Hue founders (left to right) Nicole Clay, Janvi Shah and Sylvan Guo use AI to personalize cosmetics recommendations online.
Hue, Hey Zinah Photography
Venture capital funding for Black-led startups has plummeted. And following the Supreme Court’s June 2023 decision to dam minority advancement in college admissions, diversity, equity, and inclusion (DEI) programs are under fire. Just last month, the eleventh Circuit Court of Appeals issued a preliminary injunction stopping the Fearless Fund from awarding grants exclusively to Black women entrepreneurs—which is its very mission.
But Google for startups is not backing down. Recently, the corporate announced that its Black Founders Fund and Latino Founders Fund have together awarded grants to a complete of 20 startups, all with business models that leverage artificial intelligence. Each founder will receive a non-dilutive money award of $150,000 (in other words, Google won’t get any equity for its money) and $100,000 in Google Cloud credits. They’ll also get access to mental health resources and mentorship from Google experts in AI and sales.
Accordingly CrunchbaseFunding for Black founders fell 71% in 2023, nearly twice as much as overall VC funding. Google for Startups says it has invested $50 million in Black and Latino-led startups since 2020, which have collectively raised over $590 million in follow-on and other funding.
The startups receiving money from Google this yr cover a wide selection of areas, although all of them use AI in some form. Aceptus of Glenwood, MD, offers an intelligent home energy management system designed to optimize energy use and reduce costs. Beta Financial ServicesBased in Chicago, Illinois, the corporate is committed to eliminating human bias from the deposit and lending business. AbundantHeadquartered in San Francisco, California, focuses on agricultural technology and provides insights into the impact on crop production at each the sphere and scale levels. AI changeNew York City-based company offers software that allows industrial landlords and company tenants to attain net-zero goals by decarbonizing their facilities. Subscribe tobased in Los Angeles, California, operates a recruiting platform designed to assist students transfer from community colleges to four-year degree-granting institutions. Rain jacketin San Juan, PR, is developing a brand new type of climate insurance.
One of the businesses receiving a Google Award this yr is Hue, which was listed by Forbes on the 2023 30 Under 30 list within the Retail and Commerce category. While studying at Harvard Business School, Hue co-founders Nicole Clay and Janvi Shah joined a Zoom call hosted by HBS graduate Vicky Tsai, founding father of Tatchaabout the best way to change into an entrepreneur in the sweetness industry.
“I love telling this story. Sometimes I get a little emotional. I was on the call and Janvi happened to be there. I think I asked a question and later she snuck into my Slack account and said, ‘Hey, my name is Janvi. I worked at Google Photos and I have this idea that I’d like to share with you,'” Clay recalls. “We started what I call ‘founder dating,’ we had coffee, talked about the idea and eventually met at my house. There were sticky notes everywhere. We quickly realized there was a need for people like us who were building technology in a very empathetic way.” They later brought on one other HBS classmate, Sylvan Guo, as a co-founder.
Hue has raised $2 million from NFX, Underscore VC and other investors, but Clay says it’s still a challenge for Black founders to get sufficient funding. She believes the type of mentorship support Google offers, including within the “often overlooked” area of mental health, is crucial.
The Hue platform uses artificial intelligence to personalize online makeup shopping. Shoppers take a one-minute quiz about their skin tone and complexion, then receive color recommendations and video and photo reviews from real customers with similar skin tones.
“We interviewed hundreds of customers and began to understand their shopping journey, specifically why they weren’t converting on websites. Almost every one of them opened Google or TikTok, with TikTok emerging as the new Google. When we asked them why they were using TikTok, they said they were looking for someone like themselves,” Clay explains. “That got me thinking about my experiences as a kid shopping for beauty products or other things like hair care or fashion. I’m always looking for someone like me to build trust in a product beyond the brand’s claims. Seeing myself represented in a brand is crucial.”
According to McKinsey & Co 2022 reportonly 16 of 213 venture-backed beauty firms have Black founders. But Black consumers are 3 times more more likely to be dissatisfied with their hair care, skincare and makeup options than non-Black consumers — meaning there is a huge untapped opportunity here. In fact, the report finds that while Black venture-backed beauty brands raised a mean of $13 million in enterprise capital, in comparison with $20 million for non-Black brands, their revenue was 89 times higher than that of non-Black brands through the period studied.
