Less than three percent of Black and Hispanic tech companies receive funding from venture capitalists.
Eli Rivera and Ruben Gaona, co-founders of The Way Out app, are among the lucky few. The app developers recently received $400,000 in seed funding from Gateway Capital Partners, a Milwaukee-based Black-owned venture capital fund.
Rivera and Gaona said they were ecstatic the funding came from a person of color whose ideals align with their mission to help Black and brown people who were released from incarceration.
Launched in 2020, the app connects formerly incarcerated job seekers with potential employers, re-entry service providers, training programs, and even transportation to get to and from work. Jobs offered through the app range from retail, hospitality to landscaping.
“We felt that if we were going to partner with (venture capitalists), we wanted them to truly understand and have experienced the systemic inequalities that we are addressing through our platform,” Rivera said. “Having a Black female-managed VC group backing us is perfect.”
Like most minority startups, Gaona and Rivera were challenged with finding capital. The typical process for funding any business begins with family and friends.
That process hurts people of color, Rivera said.
Many Black and brown tech founders don’t have families with large savings, mortgages or IRAs to borrow against. It’s tougher still for Black and brown tech startups to get venture capital funding.
“We get less than 3% combined — that’s women. That’s Black and brown founders,” Rivera said. “It’s that little.”
The funding was announced in mid December. It will allow the duo to focus on growing their business without continually chasing grants or doing pitch competitions.
“It’s like fighting every day to try to figure out where’s that next little pot of money gonna come from,” Rivera said. “That takes a lot of energy and focus away from what we are doing. It (funding) allows us to work on the business; not in the business.”
More:https://www.jsonline.com/story/news/2022/06/27/tech-program-helps-people-released-prison-learn-computer-internet-smartphone-skills/7490164001/
The app’s development came to pass from Rivera and Gaona’s own life experiences.
Both spent time in prison. Each overcame challenges of re-entering society and avoiding recidivism. The men know successful re-entry for formerly incarcerated individuals starts with employment.
It was enough to compel Gateway’s founder Dana A. Guthrie to back the app.
“They have a strong understanding of the people their platform serves because they lived it themselves,” said Guthrie, who also is Gateway Capital Partners’ managing partner.
“The Way Out demonstrates how technology, when applied thoughtfully, can address social issues within a business model that is highly scalable,” she said, adding that her company does “not believe financial returns and social returns are mutually exclusive. The Way Out is a great example of that.”
The funding will also allow Rivera and Gaona to scale the app, fine-tune it and bring it to market quicker. Seventy percent of the funds will be dedicated to software development.
When the app launched two years ago, they created a lean version. The goal — like most tech startups — was to get the product out there and prove it works.
The app uses an anti-bias employment software that creates a blind profile of each job seeker by removing names, addresses and other factors. This allows interviewing and hiring decisions based on qualifications, certifications and work experiences.
“The Way Out’s software assures that nobody’s application gets overlooked due to explicit and/or implicit bias,” Rivera said.
Fine-tuning the app has the potential to attract more employers, help justice-involved job seekers find jobs. It also will aid re-entry service providers in connecting people to resources. The app, Gaona said, is breaking the cycle of incarceration through technology.
“Just building the technology to find a way to help justice-impacted people and connect them with employers and create that platform where everybody can come and feel safe – that is the most important thing … and something we haven’t seen out there yet,” Gaona said.
The Way Out has matched more than 300 justice-impacted individuals with more than 1,000 supportive services, such as employment, housing, transportation, healthcare, technology training, and legal services. These resources minimize the risk of employee turnover while providing an untapped talent pool for employers struggling to attract and retain talent.
The retention rate for job seekers staffed through the app is 90%. According to the U.S. Bureau of Labor Statistics, the average employee turnover rate in 2021 was 47.2%.
“What makes us different is that holistic approach and the fact that we are bringing support to the justice-impacted individuals at the same time they are looking for employment,” Rivera said. “It’s all about maximizing our impact.”
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