ESG — environmental, social and governance — policies are continuing to trickle down from public companies in the private world. And Black Brain Trust CEO Angel St. Jean says while those policies are being met with increasing seriousness, there’s still a ways to go.

A conversation she had with the CEO of a luxury clothing brand highlighted the change. The CEO noted that talk about environmental issues had, a couple decades ago, been considered radical, reserved for tree huggers. Now, a clothing maker without a sustainable line will acknowledge that they’re not only impacting the environment, but they’re impacting revenue.

“We're getting clearer data that shows that companies with higher ESG scores are outperforming other kinds of companies in the market, similar to what we're seeing happening in the diversity, equity and inclusion space,” St. Jean says. “And I think we are at that stage where investors, if you're looking at what is your fiduciary responsibility as a shareholder looking at a company, you have to be thinking about how we're going to get the best returns, how we’re going to ensure sustainability of our company. And as these kinds of factors are being proven empirically to be correlated to better performance, the expectation is going to increase.”

Black Brain Trust, a tech startup that created Equiscore BI, a platform that performs equity scoring to help organizations make measurable improvement to their diversity, equity and inclusion efforts, recently received a seed round from Fearless and The Harbor Bank of Maryland Community Development. The fundraising process, she says, was challenging on multiple levels.

Having not been the CEO and co-founder of a startup before, she says the learning curve is steep.

“There are just so many things to understand about the way an investor wants to hear about your scalable business opportunity versus a customer that needs your solution to address their issues,” she says. “And unless you have a place to go to understand those kinds of things, I would say I walked into conversations with investors probably in the early days not really knowing how to communicate what the investor needed.”

Also, as a woman and a person of color leading a company centered on diversity and inclusion, she expected that her chances of landing an investment were slim.

“We had conversations with investors that really didn't get what we were doing,” she says. “Back in 2021, when we officially launched, people, the only thing they really understood about diversity, equity and inclusion is consultants. And so they thought if you’re not consulting, I don't really understand what your platform can do or would do. And then frankly, the bigger issue of, is this just a fad? George Floyd was recently murdered. Everybody cares about this right now. Are people going to care about this a year from now? I was told by investors that if I didn't have something ready to go within a year's time, then we will miss the window — people won't care about this anymore.”

Investors, she says, are going to invest in things that make sense to them. If they don't understand diversity, equity and inclusion because they’re not in the space, then they don't have a good way of understanding the opportunity.

“I think that has become easier since then, especially we're two years later and this is still a thing that people care about,” she says. “And so we're at least now having better conversations. But I think there's still a barrier because the vast majority of people that are making decisions about investments are white men, and I don't know that this is on their radar the same way cybersecurity or some kind of project management tech is as a scalable business opportunity.”

St. Jean spoke on the Smart Business Dealmakers Podcast about the rise of ESG, her company’s growth, and the challenges of fundraising. Hit play to catch the full conversation.