ALYSSA KHAN, EDITORIAL ASSISTANT
Sep 25, 2023
When Elise Smith co-founded DEI learning platform Praxis Labs in 2019, she wasn't trying to gain fame. She was trying to level the corporate ecosystem.
Smith and her co-founder, Heather Shen, designed New York City-based Praxis Labs to use mixed reality technology to train users to face a host of workplace scenarios, from presenting projects to navigating watercooler conversations. Praxis Labs has raised $18.7 million in venture capital to date: The company hosted a seed round in February 2021 that raised $3.2 million, and in October of the same year, Praxis raised $15.5 million through a Series A round. In June 2023, Accenture announced it was making an investment of an undisclosed amount.
Smith's funding accomplishments have garnered her press buzz, landing her spotlights in Essence, Afrotech, and Marie Claire over the past year and a half. And for good reason: According to Digitalundivided's Project Diane, a biannual report on funding for Latina and Black entrepreneurs in technology, Smith has raised the most funds out of the approximately 750 founders tracked by the report.
Access to funding remains a prominent issue for founders of color. According to data from Crunchbase, Black entrepreneurs receive approximately 2 percent of total VC funds each year. Black women entrepreneurs receive less than 1 percent. Before 2021, only 93 Black female founders had raised $1 million in VC-backed funding.
Despite falling into the lowest-funded VC-backed demographic, Smith has managed to attract key investors, an accomplishment she credits to her vision and the already impressive impact coming from her work. And yet, Smith is tired of talking to the press about her funding.
"While I recognize the deep value for folks interested in and on the brink of starting their own companies and for investors who may still need awareness building on how they play into the system, I am also very weary of having my voice used for only this topic," said Smith via email.
Smith explains that "flashy headlines" about her company's funding tend to overshadow both how she is putting that money to use in her business and her company's mission. But as she sees it, there is another, even more problematic issue at play: racial bias.
Smith says that many Black founders are only ever covered for the sake of diversity -- only if, for example, they have overcome a racial funding gap -- which excludes them from larger conversations about their industries and impact. "That kind of tokenization of folks who've been able to break, gain access, opportunity, start companies, and get capital is a detriment not only to their teams and their businesses, but also to society," Smith says.
Smith says she is not the only founder of color who feels tokenized by funding-focused coverage. "I have peers who don't want to take those interviews," she says.
These peers include Naza Shelley, the founder and CEO of CarpeDM, a Washington, D.C.-based dating app designed specifically for single Black women professionals. Founded in 2018 and funded initially by Shelley's 401(k), the money she made from selling her condo, and $180,000 raised through a friends and family round, CarpeDM raised $1.5 million last year in rounds led by Virginia Venture Partners. This earned the company a feature in Black Enterprise and coverage in Yahoo Finance.
"On some level, it is newsworthy. But I don't want the headlines to equal tokenism, like 'There are companies that do it. So if you're not, it's because your company isn't good.' That's not true," says Shelley.
Taylor Shead also finds funding-focused coverage of Black women entrepreneurs problematic. Shead is the founder and CEO of Stemuli, a Dallas, Texas-based A.I. company that launched the first "educational metaverse," as she describes it, in August 2021. Stemuli is focused on addressing the nation's talent shortage by bringing access to quality education and workforce training to schools and colleges. Today, 89,000 students are using Stemuli, and Shead recently became the 94th woman of color to secure $3.25 million in VC funding, garnering her features in Essence and the Dallas Business Journal.
Shead acknowledges that this coverage has helped her open certain doors, but like Smith, she feels that coverage of her funding doesn't allow for recognition of what she's actually built. "Just because I raise money doesn't mean shit. It doesn't mean anything. It's about what I do with it," says Shead.
But Shead says there is also a sense of limitation associated with funding-focused coverage of Black founders. "The metric of 'you raised this money,' it's like you're saying, 'Because you made it here, you made it, and you can stop,'" she says. "[Funding milestones are] a low bar for what we're capable of as Black women. What about all the women who didn't raise enough money who create these million-dollar businesses? There are so many of us that had to be more resourceful."
That sense of exclusion also bothers Smith, who argues that funding-focused coverage inevitably creates a pedestal for successful founders and an even taller one for well-funded Black founders. "The focus [on funding] becomes about the exceptionalism. The 'first' or the 'one', the 'most' or the 'few,' versus emphasizing what has become the norm, the prevailing narrative," she says.
Instead of focusing so much on funding, Smith says, we should be showcasing the impact of minority founders and emphasizing the mission behind their businesses. To her mind, focusing on a founder's mission and business impact is critical for increasing equity, building better support systems outside of founder communities, and increasing founders' success within and beyond the VC ecosystem.
Increasing equity is a cause that Smith has built into the core of her own mission at Praxis Labs. Praxis was inspired by Smith's experiences as a Black woman working her way up the traditional workplace hierarchy. While women generally face greater hardships when it comes to climbing the corporate ladder, the "broken rung" is even worse for women of color. According to McKinsey, only 13 percent of C-suite roles were occupied by women of color in 2021, and an updated 2022 study showed that number dropped to just five percent.
Smith says the lack of mentorship and visibility for Black women leaders is a key problem. "I remember earlier in my career being in situations where I'd be looking for that senior leader, who, I know if I share the work I'm doing and get visibility and feedback, I can progress in my career. But as a Black woman in the workplace, that's not always as accessible to me," says Smith.
Today, Smith draws inspiration from her experiences when building and supporting her teams, developing and marketing Praxis's products and services, and, most important, crafting and advancing the company mission. Smith says she is in the business of perspectives, challenging Praxis users to identify and confront their conscious and unconscious biases and the influence those biases have on communication and decision-making.
Praxis serves companies of all stages and sizes. Its team of 41 employees works to fuel the platform, which is used by several Fortune 100 companies, including Google, Amazon, and Target, to further equity and inclusion training. Her vision has generated annual revenue well into the seven figures.
"We are at the advent of [DEI] becoming a core business priority. It's powerful. Human skills have been elevated in the workplace in a way that we haven't seen before, particularly in this time of market uncertainty," says Smith. "What are those durable skills? What are those human skills that allow us to lean into ambiguity? To lean into the discomfort of a difficult conversation of how these human, durable skills build long-term, sustainable businesses?"