(Photo by Flickr user WOCinTech Chat, used under a Creative Commons license)
Only 1% of venture-backed founders are Black and only 1.8% are Latinx.
These statistics are reported in a 2018 study conducted by RateMyInvestor and DiversityVC that examined publicly available venture capital deals over five years (January 2013 to December 2017) from nearly 10,000 U.S.-based founders and 135 VC firms; CB Insight reported similar numbers in 2015.
Here are some other eye-opening stats about venture-backed founders from the study:
- 77.1% were white, regardless of gender and education
- Asian founders made up 17.7%, making it the second most-backed venture capital group
- Middle Eastern founders accounted for 2.8%
Those numbers are why the DC Inclusive Innovation Fund exists. The early-stage investment fund identifies companies with large market opportunity and high-growth prospects with a particular focus of investing in founders who are women, people of color, disabled, veterans or LGBTQ.
Mayor Muriel Bowser’s office tapped The Marathon Foundation, a D.C.-based nonprofit that focuses on increasing business opportunities and capital for entrepreneurs, to create and manage the fund last September, and it’s still being developed, with some investment partnerships to be announced in the near future.
Though these statistics are nationwide, the fund’s Vernon Lee shared some insight with Technical.ly about what the D.C. tech community can do to be more supportive of local minority entrepreneurs.
“Be deliberate and intentional in seeking opportunities to invest in, mentor, coach and partner with underrepresented entrepreneurs that may not look like you or are part of your current professional and personal networks,” said Lee, general partner at the fund and a board member for The Marathon Foundation. “For example, set a weekly, monthly or quarterly goal of meeting or partnering with individuals and/or organizations with a track record in this area.”
His advice reminds of Adam Mutschler, founder and CEO of podcast “The Founder’s Mind” and partner at The Kedar Group, who shared at our stakeholder meeting last month that he has been trying to go to conferences where he is considered the minority, like AfroTech. He said this helps him meet different people and understand them better.
On the topic of being intentional, Lee shared that the Harvard Business School Alumni Angels of New York reached out to The Marathon Foundation a few years ago ahead of the launch of its Venture Capital Access Program (VCAP), a four-week program for underrepresented entrepreneurs. Since their partnership launched, VCAP saw a 25% increase in the number of underrepresented entrepreneurs selected for its quarterly pitch nights.
“Be deliberate and intentional, even when it may seem challenging and inconvenient,” Lee said.
Contrasting insight from minority founders
Despite the lack of VC funding going to minority-founded startups nationally, Stephanie Cummings, cofounder and CEO of Please Assist Me, said she feels fully supported in this community. Her startup, which manages a tech platform connecting people with reliable assistants to help them manage day-to-day chores and tasks, moved its headquarters to D.C. at the beginning of this year.
“D.C. is full of technologists of color and is the most inclusive community that we have been a part of,” Cummings said. “From a large, inclusive community to welcoming new members with open arms, I feel privileged to be a part of a supported entrepreneurial community. Every person that we worked with so far has done what they can to help us grow and succeed.”
Cummings shared that Please Assist Me has raised $300,000 in capital to-date. That includes funding from two big pitch wins last month, when Cummings took home the $20,000 grand prize at Vinetta Project’s latest showcase and the $25,000 first-place spot at the HERImpact DC pitch competition.
“Raising as a minority founder has been challenging, but over half of our capital table are minority or female investors,” Cummings said. “As more and more minorities invest in companies, raising money as a founder of color will be easier.”
"Although there are resources for women and minority tech founders here in D.C., they require a certain tenaciousness to seek out."
In contrast, Quinnie Lin, founder and CEO of QB Strategies, a public affairs firm for social justice, shared that her experience raising funding here has been difficult.
Since its launch a year ago, QB Strategies has provided large nonprofits with strategic direction, taught leadership classes to formerly incarcerated individuals and refugee students, given diversity and inclusion trainings, and provided insights on social media analytics. The bicoastal firm services clients in D.C. and Los Angeles.
After QB Strategies participated in the Georgetown Venture Lab incubator program earlier this year, Lin was inspired by the lab’s resources to develop an idea for a healthtech product: QB Health, which will curate a platform offering expecting mothers and family-based communities data, support and resources they don’t have access to.
The startup will soon be based out of downtown Los Angeles because of the lack of resources available to Lin in D.C., she said.
“Generally speaking, although there are resources for women and minority tech founders here in D.C., they require a certain tenaciousness to seek out,” Lin said. “I have gotten a great deal of positive feedback and encouragement on the idea of technical platform, but only a handful of people have gone out of their way to truly listen and provide resources. One of the reasons that QB Health will be partly based in Los Angeles is that there is a bigger appetite for investing in good ideas and good teams.”
Lin said that she’ll be seeking funding opportunities for QB Health in San Francisco, LA and Boston to start. She also said one of her biggest challenges is not having a technical background, but she makes up for it with other skillsets, such as data science and critical thinking.
Entrepreneurs of color, tap into these resources
Here are some D.C.-area resources that Lee, Cummings and Lin shared for entrepreneurs of color:
- Black Girl Ventures
- Inclusive Innovation Incubator (IN3)
- SEED SPOT
- Collaborative Alumni Angels Group
- Dingman Center Angels
- Pipeline Angels
- Alfred Street Baptist Church (which has an entrepreneurship ministry with monthly meetups and guest speakers that are experts in their respective industries)
- 1863 Ventures
- DC Startup Week
- Georgetown Venture Lab
For funding, Lee said entrepreneurs of color should pitch to angel investors, angel investment groups and corporate venture capital firms — easier said than done — as well as use crowdfunding platforms, and apply for grants and pitch competitions.
And consider these local and national funding sources:
- Pier 70 Ventures
- MaC Ventures
- Ulu Ventures
- 645 Ventures
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