The venture funding statistics around African American female startup founders are startling. Of the 10,238 venture deals from 2012 to 2014, only 24 went to black women (just 0.2%). And African American female-led startups on average raise just $36,000 of funding, according to a report by #ProjectDiane.
In fact, only 11 startups founded by black women have raised more than $1 million in VC funding, the report found.
Star Cunningham, founder of 4D Healthware, is working to add another name to that list, and made a big step toward that goal by raising $710,000.
4D Healthware announced the new funding Monday, which will help grow the company’s real-time personal health dashboard. 4D Healthware uses health data from wearable devices like Fitbit to help people with chronic conditions monitor their health more effectively, with information sent to your phone and computer that’s read like warning lights on a car dashboard.
“If you think about driving your car, you have all of this maintenance that you have to do or a light will come on,” Cunningham said. “Well, why don’t we have something like that for our bodies? 4D Healthware is designed to do that and be that tool that tells you more than eat right, exercise, drink more water. It tells you specifically what you can do to improve your health.”
If you’re diabetic, for example, 4D Healthware works with your activity tracker and Bluetooth-enabled glucometers and wireless blood pressure monitors to keep patients informed in real-time on their condition. On the 4D platform, patients will see yellow and red warning lights if something is wrong, and potentially catch a serious problem before it arises.
Cunningham, who launched 4D Healthware in 2011 after almost 10 years at IBM, is one of only a handful of African American female entrepreneurs in Chicago. She acknowledged that she, like other minority founders, found it difficult to initially raise funding, and pointed to one major reason why people of color struggle to secure venture dollars: Minority founders often have a harder time raising a friends and family round.
A friends and family round helps give startups early traction and is a metric some venture capitalists take very seriously, Cunningham said. A minority founder, who doesn’t come from a rich family or doesn’t have a network of wealthily friends, is already at a disadvantage, she explained.
“One of the first things you hear as an entrepreneur is: How much have your raised to date?” she said. “That friends and family round is a significant round.
“When I went to my family to ask them to invest in my company, this was all so new to them. It’s foreign to them. I did have family members who did invest, but my friends and family round was extremely small. There’s no one in my family that would write a $25,000 check.”
The solution, Cunningham said, is that investors may need to be willing to invest earlier in minority-led startups.
“An understanding has to be arrived that if you are going to invest in an African American-led company, especially one led by an African American female, you may have to invest sooner,” she said. “You may have to invest earlier, because they (may not) have access to the resources that others have access to.”
Cunningham ended up raising just under $64,000 during her friends and family round, and 4D Healthware’s latest funding brings its total raised to nearly $674,000. The round included a mix of private equity and angel investors, like Allen Caviles and James Kelly.
With the 4D Healthware dashboard, both patients and physicians have access to a person’s condition, and can check how they’re progressing towards goals, and if they’re on top of their medication. The platform works with more than 250 fitness trackers and other connected health devices, and can send messages throughout the day to help people stay healthy.
4D Healthare is in the process of onboarding of new healthcare clinics across the country, and primarily works with patients dealing with obesity, hypertension, and diabetes.
“(With 4D Healthware), you will be able to see your red lights, or your warning signals, in a very easy to understand way,” she said. “And you’ll be able to interact with that data and interact with our patient engagement advisor to put you on the right track so we turn that red light green or turn it off.”
4D Healthware said it plans use the funding to continue to invest in its technology and to grow its service teams. And Cunnignham says she’s continuing to work to grow the number of African American women who’ve raised $1 million in venture capital.
“Being an African American female entrepreneur, there’s not a lot of us, even fewer of us in the healthcare space, and fewer of us in the technology space,” she said. “When you look at the numbers, the challenge is, how do you shift the thinking of those who do invest?”
Update: After publication, 4D Healthware said they secured an additional investor in their seed round, bringing the funding to $710,000.