Diversity — or Lack There of — in Entrepreneurship

Entrepreneurship and technology is not just a bunch of white guys from Stanford so when will we see a better representation of what entrepreneurship really is and how can we influence the ecosystem to support that diversity?

I was recently asked, “Why do we not see more diversity in the tech entrepreneurship space?” Diversity is something we talk about a lot about and has become a buzzword of sorts. This question has created a lot of heated debate with fingers being pointed, but it is a question that we must confront, strive to answer, and build solutions to set right. When we dig deeper, we will see that we have built a system that continually rewards a specific type of entrepreneur and pushes down others. In this post I will lay out the problem we are dealing with in today’s entrepreneurship and tech space and solutions to begin remedying it.

I am a serial entrepreneur that has spent my entire career in the tech space because I believe the best way to solve societal problems is through market driven solutions and technology is the tool to scale them. The first company I started in 2012 was an accelerator program and venture fund called Nuevo Labs that aimed at supporting minority led tech startups. I started Nuevo Labs in response to the concerning numbers of diverse entrepreneurs at 1871, a tech incubator in Chicago, that recently opened. I was one of a handful of female entrepreneurs and I was one of the only Latino entrepreneurs in a space of hundreds. We raised funding, built an accelerator program, sourced a number of minority led tech startups, but we were short of our goal. We couldn’t find a diverse public face to run the program which speaks to the problem itself! Long story short, we ended up returning money to investors and walking away from a problem that only continued to worsen. Fast forward 7 years later and I am still looking this “diversity” problem in the eye.

Success in entrepreneurship is largely determined by race, gender, geographic location, and education.

It saddens me to say that still today in 2019, where you come from and what you look like greatly predict your chances of a successful outcome in entrepreneurship. Take for example pattern-matching, the process by which investors invest in what has worked before and who look like them and is perpetuated by herd mentality. Pattern-matching comes as no surprise as venture capital is still a white male-dominated industry and many VCs admit to this strategy. Sounds like a serious problem, right? It gets worse. Only 3% of venture funds employ Black and Latino investment professionals, few of which are partners, so investment in white males only continues to perpetuate. And the investment numbers do not lie. Only 1.8% of venture backed companies are founded by Latinos and 1% by Black founders. This problem of pattern-matching and lack of diversity throughout the entire entrepreneur and tech ecosystem has created an exclusive vicious cycle. White male LPs invest in white male fund managers who invest in white male entrepreneurs.

Now you might be asking, why is this a problem? If entrepreneurship is compared to darwinian evolution theory of natural selection — “survival of the fittest” — then white males continue to dominate this space because they are inherently better than minority and women entrepreneurs. Wrong. This is a systemic problem that is deeply rooted through centuries of discrimination and racism and perpetuated by stereotypes. As a white male, you are born into a more privileged life and have a significantly greater chance of success in entrepreneurship because you are more likely to have access to better education, better resources, larger network, etc. than if you were a black, brown, woman, or LGBQT entrepreneur.

Don’t get me wrong, this vicious cycle exists today, but it is not gospel. People can break in to this cycle at any point and many have! But it is still a vicious cycle with friction at every point making it beyond difficult for minority and women entrepreneurs to break in. Solving this problem cannot happen one way or another, it must happen at each point of the cycle.

I think we can all agree that different forms of privilege exist and while there have been policies put into place to alleviate some of the barriers that diverse individuals are up against, it still has not solved this systemic problem. So how do we go about driving systemic change then?

1. Diversity: Diversify decision-makers in the financing, corporate, and government sectors to better represent underserved groups.
2. Perception: Change public perception by influencing the narrative around diverse entrepreneurs and founders.
3. Culture: Reassess and design a new inclusive startup culture that represents founders from all backgrounds and geographies.
4. Resources: Invest in the development of physical startup ecosystems and programs in underserved communities.
5. Financing: Back and financially support diverse fund managers and fund with a focus on diverse founders.
6. Education: Support education programs (STEM, entrepreneurship, business, etc.) of all ages for underserved groups.

There have been on-going efforts for some time in the tech and entrepreneurship space and while we are seeing superficial changes, we are not yet seeing true systemic change. Not one person or group is going to solve this entire problem alone, but as a community we can help create and scale a new inclusive solution. What we need to do is:

Catalyze change in a measurable way that goes beyond leveling the playing field by moving the needle systemically and not just superficially.

We need a two-prong approach to start making a dent and to begin seeing long term changes:

1. Cultivate and Promote Winners Today

Diversity in entrepreneurship is a deeply rooted systemic problem; however, we are also dealing with a superficial problem, which is public perception of who these entrepreneurs are. The lack of well known diverse winners in the space perpetuates the underlying problem, which is why we need to amplify and promote winners today. While these tactics might feel shallow, it is imperative that we start seeing a change in what an entrepreneur looks like.

2. Build a Foundation for Long-Term Success

Not one person or group can solve this problem on its own, which is why we need to continue investing in the organizations and people that are building up this ecosystem. This means continuing investment in STEM programs, early education, women’s programming, minority and women led VCs, minority and women led fund to funds, accelerators targeting underserved and marginalized areas, physical locations in less affluent areas, etc.

There is still A LOT of work to be done, but that is what entrepreneurship is all about. Survival. Growth. Change. This is just the beginning. Over the coming weeks I will be posting a series of blogs on this topic and digging a bit deeper. Stay tuned.

For more information, refer to the original posting at www.triciamartinez.com