The Essentials
- If you’re serious about diversity and inclusion in the startup ecosystem, you need to be the kind of ally who makes connections.
- With 93% of VC controlled by white men, that’s going to introduce a selection bias.
- Coming to this world as an underestimated founder means we may not have that net of family and friends ready to write checks for our first funding rounds.
In 2022, Black founders raised just 1% of all VC funds in the U.S. We’re not just underrepresented, we’re underestimated.
There’s a lot of gatekeeping in the startup world; that’s to be expected with large sums of money and innovative intellectual property. But there’s also a psychological barrier: people trust people who look like them, and with 93% of VC controlled by white men, that’s going to introduce a selection bias.
It’s unfortunate, though, that this selection bias is shooting some folks in the foot. Guess who’s now the most educated demographic in the U.S.? Black women. I bet they have some great ideas. And diverse teams routinely outperform homogenous teams and are known to be more innovative and flexible. That’s pretty important in the startup space.
So how can you help?
An unspoken part of this process for Black and Brown founders: sometimes, we need a white advocate. If you’re serious about diversity and inclusion in the startup ecosystem, you need to be the kind of ally who makes connections. I’m talking about taking meetings on behalf of Black founders, championing their work and their ideas, and helping with the due diligence and networking. Help set things up so that founder can come in and close.
That 1% figure I opened with? It’s actually even worse in Massachusetts, at 0.4% for 2021. A lot of the Black and Latino founders I know go to New York to get their money; there are fewer strings attached, and NYC’s VC culture on the whole is more speculative, while a lot of Massachusetts funds want to ensure they pick a winner every time. While the numbers are still pitiful, the data also points to better outcomes in NY: 3.2% of New York’s venture capital went to Black-founded companies in 2021.
Many entrepreneurs come to the startup world with family entrepreneurial networks that help them make connections and get in front of the right people. They have experts in their circle they can ask for advice. But coming to this world as an underestimated founder means we may not have that net of family and friends ready to write checks for our first funding rounds. That means advocacy is crucial for us to even get in the game.
Thanks to our own networking prowess and organizations like the Black Economic Council of Massachusetts, we’re talking to each other. A lot of businesses start out in isolation; when I founded 1854 Cycling, I didn’t know anything about a credit line at first. It was through hard work, networking and entrepreneur support that I got 1854 to where it is today–unveiling an e-bike that has the potential to change community policing.
There can be a bright path forward if we work to champion and amplify underestimated voices and do the work to ensure that the incredibly miniscule share of funding Black founders raise grows every year. The future of innovation is diverse and inclusive, and the sooner we embrace it, the stronger and richer our collective journey will be.
Brandale Randolph is the Founder and CEO of the 1854 Cycling Company.
