Originally published in Austin Business Journal – October 16, 2020
It’s easy to see the systematic racism in venture capital at a macro level.
A 2017 report by Transparent Collective found that just 1% of VC-funded companies have Black founders. And in 2020, Black and Latino founders have secured 2.6% of all the venture capital in the United States, according to Crunchbase News, despite making up 32% of the United States’ population.
But what about at the micro level? How do those pressures manifest day to day, and what is being done to overcome them?
In reporting on the second edition of our Small Business, Big Mission project, we came across multiple efforts, both local and national, to create more equitable conditions in the startup world.
In a June Medium post, republished that same month by Harvard Business Review, Black entrepreneur James Norman provided a guide to VCs interested in investing in Black founders. Norman, founder and CEO of California-based Pilotly Inc. and a partner at Transparent Collective, highlighted four points for VCs to remember when considering investing in Black founders (see right) and made the case for economic inclusion being key to racial equality.
Norman highlighted four points for VCs to remember when considering investing in Black founders:
- They solve different problems and have different solutions
- They come from different surroundings with different resources
- They come from a different culture and often have a different communication style
- VCs face the continuous threat of unconscious bias.
Equally important are efforts to provide information and resources directly to entrepreneurs of color, and those aspiring to be entrepreneurs. At Huston-Tillotson University, the historically Black university in East Austin, that takes the shape of the Center for Entrepreneurship and Innovation. It’s designed “to provide women and minorities with transformative experiences through entrepreneurship and innovation,” according to an announcement from the school.
The CEI expanded in June 2018 to space at Springdale General, and while that physical space is temporarily closed because of the pandemic, Steven Edmond, dean of the School of Business and Technology at Huston-Tillotson, is optimistic it will reopen soon. The CEI plays an important role educating students as well as the wider community about the possibilities of entrepreneurship.
In addition to serving as a classroom for Huston-Tillotson students, the CEI has hosted a startup weekend where students and businesspeople mingled as well as a summer entrepreneurship program for high schoolers and a one-week summer bootcamp.
“CEI will offer entrepreneurial education, provide incubator services, and help women and minorities launch new ventures through classroom instructions, experiential learning, and on-campus incubation,” Edmond said in a statement. “CEI is designed to be a one-stop destination for entrepreneurs looking to take their business concepts from idea to launch to success.”
Edmond also leads the nascent MBA program at Huston-Tillotson, which launched in fall 2019 with nine students and added a second cohort this fall with 15 students. Edmond said Huston-Tillotson may even launch a spring cohort because of high demand for the program.
Some companies are also creating novel ways to increase diversity within their ranks. Coding bootcamp Galvanize has a program called I Own It, which enrolls people from backgrounds underrepresented in the technology sector in a bootcamp and then moves them into paid internships at partner companies.
Program participants get access to Galvanize’s career services and alumni networks, and the organization estimated graduates move into career fields that can pay annual salaries of $90,000 or more.
“It gives you a competitive advantage — you essentially get access and exposure to a talent pool you were blinded to before,” Harsh Patel, CEO of Galvanize and co-founder of Austin-based MakerSquare (acquired by Hack Reactor, which was later acquired by Galvanize), said of diversity in startups more generally. “With the number of people of color in the U.S. increasing year over year to the point where they are going to be the majority soon, if you’re not directly addressing diversity you are basically blinding yourself to a huge segment of the market. That’s a huge business risk.”
Optimizely, a San Francisco-based company with a sizable Austin office that makes digital tools for optimizing software development, announced in September it had joined I Own It. The business said it would provide four scholarships and paid internship opportunities “to those who identify as women, are people of color, are part of the LGBTQ or disability communities, or are military veterans.”
Those are just a sampling of ways to get involved on the micro level. No single effort can rectify decades of systematic racial inequality built into the funding and startup ecosystem. But taken in concert, they represent some of the promising developments to improve what can often feel like a hopeless situation.
To learn more about Galvanize, visit galvanize.com