of men, one senior investor began questioning her law degree because he had never heard of Southwestern University — the private college in Georgetown, Texas where Hanna received a full scholarship.

"He made it difficult for me to pitch to the rest of the group, and the other men, because he was older, they didn’t say anything or stop it from happening," she said.

In a December 2018 study by Morgan Stanley, investors who were surveyed did "not see the significant funding imbalance" for women founders despite making "imbalanced investment decisions" and holding minorities to higher standards.

Calling courageous investors

The number of black women entrepreneurs is doubling each year, but the percentage of venture capital raised is practically non-existent. Of the $424.7 billion of funding raised since 2009, only $289 million went to black women.

This sort of transactional inequality among capital gatekeepers toward minority entrepreneurs is what Hanna called a two-way street.

“We can work on coaching more people of color into STEM, we can create more programs that help early-stage founders grow their businesses, we can do all these great things to help the founders and their companies," said Hanna in an interview with Business Insider. "But it’s also about the investors being courageous enough to take risks and invest in people who are not like them.”

More money than ever before is going into increasing the number of women of color in the digital space with organizations like Black Girls Code and Google's Women Techmakers. But increasing the number of minority women in the tech pipeline is just part of the equation, tackling hypocritical investors is the other half — something "we can't change on our own," Hanna said.

"I see people that tout themselves, and are very proud to say they support diversity and inclusion and that they are interested in taking meetings with non-typical founders," said Hanna. "That’s great. But meetings aren’t funding. People take meetings all day, they don’t write a check."

Mahmee plans to expand into Pittsburgh in 2019, where it will begin to undertake the city's growing infant mortality rates.

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