Leveraging underrepresentation as a minority entrepreneur

Minority communities tend to be underrepresented, but the main barrier is being underestimated, especially in the financial services industry. These underserved communities face unique systemic barriers and challenges to owning and scaling a business.

Arlan Hamilton, the founder of Backstage Capital, talks through her book It’s About Damn Time: How to Turn Being Underestimated into Your Greatest Advantage in the Your Next Move live-event series by Inc. in partnership with Capital One Business. 

In Hamilton’s experience, she had difficulty breaking into an industry dominated by white men, but she was able to take on these roadblocks and use them to create an advantage. "I saw a world that felt like I did on the inside,” said Hamilton, whose firm invests in women, LGBTQ+ founders and people of color — and who identifies as all three. “I saw that passion and that moonshot thinking, and the optimism that was unbridled, and creativity that couldn't be measured.”

To identify underrepresentation and underestimation, let’s define what it is and how it affects minority entrepreneurs and the LGBTQ+ community.

Underrepresentation is defined as a statistical difference in the demographics of a given population. In business, this may present itself as not having enough diverse voices and employees in a company meeting room, or even not having enough funding to be a viable competitor within their industry. 

Underestimation is defined as the belief that minority individuals have to work to overcome and correct initial impressions of those who have already made assumptions.

Hamilton noted the difference between underestimated and underrepresented like this: “The word underrepresented has this instant connotation of being the other, the less-than, the not-to-be-taken-as-seriously. As if they’re the ones who need more help.” 

“And the word help is used more than backing or funding,” she said. “But the word underestimated just reinforces what we already believe about ourselves, which is that you just haven't caught up yet. You just don't understand yet.” 

Minority communities work to overcome the challenges of both underrepresentation and underestimation at the same time. These challenges have a greater impact on minority communities because they have to divide their focus between these barriers and every other task on hand.

At Backstage Capital, Hamilton works to break down barriers to the status quo. There’s space for everyone and anyone who wants to be in this industry, but it won’t come without its challenges. 

Hamilton found that underrepresented and underestimated founders need different types of support.
In her experience, “We find that underrepresented, underestimated founders tend to be over-mentored and underfunded. So, we do have a mentorship program, but it’s about access more than anything.” 

Hamilton also shared her views on what's to come as more companies and individuals become aware of the inherent disadvantages. “My thinking was, if someone were to figure out how to challenge this status quo, the opportunities that lie ahead would be immeasurable. And not just for underestimated, underrepresented founders—but everyone.” 

There’s hope for new investors and founders coming into the space. "You see this wonderful new generation of angel investors and of syndicate investors and small fund investors who are coming into their own and really bringing a fresh perspective to things, “ Hamilton emphasized. 

From an investor’s point of view, the new generation is looking past underestimation and using it to their advantage instead of being stuck in the belief they couldn't achieve their aspirations. “Thank goodness that the majority of them didn't get stuck in this belief that they couldn't, that they felt that they were underestimated rather than stopped at the door."

Hamilton noted that when the savvy investors she knows hear underrepresented, they’re often hearing homework. “But if you say underestimated they hear the word challenge — something untapped, something interesting and intriguing that I haven’t learned enough about. You immediately tap into something on both sides that makes everybody rise to the occasion,” she said. 

Here are some ways you can use underestimation to your advantage. 

• Prove people’s assumptions wrong. Before walking into rooms — literally and figuratively — remind yourself of who you are, where you come from, what strength lies within. It’s not about proving the person wrong, but their assumptions. What do you imagine they’re assuming about you? 
• Leverage your value. Be confident in the qualities you bring to the table. Find the things that make you unique and stand out from the rest. If you’re unsure on how to find that leverage, start to reverse engineer your dreams. Ask yourself what type of company you’d like to work for and the type of boss you’d like to be. And if those don’t exist, build your own. 
• Evaluate each challenge differently. Understand that each situation will be different from the rest. Recognize that change and adversity is inevitable, but within each are valuable lessons, memories and opportunities that add to your experience. 

"I'm realistic: There's active racism in this world of startup investing and startup creation,” said Hamilton. “There's active misogyny; there's active homophobia. But by and large, what I notice over and over again is that it’s just a really incredible world that was meant for us all.” 

Both inside and outside of Capital One, we’re committed to celebrating and supporting diverse business owners and the LGBTQ+ community. No matter your pronouns or how you identify, we’re an ally, and we welcome you for who you are and the perspective you bring. 

To learn more about using underrepresentation as an advantage, as well as other insights and resources to help move your business forward, check out the Capital One Business Hub.