With SXSW Swirling, Entrepreneurs Look To Change The Face Of Austin's Startup Scene
Kim Roxie was a student when she first realized there was a problem.
“It was working at a makeup counter while I was in college and coming in contact with so many women who were tired of the way beauty was being done,” she says. “A lot of beige and not enough brown in the cosmetic department.”
The industry disproportionately sells makeup and beauty products to white women, she says, leaving a lot of money on the table. According to Statistica, a market and consumer data company, people of color purchase makeup products more frequently than white consumers.
Then Roxie saw another problem.
“When I looked inside at the ingredients that I was selling people, I almost freaked the heck out,” she says. "I was like – What am I doing? What am I selling people? I started to feel like I was hurting them. That’s when I knew I had to find a better way.”
That spark was enough for her to attend a makeup manufacturing show in New York. After a number of "nos," she found one person who was willing to work with her. From there, she launched Lamik Beauty (Love and Makeup in Kindness), an organic line of products primarily for women of color.
Roxie was a success. She had her own makeup line and a storefront in her hometown of Houston with a solid customer base. But she wanted more.
“I knew that I could scale my company with e-commerce, become a tech-enabled company that could do a direct-to-consumer model,” she says. "But when I looked around in my community, I couldn’t find the resources to get me there.”
Roxie enrolled in small-business programs, but none of those addressed her desire to get bigger. Then she looked toward Austin. She began doing research on startups.
“And I was like, ‘Wait, there’s been this party going on this whole time, where there has been fundraising going on, there have been accelerators, there have been mentors and a network happening that I have not been a part of? Why didn’t anyone tell me?’” she says.
Then she applied to a program at DivInc, a startup accelerator for minority- and female-owned companies. CEO Preston James liked what he saw.
“You have existing customers,” he says he told Roxie. "You have an awesome product, based on the return of your customers. We can help you scale.”
DivInc's three-month program gives owners the tools to move up the startup-investor food chain.
“I think Kim is a great example of a person who started her business as a small-business type, but then wanted to [get bigger]," James says. But she didn't know how to do it.
Roxie's also a good example of a blind spot for needs in the marketplace that white – and likely male – venture capital investors might have.
After being accepted into DivInc’s program, Roxie closed her store in Houston. She plans to relaunch a bigger and better Lamik online in Austin.
“You have to build that culture in order for entrepreneurs to feel like they are included and can be part of the ecosystem,” James says. “So they’re not intimidated, so they are getting access to the resources, and the network, and the mentors, and the things of that sort."
James left Dell after a few decades to get involved in Austin’s vibrant startup environment. He says a friend kept pushing him to become an angel investor.
“And I asked her, ‘Why are you pressing me to become an angel investor? I mean, I’m not rolling like that, you know. I got a little something,’” he says. "So, she said, ‘I’ve been doing this for about 20-25 years in the Bay Area and now here in Austin, and I can’t recall meeting an African-American angel investor.’ And I was like, ‘Whoa.’”
After doing some research, James says, he could find fewer than a dozen publicly known African-American angel investors nationwide. He took the leap.
As an investor, he attended startup demonstration days and pitch competitions. He saw a lack of diversity on both the entrepreneur side and among investors. He was asked to speak about diversity in the startup scene at a number of conferences and panels. According to 2016 data compiled by Pitchbook, only 3 percent of venture capital firms have black or Latino investment managers.
“I just got tired of talking about it,” he says.
From DivInc’s office at Capital Factory in downtown Austin, James and development director Monica Morales are trying to do something about it. They look for founders of color and women they can help take to the next level.
After DivInc, Roxie took the next step last summer and began a program at Sputnik ATX, a next-level local accelerator. Oksana Malysheva, its co-founder and managing partner, says Roxie’s business was too good to pass up – socially and financially.
“There is money to be made,” she says. "Now, once we see ... the founder [with] 10 years of product-market-fit discovery through her store in Houston and 5 million in sales prior to trying to take this nationally – I’ll make a bet on that person all day long.”
“And I’ll speak for all the white-guy VCs out there,” says Joe Merrill, Malysheva’s co-founder at Sputnik, "a good VC – regardless of your ethnicity or background – you don’t assume you know anything. You have to be prepared to learn and be very actively engaged in finding out the truth.”
The truth is Lamik may be an answer to a question that Merrill had never thought to ask. He went out to cosmetic aisles to see for himself — and got excited. Sputnik's investments don’t necessarily have an altruistic focus, but they do focus on great business opportunities.
This is, of course, just one success story. But these small signs of social progress leave those in the local startup scene optimistic.
“There is impact and change that is happening,” says Morales, development director at DivInc. “In the little time that I’ve been here, I’ve seen great changes. I’ve seen the community really get behind us, and we have a lot of people in our corner. So, yes. Change is happening.”As for Roxie, she’ll be spending the first weekend of South by Southwest rubbing elbows with investors and influencers, looking for her next opportunity.
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