Civic News
Builders Conference / DEI / Entrepreneurs / Funding / Philly Tech Week

The challenges of creating thriving, inclusive economic ecosystems

Here's what ecosystem builders too often get wrong when trying to foster diversity, from neglecting to meet under-resourced founders where they are, to prioritizing competition over regional partnerships.

The "THRIVING: What the Innovation Economy Means for Everybody Else" panel at Builders Conference 2023. (Photo by Holly Quinn)

This editorial article is a part of State of Local Tech Month of Technical.ly’s editorial calendar.

Full disclosure: This article mentions TEDCO, a Technical.ly Ecosystem Builder client.
A healthy ecosystem is a diverse ecosystem, whether you’re talking about the environment or economic development.

Most cities, even those with bustling economies, have historically excluded swaths of their populations from the benefits of the wealth-building that comes with active economic development participation.

In the last few years, we’ve seen more of a concerted effort to make diversity, equity and inclusion a priority as part of building thriving ecosystems.

Some things have changed for the better: Black women are the fastest-growing group of entrepreneurs in the US. Some have stayed the same: Black entrepreneurs still have a low rate of business growth, even as the number of Black-owned businesses increases.

Why does prosperity remain out of reach for so many historically under-resourced people, even when resources have increased? A panel of pros discussed what it means for an ecosystem to thrive, inspired by Technical.ly’s Thriving series, at the Builders Conference during Philly Tech Week 2023 presented by Comcast.

Here’s what speakers said ecosystem builders too often get wrong when trying to create more diversity:

They don’t meet under-resourced founders where they are

Business funders — whether they’re banks, VCs or corporations making public commitments to inclusion — may disregard challenges that Black and other marginalized entrepreneurs face.

“For us, we meet the entrepreneur where they are,” said Tammi Thomas, chief development and marketing officer for TEDCO, a Maryland-based VC firm that invests 83% of its business funding into entrepreneurs of color — a major contrast compared to around 2% for the average VC Firm.

“We have different funding programs to serve to meet different challenges,” she said, adding: “We found out that these founders need more than just money — they usually don’t have the network. So we have wraparound services to help them scale their company.”

They take the friends and family round for granted

Founders of color also often lack a phase of business development that can put them at a disadvantage when seeking funding: the friends and family round. Virtually no one walks in to pitch a VC with just an idea; the idea has to be developed and prototyped and the concept has to be proven — all of which can cost thousands of dollars before a founder sees a penny from a standard investor.

“There are a lot of populations that don’t have access to that very early funding,” Thomas said. “We created a pilot program for African Americans investments called the Builders Fund, and we went back to the state like, ‘Look, we have the data showing that this is transformational in our economy if we invest in underrepresented populations.'”

They don’t make it real

Most cities have seen some iteration of a startup grant for Black-owned businesses since 2020. They’re often backed by a bank or large corporation and sometimes include a pitch competition.

The problem? Real startup investments start around $100,000 and can go into the millions, depending on the industry; these programs, by contrast, often offer significantly lower amounts.

“So-and-so has a program for entrepreneurs — $10,000! What are you doing with that? That’s not real,” said Mike O’Bryan, founder of Humanature and distinguished resident fellow at Drexel University’s Lindy Institute for Urban Innovation. “That doesn’t mean it’s not helpful, I want to be clear. … If you’re a startup and you’re supporting founders and $10,000 is a significant part of your budget, that’s fine. But if you’re a big ol’ bank … if you do [a $10,000 grant] for two years and you say, ‘We’re investing in the ecosystem?’ That’s not real. That’s not an operational reality that we should even be accepting as a truth.”

They don’t ask enough questions

Cities often look to other cities to see what programs are successfully diversifying their ecosystems. When something works, other cities try and replicate it.

Even amazing programming fails, however, when the replicating body doesn’t take all of the original one’s steps.

“Design is much like medicine in that it doesn’t matter how well-tailored the intervention is if the uptake doesn’t happen,” O’Bryan said. “Sometimes what I find with cities is that nobody fully pays attention, so when they start digging into some of the mechanics behind these [programs], all of a sudden it’s like, Wait, they did what? Really? We didn’t know that.’ Well, you didn’t ask questions.”

They work competitively, not regionally

Tempest Carter, the Philadelphia Department of Commerce’s director of strategic initiatives, wants to see the city become more regionally focused to help both its cities and regions — for instance, the broader tristate area that includes southern New Jersey and northern Delaware.

“Pennsylvania does not have a regional economic development strategy,” Carter said. “It’s very ad hoc, like, ‘Here’s a program, someone’s put in a grant application.’ Ohio very much as a regional approach. Philadelphia, within its five-county, three state region, we don’t work collaboratively. It’s all a zero-sum game.

“So one of the things that we’re hearing from our partners in the city is, ‘We’ve got to do some mindset shifting around how we show up at tables and how we think more expansively about growing our economy and very intentionally increasing opportunities for folks to connect quality jobs,'” Carter added.

They don’t see challenges as opportunities

A common challenge in large cities is historical disinvestment in the school system, leading to young people aged 18 to 26 who lack the education expected for college and for much of the workforce — especially in tech.

Instead of seeing young people who’ve slipped through the sometimes-wide cracks as failures, Brian sees them as an opportunity with time left to develop.

“An 18-year-old is a glorified 14-year-old and a 22-year-old is a glorified 16-year-old, biologically,” O’Bryan said. “Adolescence doesn’t end till about 26. We have plenty of opportunity here to be investing in folks right now. … The school district clearly can’t answer the call by itself. Do we abandon them? Or should we be using our assets like arts and culture to get them obsessed with stories, with narratives, even if it’s through their phone and technology?”

Stories, and what they can teach us, are ultimately what the Thriving series is about. Carter highlighted narratives’ importance to actually bringing more Black engineers, founders and related professionals into the fold.

“Creating space for those stories is so pivotal in terms of making sure that we’re increasing how many Black technologists there are, how many founders there are, because people are starting businesses in massive numbers,” Carter said. “Philly has more VC dollars raised than Miami. But people, if they are an underrepresented founder, might not know how to access that. So we’re a bullhorn: ‘Hey, the money’s over here!’ People will follow where they feel opportunity is.”

Companies: TEDCO / City of Philadelphia / Drexel University / Chamber of Commerce for Greater Philadelphia
Series: State of Local Tech Month 2023

Before you go...

Please consider supporting Technical.ly to keep our independent journalism strong. Unlike most business-focused media outlets, we don’t have a paywall. Instead, we count on your personal and organizational support.

3 ways to support our work:
  • Contribute to the Journalism Fund. Charitable giving ensures our information remains free and accessible for residents to discover workforce programs and entrepreneurship pathways. This includes philanthropic grants and individual tax-deductible donations from readers like you.
  • Use our Preferred Partners. Our directory of vetted providers offers high-quality recommendations for services our readers need, and each referral supports our journalism.
  • Use our services. If you need entrepreneurs and tech leaders to buy your services, are seeking technologists to hire or want more professionals to know about your ecosystem, Technical.ly has the biggest and most engaged audience in the mid-Atlantic. We help companies tell their stories and answer big questions to meet and serve our community.
The journalism fund Preferred partners Our services
Engagement

Join our growing Slack community

Join 5,000 tech professionals and entrepreneurs in our community Slack today!

Trending

9 don't-miss events for technologists and entrepreneurs this July

Philadelphia Police are investigating vandalism at the home of a Ghost Robotics exec and the company’s Penn HQ

Top 3 vital trends founders should know before pitching investors in 2024

An OpenAI advisor wants to help tech leaders embrace the humanities

Technically Media