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Nonprofit Making of Black Angels focuses on education to change the face of angel investing

Black entrepenuers received just 2% of angel investments in 2021. Senior Personal Finance Correspondent Sharon Epperson looks at a project to improve the opportunities for founders and funders.


  • In 2021, just 2% of “angel” investments went to Black startup founders, according to research from the Angel Capital Association.

  • Angel investors provide critical early capital and may support founders with industry expertise and networking opportunities.

  • The U.S. Securities and Exchange Commission requires angel investors to be “accredited investors,” meaning an individual must have earned income of more than $200,000 or a net worth exceeding $1 million, excluding the value of their primary residence.

As a young physician, Dr. Elizabeth Clayborne saw a need for a better way to stop nosebleeds, a common condition she saw at the hospital where she worked, especially among children. She developed a bandage-like device for your nose and secured patents for her invention, called “NasaClip.” Then, in 2020, the Washington, D.C.-Baltimore area physician launched a business to market the device.

“I wanted this to be available to the everyday mom and dad,” said Clayborne, who at 39 is now NasaClip’s CEO as well as an emergency room physician. “Currently there’s about a third of U.S. households where someone has common, recurrent nosebleeds.”

After tapping friends and family, many startups like NasaClip try to get funding from individual investors — so-called “angel investors” — at an early stage of their business. Yet only a fraction of those investors are Black.

“I was heavily supported by angel investors who are interested in female and minority-owned businesses,” said Clayborne. “And really, without them, I would not be able to take these essential first steps to get to where I am today.”

Still, getting funding for a startup is challenging, especially for Black entrepreneurs and founders. In 2020, the year George Floyd was murdered, Black founders got a record 16% of angel investments, up from 0.5% in 2019. However, in 2021 that figure fell to just 2%, according to research from the Angel Capital Association, which represents individuals and groups of investors.

Dr. Elizabeth Clayborne shows the NasaClip device she invented to stop nosebleeds.

Steve Washington, CNBC

That sharp drop going to Black founders was “disappointing,” said Pat Gouhin, CEO of the Angel Capital Association. “We’re still trying to do what we can to push to have as much funds go to those underrepresented communities as we can.”

Boosting founder and funder diversity

“Black companies are just not getting the funding,” said Jill Johnson, CEO of the Institute for Entrepreneurial Leadership, a nonprofit economic development organization based in Newark, New Jersey. “And especially when you look at Black women, that’s even less.” Johnson started IFEL in 2002 to support entrepreneurs and small business owners, but over the years found they weren’t moving the needle enough to gain access to capital. “I don’t want to be having this same conversation about access to capital in 20 years,” Johnson said. “I don’t want my children, when they get ready to start a business, to be trying to figure out access to capital.”

Anyone with financial capacity needs to get involved in this investor ecosystem to provide the access to capital that Black-owned businesses so desperately need. Jill Johnson CEO OF THE INSTITUTE FOR ENTREPRENEURIAL LEADERSHIP

In 2020, Johnson designed a program called the “Making of Black Angels” to educate prospective angel investors and connect them with Black business owners to help startups obtain critical funding. “Capital in the United States of America is so plentiful,” she said. “Yet, we have certain groups that have been historically excluded from this access — and we need to change that. “Anyone with financial capacity needs to get involved in this investor ecosystem to provide the access to capital that Black-owned businesses so desperately need,” Johnson added.

Becoming an angel investor

To make early-stage investments as an angel investor, you must be an “accredited investor,” as outlined by the U.S. Securities and Exchange Commission. Individuals must have earned income of more than $200,000 (or combined income of $300,000 with a spouse) in each of the prior two years or a net worth exceeding $1,000,000, either alone or with a spouse, excluding the value of their primary residence. The SEC also warns that “early-stage investments may involve very high risks” and “you should research thoroughly any offering before making an investment decision.” More than two-thirds of startups never show a positive return.

Risks and rewards of angel investing

Yet, those statistics have not deterred investor Gina Nisbeth from doing her homework and financially backing companies she believes in. “I absolutely do expect an economic return; I believe in these companies,” said Nisbeth, one of the more than 250 participants in the Making of Black Angels virtual course and other events. Nisbeth, based in Annapolis, Maryland, first heard Clayborne’s pitch about NasaClip at a virtual meeting, hosted by IFEL, that introduced Black startup founders to prospective angel investors. After that pitch, Nisbeth initially invested $7,000. She later invested $10,000 more and became a company advisor. In the past two years, Nisbeth said, she has invested in several startups. “I believe the companies themselves are going to grow,” she said. “I believe they’re going to hire people of color and that’s putting capital in the hands of people of color — that, to me, is addressing the racial wealth gap.”

Before starting her own consulting firm last year, Nisbeth worked in community development finance at Citigroup. Now, she said, she is excited about the opportunity to help the founders beyond just providing capital.

“I can leverage 25 years experience at Citi,” Nisbeth said. “I can leverage the networks that I’ve built and help other organizations who might not have this information or access to capital to get it.”

Relying mostly on angel investors like Nisbeth for early stage capital, Clayborne has raised more than $1.1 million and expects to have NasaClip on the market by April.

Looking at the success rate of many startups, “angel investing is risky,” Clayborne said. But, she added, “I do think it is a really interesting and powerful way to invest your money that not only brings up that business, but may raise up, you know, communities, values and interests that you have that coincide with what’s important in your life.”


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