Jeff Bezos went down the classic startup path in looking to get Amazon off the ground in the mid-90s: turned to family and friends to help fund its early development and operations.
According to Bloomberg, the almost US$246,000 his mother and stepfather invested could now be worth as much as US$30 billion.
While it may be a classic Silicon Valley story, having people in your close network that can invest a quarter of a million dollars is a privilege afforded to a select few. There is, of course, also the privilege that can allow someone to pursue entrepreneurship – or any career, or even education – in the first place while others can’t.
This is the idea behind Pioneer, an initiative launched by entrepreneur and former Apple executive Daniel Gross with backing from Stripe and Marc Andreessen, which looks to find and support the ‘Lost Einsteins’ of the world.
The term, Gross explained, comes from American economist Raj Chetty, who found children from high-income families are ten times more likely to income investors than those from below-median income families, despite these children scoring just as well on early childhood tests.
“Chetty used the term ‘lost Einsteins’, referring to geniuses who would have been able to do great things had they been exposed to opportunities in the right way. We’ll never know what they could have achieved,” Gross said.
Pioneer, in turn, is based on this notion and the importance of being exposed to opportunities and supported to pursue them. Gross said it reflects his experience growing up, where he spent much of his time “feeling like an outsider looking in”.
“High school wasn’t interesting. I didn’t have many friends. And I didn’t have much to be passionate about. Eight years later, I live in Silicon Valley and have built products that have touched billions of people and sold a company along the way,” he wrote in a blog post.
“I’m by no means ‘successful’. I was able to accomplish these things because of the people who took a bet on me despite me being unknown.”
Looking to extend that opportunity to others is Pioneer, which states its technology “acts to unbundle privilege from opportunity, skewing the odds in favour of talent and ambition – at internet scale”.
What that looks like in practice is having people submit an idea they want to grow into a full project, posting weekly updates for a month. Members of the Pioneer community will then be tasked with upvoting the ideas they think have the most promise – using an algorithm Pioneer likened to the ELO rating system in chess.
The highest-scoring applicants will then become ‘Pioneers’: that will see them receive a US$5,000 grant, a ticket to San Francisco to meet the other Pioneers, mentors, and experts in their respective fields.
While not necessarily focused on backing business ideas – applicants can be “artists, activists, and scientists”, for example, and are under no obligation to start a company – Pioneer explained that it will retain a three percent stake in any company a participant may go on to create over the next eight years.
It will also retain the option to invest a further $20,000 for another five percent of the company.
“The goal is to use the returns from the entrepreneurs that *do* start companies to fund the next cohort,” Pioneer explained.
A new cohort of Pioneers will be chosen every 30 days.
“While Pioneer will provide money to people, it’s not about the money. My hope is that this experiment can broaden people’s horizons of how they view themselves. I met amazing peers and challenged myself to do what I thought I couldn’t because of my environment,” Gross said.
Also looking to back those who don’t always have the exposure to and support of the establishment is dating and networking app Bumble, which has today announced the launch of its Bumble Fund, a venture fund looking to back businesses primarily founded and led by women of colour and those from underrepresented groups.
The fund’s investment strategy will be led by Sarah Jones Simmer, Bumble’s chief operating officer, alongside senior advisor Sarah Kunst.
“Investing in and empowering women in business is something that our founder and CEO Whitney Wolfe Herd is deeply passionate about and is at the very core of what Bumble stands for,” Jones Simmer said.
“Through Bumble Fund we’ll look not only to support those women leaders who have been largely ignored, but we’ll also demonstrate why those investments build smart, successful businesses.”