Festival Fellow Spotlight: Dan Barker

Tell us about your big idea!

Since the start of the Covid-19 pandemic, there has been an explosion in businesses opened by Black founders, helping to drive the robust recovery and strong employment the U.S. now enjoys. Women founded and co-founded ventures achieve a 35 percent higher return on investment and Black founded and co-founded ventures achieve a 30 percent higher return at exit. Despite the clear entrepreneurial spirit in these communities, they receive less than one percent of venture capital. 

Unfortunately, the problem is only getting worse in the face of the “DEI backlash” — exemplified by last year’s affirmative action ruling and ongoing lawsuits against organizations like Fearless Fund. These efforts are bad faith attempts at using laws intended to promote equality to tear down even modest efforts at closing racial economic disparities.

It’s time to form a coalition of investors, corporations, entrepreneurial support organizations and policymakers who are willing to stand on principle: investing in Black founders is not only good economics, but a moral imperative when these same entrepreneurs are cut out of 99 percent of venture capital funding. This coalition must proactively work to create an environment where those with ambition get access to the resources they need to grow and scale their business.

Several partners are already doing this work, such as the Black Economic Alliance and the Black Innovation Alliance, who are helping to build an ecosystem where Black innovators can thrive. Additionally, some corporate leaders, like JP Morgan Chase’s Jamie Dimon, have stood against the tide and reaffirmed commitments to continuing diversity, equity, and inclusion efforts. 

Our current moment offers an opportunity for clarity. Those organizations who are truly committed to a more equitable and prosperous future must come together and define strategies for pushing back against DEI backlash and advancing the work we know is critically important to closing the racial wealth gap. 

How do Halcyon's programs work? What do founders experience once they’re accepted into a fellowship?

Halcyon has supported underserved entrepreneurs since it was founded in 2014. Sixty-eight percent of those companies have a female founder or co-founder and 93 percent have a founder of color. We know that there isn't a pipeline problem. The problem is a misalignment between who has the capital and who is truly solving our world's most important challenges.  

While all of Halcyon’s programs focus on diversity, equity, and inclusion, two programs in particular focus on closing gaps in the United States for Black and Brown founders. The Future Builders Fellowship is designed for U.S.-based Black, Hispanic/Latinx, and Afro-Latina women and nonbinary entrepreneurs who are changing the world with their bold ideas. And the Opportunity Intensive Fellowship serves two cohorts — one in the spring and one in the fall — of impact-driven business founders in the Washington metropolitan area whose ventures are based in or primarily serve government-designated Opportunity Zones.

Through our fellowships, these founders receive several weeks of training focused on investment readiness and product-market fit. They are also given opportunities to develop their leadership skills and network through partner happy hours and investor breakfasts. They also receive pro bono support from corporate partners, connections to mentors and potential investors, and access to capital via our investment vehicles. Upon completing the fellowship, the founders become cherished members of our alumni and continue to engage in the Halcyon community.

You’ve spent your career working in financial inclusion and entrepreneurship. What do you look for when evaluating early-stage ventures? What makes a business idea stand out? 

There is a competitive advantage for businesses that have impact at the core of their business. Ten years ago, it was really hard to convince people of that truth, but that's no longer the case and the world has moved towards Halcyon’s way of thinking. Some companies are now pivoting to make impact the core of their businesses, but we've had the pleasure of working with businesses that knew this secret all along. 

When thinking about what makes a business stand out and how Halcyon chooses which ventures to funnel resources into, we look at four things: impact, scalability, innovation and talent. We want to see businesses that can be scaled to have meaningful impact in our society and our environment. We are also looking for entrepreneurs that are close to the problems they are trying to solve. These entrepreneurs see the challenge up close, so they are best positioned to be the ones to solve it. Their solutions are usually the most innovative. Those founders also happen to disproportionally be women and people of color. 

This is not a science, and investing in early-stage companies is a high-risk business. One of our core values is being risk tolerant. We are a nonprofit because it allows us to take that risk, because we don’t have the incentive structure driving a return. This allows us to de-risk companies that may be a risky investment because it’s a brand-new idea. The idea is critically important and, what, at the end of the day, distinguishes an inventor from someone who changes the world.

At Halycon, you believe that “impact-driven business is the only viable future for capitalist society, and represents the easiest path forward to solving the problems of the 21st century.” Can you elaborate on this — what transformations must happen for capitalism to be sustainable?

I’m driven by the example of past movements who did not accept that the rulings and policy shutting out historically disadvantaged groups should be accepted on face value. We have an incredible opportunity to move our economy and our society forward. What we need is the political will and the grassroots organizing power to ensure that progress isn’t rolled back.

And we need money. At the end of the day, that's the lifeblood of a startup. Since 2021, we’ve seen new thinking that puts resources behind this idea, but with interest rates and the uncertainty of the market, venture capital is getting skittish. We need to think about how to reorient the risk profile. We focus too much on the risk of impact when there are clear financial, social, and environmental risks when business does not take sustainability and equity into account. There has to be a shift in changing the appetite of venture capital. The people who are going to solve these problems are the people who are closest to them. We need to explicitly focus on these founders, not because of altruism but because they have the best solutions to these problems in their communities.

The views and opinions of the author are their own and do not necessarily reflect those of the Aspen Institute.