The Founders of Color Changing LA's Startup World
Even after the tech industry's reckoning after the killing of George Floyd last year, the startup world is still overwhelmingly dominated by white men.
Of the $150 billion in venture funding raised by U.S startups last year, just $1 billion went to Black founders, according to Crunchbase.
And Southern California is hardly bucking the trend. Just 2% of VC investment partners here identify as Black or Latino and less than 10% of VC-funded companies are led by women or people of color in Southern California, according to PledgeLA.
But even though progress has been slow, there are founders of color helping lead the new wave of tech startups.
Who stands out? We asked the region's top VCs to weigh in.
The list includes a young CEO who grew up without internet access who's now building an esports empire as well as a music industry veteran using artificial intelligence to predict what songs will become breakout hits.
Here is who topped the list in alphabetical order of votes received.
Delane Parnell
Delane Parnell
PlayVS' founder didn't grow up with internet access. But now the young CEO is building an online esports empire. The Detroit native told dot.LA that a chance meeting brought him to Los Angeles where the company took off, raising $108 million since launching in 2018.
Since it entered the esports marketplace for high school teams, PlayVS has raised $107 million. Now, 43% of all high schools in the country have an esports team, playing Fortnite, SMITE, League of Legends and other games using the PlayVS platform. But Parnell has larger ambitions.
"I still want to build a digital playground in which every gamer can compete, whether they're high school-aged or college-aged or in their 40s in any sort of context of competition," he told dot.LA in April.
Hamet Watt
Hamet Watt
Hamet Watt, co-founder and former chairman of MoviePass, unveiled Share Ventures last fall after raising over $10 million in funding. The venture studio aims to jumpstart companies that focus on human performance or wellness.
"We like to use human performance because it expands the definition," Watt told dot.LA. "It's not just things like yoga. It's sports tech, behavior science and human optimization."
Watt said he is the only Black person he knows of running a venture studio and by virtue of his diverse network he can tap into talent others may have overlooked.
"You can't make money doing the same thing everyone else does," he said. "You can't fish in the same talent pond that everyone else does."
Troy Carter
Veteran music executive Troy Carter is constantly reinventing the business of music management. The angel investor's latest project is Q&A, where he is co-founder and CEO. Founded in early 2019, the company not only does music distribution and analytics, but it has been testing a new product that uses music enthusiasts and AI to test whether songs can become hits.
"My job, with software, is: Can I help them choose which song they should release first? And what that reaction would be around that song. Can I help them deliver that content from A to Z seamlessly? Can I help them with their project management software? So, it's not to replace the creative process, it's to organize it," Carter told dot.LA.
The Philadelphian-turned-Angeleno was the founder and CEO of Atom Factory, where he rose to prominence managing the careers of global superstars including Lady Gaga and John Legend. Most recently, he led creator services at Spotify and, in 2017, was named entertainment advisor to the Prince Estate.
He also created AF Square Investments, which has backed Uber, Lyft, DropBox, Blavity, and Gimlet Media among others.
Allan Jones
Allan Jones
Former ZipRecruiter Chief Marketing Officer Allan Jones' came from a family of small business owners. Bambee, the human resources company he founded, was his answer to the disparity he saw in accessibility to top-tier HR managers.
"This year in particular has verified the feeling we've had since starting Bambee," Jones said in a statement according to a Bambee Linkedin post. "Human resources can no longer just be for the Fortune 500."
Founded in 2016, Bambee connects small businesses with a dedicated HR manager for an affordable $99/month. The company has raised a total of $33 million in funding rounds primarily led by QED investors, and is now valued at $145 million according to Pitchbook.
Jones credits his family of small business owners for Bambee's mission. "My inspiration comes from an earnest insight into the friction and struggles of running a business day-to-day," he said in an interview with Medium earlier this year. "I had a seat at the table where those owners came home and talked about their actual business problems each night."
Hernan Lopez
Former Fox TV International CEO Hernan Lopez launched his own media startup, West Hollywood-based podcast studio Wondery, in 2016. The company quickly made a name for itself with a roster of hit shows like "Dirty John," "Dr. Death" and "Business Wars." And it raised $18 million before it was snapped up earlier this year by Amazon, reportedly for nearly $300 million.
"As a gay Latino immigrant, I have hit most of these 'celings' and have felt defeated and alone. But I was fortunate to find mentors who encouraged me to never give up and who provided guidance on how I could achieve my dreams. Now I want to give that opportunity to others," wrote Lopez in a Linkedin post.
Donny Salazar
Donny Salazar
There's probably no business more crucial in today's retail landscape than logistics.
Donny Salazar co-founded MasonHub as a way to help retailers streamline their logistics and fulfillment in 2018. His company, valued at $85 million, connects brands to its network of fully-owned and operated fulfillment centers so that they can scale more easily. To date, MasonHub has raised $21.5 million, most recently hauling in a $15 million round led by Autotech Ventures, according to Pitchbook. It counts Carbon38, 11 Honoré, MINDD, Vegamour and Bala Bangles among its clients.
Salazar, who was formerly an executive at Gilt Groupe, is focused on high-growth companies.
"Throughout my experience scaling businesses, I struggled to find a partner that could support a fast-growing brand and cared about the customer experience as much as I do," Salazar wrote earlier this year.
Lead illustration by Ian Hurley.
Correction: This story corrects the amount MasonHub raised and its valuation. A previous version relied on incorrect Pitchbook data, which has since been updated.
- The Fund for South LA Founders Announces Its First Cohort - dot.LA ›
- Austin Clements and His New Fund for Black Entrepreneurs - dot.LA ›
- Taj Eldridge Launching $250M Fund for Black, Brown Investors - dot ... ›
- Venture Capital Funding Goes Mostly to White Male Founders - dot.LA ›
- Hamet Watt is Starting a Venture Studio for Wellness - dot.LA ›
Subscribe to our newsletter to catch every headline.
Krankel took on the role of CEO, while Hines became creative director. They brought in gaming veterans Heather Gross as the art lead and Bryant Cannon as lead developer.
The through-line for Night School is story: elevating player choice in much the same way the studios they share a lineage with did. The studio puts the focus on the messy, complicated and overlapping ways a story is communicated through dialogue, whether between unique quirky characters, or occasionally, the game and the player themselves. That also extends to how the studio’s team members work with each other to this day. The approach attracted Netflix, which acquired them for an undisclosed amount in September.
Neither Krankel nor the other staff members contacted for this piece could go into detail about Night School’s new position at Netflix either. But the move hasn’t changed their conversational dynamic. “People should constantly be talking,” Krankel said. “If you think you’re talking too much: you’re still not talking enough.”
That dialogue-first philosophy was evident in Night School’s first game, 2016’s “Oxenfree.” A supernatural thriller set on a local tourist trap island, “Oxenfree” makes good on Hines and Krankel’s early ideas by featuring a near-constant stream of conversation. You play Alex, a teenage girl trying to adapt to big changes in her life. What’s supposed to be one night of teenage mischief turns into an increasingly unsettling series of encounters with ghosts trying to communicate from beyond. The main crux of the game, aside from solving puzzles with a handheld radio, is navigating conversations from the thousands upon thousands of words Hines wrote for the game’s script. You choose one of three possible text bubbles at junctures in each conversation, slightly adjusting the story as it goes along.
The biggest challenge making that happen, according to Krankel, was “building the tools that would empower our designers to make the game while we were making the game.” Communication became key (along with proper documentation of all the design decisions that were made).
“Oxenfree,” available on Windows, MacOS, Xbox One and Nintendo Switch, was a surprise hit. Night School declined to share current sales numbers, but previously announced that the game had sold 1.5 million copies between 2016 and 2019. “Oxenfree” also cleaned up with the critics and the studio’s peers, winning “Excellence in Visual Art'' at the Independent Games Festival Awards in 2016, and scoring a nomination for “Best Debut” and “Best Narrative” at the Game Developers Choice Awards in 2017.
“Oxenfree is a smartly written coming-of-age mystery that holds promise for the future of dialogue-as-game.” Polygon wrote when they named the game one of the best of the last decade. That promise has borne out.
Night School Studio has since grown to 24 full-time employees and released four games, with a fifth on the way. And things could soon get even more busy: In September, Netflix announced it had acquired the company, marking the streaming giant’s first foray into gaming.
The studio has “a track record of successful development and in-house skills” that likely attracted Netflix, said Piers Harding-Rolls, game industry research director at Ampere Analysis.
“The deep narrative and graphical adventure nature of Oxenfree could translate well to video,” he said.
How Night School Came to Netflix
In some ways, the Netflix deal might have been born out of Night School’s relationship with another TV giant.
The immediate follow-up to “Oxenfree,” “Mr. Robot: 1.51exfiltrati0n,” also came out in 2016. A mobile game adapted from USA Network’s hit hacker drama, “Mr. Robot: 1.51exfiltrati0n” places the player into the story, rather than having them play as someone else. Using a fake phone operating system and messaging app, Night School adapted earlier ideas it had for a dating game to tell a story asynchronously across multiple days in the lead-up to the world-altering hack that happens at the end of “Mr. Robot”’s first season. The game is a departure from the studio’s style, but in a way, an even better example of its idea about conversation and dialogue — without a dynamic art style, having intriguing conversations became the whole game.
“Mr. Robot: 1.51exfiltrati0n” allowed Night School to collaborate with the show’s creator Sam Esmail, and brought the studio in contact with Hines’ former employer, Telltale Games. Night School reportedly worked on a companion “Stranger Things” mobile game to accompany Telltale’s own project in the years that followed. In the arrangement, Telltale acted as both publisher and liaison between Night School and Netflix. When Telltale Games went under in 2018, Night School’s work with Netflix’s hit show ended. Still, both the “Mr. Robot” and “Stranger Things” projects proved that the studio was able to work with existing properties.
It may have also put Night School on Netflix’s radar. Krankel contends that Night School was in conversation with Netflix about various projects six or seven months before the Netflix deal came about. “I don't even know if they knew that we were making a Stranger Things game," Krankel told “Game Informer” following the acquisition.
Serendipity or not, the match makes sense. Netflix and Night School have some important opinions in common. Existing interactive Netflix projects like “Bandersnatch” or even “Minecraft: Story Mode” (a Telltale game playable on Netflix) put the focus on player choice. Night School has also produced plenty of world-building right within the wheelhouse of Netflix’s most popular genre properties. An interest in the supernatural and the interior lives of young adults are just two reasons why the creators of “Oxenfree” might have felt comfortable making a “Stranger Things” game (and maybe making another one again down the road).
Night School announced its current project in April 2021. The studio plans to return to the game it made its name on with a sequel called “Oxenfree II: Lost Signals.” The follow-up focuses on an entirely new set of characters, loosely tied to the first, and carries over the distinctive walk-and-talk dialogue and radio mechanics.
Whether “Oxenfree II” eventually shows up as part of Netflix Games – free playable mobile games available with just a Netflix subscription, managed inside the Netflix app –– remains to be seen. Night School has developed for mobile before and even released console titles like “Oxenfree” on iOS. (Netflix did not respond to a request for comment on its plans for Night School, or the studio's existing titles.)
In the short term, Night School’s community director Sara Hebert says development is continuing on “Oxenfree II” uninterrupted, just as Night School promised when both companies announced they were joining forces. “Everything is indeed so new and it’s only been a few short weeks,” Hebert shared via email. “Day-to-day, our studio remains focused on creating great games and maintaining our studio culture.”
Ultimately, working with Netflix is an opportunity for a small studio to get its games in front of the streaming service’s millions of subscribers. Netflix offers “an unprecedented canvas to create and deliver excellent entertainment to millions of people,” Krankel said in his announcement of the acquisition. Now Night School just has to keep building.
- Netflix Sees YouTube as Its Biggest Threat - dot.LA ›
- 'Squid Game' Helps Netflix Add 4.4 Million Subscribers in Q3 - dot.LA ›
Qai Qai is a digital character based on a doll owned by Williams and Reddit co-founder Alexis Ohanians’ four-year old daughter, Alexis Olympia Ohanian Jr. But the digital avatar was created by Invisible Universe.
To go along with Qai Qai’s debut in the tangible world (the book is set to be released in September 2022), the company also helped Williams create a doll that will be sold on Amazon.
Invisible Universe is one relatively new entrant into the rapidly crowding field of digital avatars and virtual influencers like Qai Qai.
Dapper Collectives (formerly known as Brud) runs social accounts for Lil’ Miquela, a virtual influencer with 3.1 million followers and is said at dot.LA’s recent fall Summit it’s looking to expand her reach into TV and other forms of interactive storytelling. Another similar company is Genies, which is making digital avatars for celebrities that can follow them across different social media platforms.
“Our belief is that the power of incubating IP on social media allows us to test things and build an audience and community,” said Invisible Universe CEO Tricia Biggio “But from there, our mission is absolutely to extend that (intellectual property) and other forms of publishing.”
She said part of that is selling the doll on Amazon and eventually creating long-form scripted content.
Biggio was a TV development executive at VH1, Snap and MGM, and she was Invisible Universe’s chief creative officer for a year before taking the CEO helm in June.
She believes that creating strong characters that can transcend the boundaries of their scripted content and live online as their own digital personas is the key to getting people to stay engaged with new stories. But unlike studios focused on box offices or streaming, Biggio wants Invisible Universe’s content to be on social media first where fans can interact with it all the time.
Biggio said that her co-founder and former Snap executive Johnathan Brennan was friends with Williams and Ohanian and developed the idea to create content based on the Qai Qai doll before Invisible Universe even started. They then tapped writers with experience at Hollywood studios to bring the vision to life.
“We've assembled a team of writers, Hollywood writers, who we've convinced to come and do this really experimental thing with us,” Biggio said.
Other digital creations by Invisible Universe include the fictional long-lost toys of Charli D’Amelio’s family called Squeaky and Roy and robots for Karli Kloss called Kayda and Kai. The creators are involved in the creation of their digital characters, and Invisible Universe is working on another to-be-announced project with “Friends” star Jennifer Aniston.
Biggio said the company has raised $9 million since its launch.
Dot.LA co-founder Spencer Rascoff is an investor in Invisible Universe, alongside Williams and Aniston, who also acts as an advisor. Actor Will Smith is an investor through his venture fund Dreamers VC, as is the Cassius Family, Seven Seven Six and Initialized Capital.
- dot.LA Summit: Grid110 Wins Social Justice Award - dot.LA ›
- Invisible Universe's Plan to Bring Animation to Social Media - dot.LA ›