US-based venture capital firm Black Star Fund is eyeing the Caribbean as it expands its reach to offer funding for companies in Africa, the United Kingdom and the Caribbean.

The fund, which was started in 2019 in Sacramento, California, and has US$12 million in assets under management, is aiming to finance “high-growth and scalable companies” founded by people of African descent, according to co-founder and CEO Kwame Anku.

A panellist at the recently held TechBeach Retreat Jamaica 2022 at Iberostar Resort in Rose Hall, St James, Anku shared while discussing the topic ‘Scaling and Venture Capital: Building an Efficient Capital Stack to Drive Growth’ that his interest in the Caribbean was piqued after attending TechBeach Miami in late October.

“We’ll be expanding from solely focusing on the United States to Africa, UK and now the Caribbean. And I say now the Caribbean because I had the privilege of attending TechBeach Miami and I was so impressed by the Caribbean founders who came and the calibre of their intellect and the potential I saw in their companies, that I actually made a decision to add the Caribbean as a part of the global footprint of the next fund,” he told the Jamaica Observer at the end of the conference.

“I believe that there’s not a lot of attention focused on the extraordinary and talented black Caribbean founders,” he added.

In this regard, the co-founder shared his preference for financial technology companies, noting that he has recognised that more black founders have ventured into the payments and remittance space with a deep understanding of the importance of moving money across borders. Moreover, he expressed an interest in e-commerce, highlighting that the trend among developing economies is to be net consumers rather than creators of innovation.

“One of the things we see in my home country of Ghana is that we produce all these incredible natural resources but we’re constantly importing everything from everywhere else. So what happens when raw goods and products are sourced within the Caribbean not only from one another but for the Caribbean Diaspora, and those who are not even part of the Caribbean Diaspora who love the products, those kind of platforms help to create ease of access to goods, services and products that are made by Caribbean entrepreneurs, and that’s something I’m actually very interested in,” Anku said.

When Sunday Finance questioned Anku about the name Black Star Fund, he responded that it is multi-dimensional. First the name is an homage to Jamaican National Hero Marcus Garvey, who pioneered the pan-African movement in the United States and founded the Black Star Line vessel.

Additionally, he said it also pays respect to Kwame Nkrumah, the first president of Ghana, where Anku’s parents are from. The Ghanaian flag also bears the black star.

“What really connects both of them is economic self-determination and economic empowerment of Africans and the African Diaspora,” Anku stated.

He further argued that Garvey was trying in 1922 to “rebalance the equation” and that Black Star Fund also aims to do the same but with the advantage of technology. Expressing amazement at how the Jamaican was able to canvas such a large following without innovations such as the Internet, e-mail, cellphones or social media, Anku said accomplishing the dream of Garvey can now happen at light speed.

“So think about TechBeach Retreat where deals were [brokered] and new friendships and partnerships were made. But when we connect, we’re connecting on WhatsApp and we’re connecting on LinkedIn, and then we’re connecting all of our friends and business partners to one another in minutes,” the Black Star Fund CEO detailed.

While noting that technology has improved, Anku said the company is operating with the same principles as Garvey but with tools that can scale at a much better pace.

When asked about his use of the terms “high growth” and “scalable”, he indicated that it doesn’t refer to the growth stage of the company but rather its ability to create solutions and drive demand for its products.

“We’re talking about what we believe if the company has the potential of being a $100-million-plus company. It might have two people right now, it might only be doing $10,000, but does that company have the ability to be a $100-million company one day, let’s say within five to seven years,” Anku stated.

“The easiest way to think about it in terms of identifying a high growth and scalable company is ask if the company is solving a problem for enough people that if they were paying for that solution it would create a hundred million dollars in revenue,” he further outlined.

So far, Black Star Fund has invested into 19 companies with the gender parity for founders being 50:50 between male and female founders. However, the company has invested 60 per cent of capital in black female-led companies.

Anku boasted that only one company has failed over the two and half years of funding.

“So it speaks volumes — less about how great we are as investors but more to how great an investment opportunity black founders are because you don’t see those numbers in venture capital,” Anku boasted.

“Mainstream venture capital says invest in 10 companies, seven will fail, two will return capital and one will make all the money, We went into this with the audacity of thinking we can flip this model. So instead of having one unicorn, what if only one failed?” he questioned.

Quizzed about when Caribbean founders can expect the investments, Anku said he will first have to find investors in Jamaica and then build partnerships locally and throughout the region.

“There’s something very special about this country; there’s such a strong connection to Ghana, which I think is also a pull to me personally,” Anku noted.