More than 30 diverse tech startups recently attended the first-ever White House Demo Day as part of President Obama’s Startup America initiative to call attention to the low numbers of women and minority tech entrepreneurs.
Obama’s call to action included new public/private partnerships that promise to provide Americans with the opportunity to “pursue their bold, game-changing ideas.”
At the event, held on his 54th birthday, Obama said, “We’ve got to make sure that everybody is getting a fair shot — the next Steve Jobs might be named Stephanie or Esteban. We’ve got to unleash the full potential of every American — not leave more than half the team on the bench.”
But women of color tech entrepreneurs need more than just bold statements to pursue their ideas, they need targeted initiatives that address their unique barriers to entry in the startup world.
The event was attended by industry heavy hitters, including Intel, Pinterest and Shark Tank’s Daymond John, discussing strategies for engaging and increasing a more diverse tech ecosystem.
However, eight of the 11 attendees featured in the press materials were men. Only three women were mentioned. And only one, Rosalind Hudnell, chief diversity officer of Intel, is a woman of color.
We don’t need another study to tell us the problem.
The guest list included companies and organizations devoted to diversity in tech, but the real news came from investors, including Kapor Capital.
Mitch Kapor and Freada Kapor Klein, prominent investors in companies focused on social impact, pledged $40 million over three years to tech initiatives for underrepresented minorities. “Genius is evenly distributed across zip codes. Access and opportunity are not,” Mitch Kapor said in a statement.
Coming off the heels of Intel’s recent $125 million commitment to women and minority entrepreneurs, this announcement is critical. But how those dollars will actually get into the hands of the entrepreneurs who need them the most is still unclear.
If these commitments are to have optimal impact, investors, leaders and founders must be strategic about tackling some of the not so obvious ways that women of color are pushed out of the investment pipeline.
The unique challenges faced by women of color are substantial and, to some extent, structural. But the good news is they can be remediated with intentional creativity. Here are three ways to begin to resolve the issue.
The first step is to address what Arlo Gilbert called “Silicon Valley’s Dirty Secret.” Essentially, he asserts, investment deals are sourced and funded only through a network of people who know and trust each other. The problem is that women of color rarely have a network of people with addresses on Sand Hill Road.
We need more initiatives that create opportunities to pair tech talent with emerging companies founded by non-tech founders.
So, no meeting, no money, no unicorn startup. Venture capitalists rely on their friends, their networks and their associates — most of whom run in the same socio-economic circles — for referrals and references.
Firms must expand their tentacles and create deeper alliances with initiatives that support minority founders, such as Avion Accelerator for Latinas, Latino Startup Alliance (full disclosure, I am on their board) and Wayne Sutton’s BUILDUP. And, for the record, these organizations also struggle to find support.
Access To Tech Talent
The other side of the tech entrepreneur dilemma is lack of access to tech talent. While it is arguable whether the tech talent crisis is a pipeline issue or a hiring issue, both issues impact women of color entrepreneurs. Startup companies are more likely to succeed when they have an ex-Googler on staff, and they are most likely to fail if they don’t have a tech co-founder.
We need more initiatives that create opportunities to pair tech talent with emerging companies founded by non-tech founders. And as a non-tech founder, I can attest that going to meet-ups and hackathons is not effective in finding a developer to come work with you for equity, especially given the tight market for talent.
The White House Tech Hire Initiative — the government’s answer for getting people into coding school — could be hacked to support diverse entrepreneurs. Just this week, Sabio.la, a Los Angeles-based software engineering program working with the White House, announced a new Women of Color Coding Fellowship that will inevitably make a difference for women of color founders.
Realistic Standards for Success
Launching a startup is risky any way you cut it, but for women of color, especially those who are the bread winners in their families, the risk is immense.
The famed startup story of quitting your job, moving to Silicon Valley and living on ramen until your first seed round is touted as a badge of honor in the startup world. But the economics of this is clearly for those with a strong safety net.
Fewer than 3 percent of companies with a female founder receive venture capital.
It is not unheard of for a startup to receive a friends and family round of support in the six-figures or to rely on significant others during the transition. Given the sacrifice so many women of color endure just to get a good-paying job, it is improbable that any professional woman would leave her job security for an extremely unstable stint in Silicon Valley.
In a recent a conversation in the Female Founders group, more than half of the women said they relied on savings to launch their startup. Given that women of color make less than 78 cents for every dollar, and the impact of the racial wealth gap, relying on one’s savings is not really an option. We need more seed funds or grants, like the Y Combinator Fellowship, that give some runway to founders who otherwise would not be able to take a leap.
Few will argue that the world of tech entrepreneurship needs to be more diverse. Women of color will make up 53 percent of the population by 2050, and Hispanic women will lead this growth. Yet fewer than 3 percent of companies with a female founder receive venture capital.
Given the demographic and economic implications of a shifting economy, it is increasingly important to the economic security of women of color to be included in the tech gold rush.
It also makes sense that investors looking to find the next unicorn look to untapped markets. The first two pages of any quality startup pitch deck include a statement of the problem and the solution.
We don’t need another study to tell us the problem. We know the numbers. We need more creative solutions.Featured Image: wavebreakmedia/Shutterstock