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Building an Entrepreneurial Ecosystem in Diverse Communities

HBCUvc was established by Hadiyah Mujhid to radically shape our people’s future. We strongly believe that for us to positively impact and economically advance our diverse communities, we need to increase racial diversity in venture capital so that more entrepreneurs of color can be funded and thus create jobs and wealth for communities of color.

At HBCUvc, we refer to this as the theory of change.

Theory of Change

More Black VCs = More Funded Entrepreneurs of Color = Economic Advancement of currently marginalized communities.

This theory is not founded on pity investments, where we invest in any entrepreneur of color because they look like us. We are talking valid investments where Entrepreneurs of Color have actually put in the work to create a high growth business.

In fact, the theory of change is our acceptance of the fact that VCs invest within the intersection of what they know and who they know, and thus we are using this knowledge to our communities’ benefit in an attempt to redistribute wealth through valid investments.

A great example of this in play, is Arlan’s impactful work at Backstage Capital.

Implementation of the Theory of Change

Evidently, implementing the theory of change isn’t as easy as 2+2 =4, in actuality, we, my fellow HBCUvc fellows and everyone else who is committed to establishing equality across all races, have a lot of work to do.

This work starts with educating and supporting our community through the creation of an inclusive, sustainable, and collaborative entrepreneurial ecosystems within our communities, for HBCUvc, these communities are our universities (HBCUs and HSIs), for me personally, it is the Caribbean.

Building an Entrepreneurial Ecosystem in our diverse communities

With this in mind, we were tasked with absorbing Brad Feld’s wisdom from his book, Startup Communities: Building an Entrepreneurial Ecosystem in Your City and the below is my take away.

Goal

Create an ecosystem within our diverse community that empowers anyone who is interested, passionate and committed to entrepreneurship. This ecosystem will incorporate the following:

  1. Platform for knowledge and resource sharing for startup and entrepreneurship mechanics, and technical guides.
  2. Environmental “weirdness” that inspires acceptance of all ideas and thus encourages freedom to innovate and create. Think of how “weird” San Francisco is, where there is a perfect blend of hippiness, art, science, and appeal.
  3. Reliable and passionate technical and non-technical talent to execute on such ideas.
  4. Mentors who actively contribute time, energy and wisdom to startups and key players within the eco-system. Our eco-system specifically need mentors that are subject market experts on sectors outside of tech and entrepreneurship, such as Strategy, Pharmacy, and so on, mentors that are skilled in the entrepreneurship process and can guide each entrepreneur/founder on how to be successful based on personal experience and observations of other successful persons, how to learn and grow from failures the mentors have made, and how to learn, grow and thrive from failures the founder have and/or will make.
  5. A global perspective, to inspire each key member of our eco-system to think big. This can be achieved through cultural exchanges, and short term, purpose-oriented programs for entrepreneurs to visit other tech hubs such as Tel Aviv, San Francisco, go to global conferences, and engage with the wider community. TavTech is a great example of this.
  6. Intentionality in establishing and maintaining a strong sense of individual, and collective impact. Where each key member of our eco-system is driven to be the best version of themselves each day, create the best companies, and win together through collaboration and the philosophy of giving before you get.
  7. Non-hierarchical. Anyone with good intentions (bad players will exist but a strong community will be able to spit them out over time) can create and lead initiatives within the eco-system without needing to seek approval or go through a lot of red tapes.
  8. High visibility of successful startups from within our eco-system to inspire and attract others.
  9. Constant iteration that it is ok to fail, motivation to share and collectively learn from that failure and support . After all, winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.
  10. Continuous engagement of the entire eco-system (entrepreneurs, experienced entrepreneurs, aspiring entrepreneurs, investors, mentors, employees of startups, service providers to startups, and anyone else who wants to be involved) through activities, networking, and events such as hackathons, new tech meetups, coffee chats, industry focused events, and casual meetups.
  11. Evolution of the eco-system through implementation of mechanisms that continuously keep key players in the community or at least inspires them to stay long enough to part wisdom and train the next set of players. One such method can be driving the concept of serial entrepreneurship and feeling of belonging, where players in early successes and acquisitions can feel like they can continue to contribute to the ecosystem, can innovate, found a company, mentor, invest or advise.
  12. Create an evolving but successful capital pipeline. A lot of people think a successful entrepreneurial eco-system needs to have an abundance of investors, however I disagree, especially within new eco-systems. If your eco-system can create a proven model that have identified sources of capital, such as VCs in Silicon Valley, Pitch Competitions, Angel Investor hubs, high network individuals who can provide warm intros and so forth, they can then efficiently pipeline the entrepreneurs within their eco-system who are at that stage to successfully raise funds towards these sources of capital. A great example of this is what Mandela SH Dixon is doing over at Founder Gym, or what Consultants who claim they can help you raise funds does.
  13. Establish sharing economy models. This is founded in the research of economist Alfred Marshall, Michael Porter, Paul Krugman and Paul Romer, where they came to the proven conclusion that companies co-located in an area benefit from “external economies of scale.” Emerging companies need certain common inputs — for example, infrastructure, specialized legal and accounting services, suppliers, labor pools with a specialized knowledge base — that reside outside the company. Companies in a common geographic area share the fixed costs of these resources external to the company. As such, in creating sharing economy models, we all win. An example of this is co-working spaces and so on.

Existing Successful Eco-system Models

In addition to Brad Feld’s book, and my take aways, I strongly suggest shaping your community based on the research of what makes other eco-systems within and external to tech successful.

I have identified a few below:

Entrepreneurial Communities

  1. Silicon Valley
  2. Boulder Startup Eco-system
  3. TechStars

Socialist Communities

  1. Kibbutz: A collective community in abundance in Israel where everyone has a role, responsibility and impact to the community and in return everyone thrives economically, educationally, and all if not most basic human needs is taken care of.

The people within the entrepreneurship eco-system

The people within a startup eco-system can be classified into two groups: entrepreneurs and feeders. However despite this differentiation, everyone should embody the following principles:

  1. Understand that having more people engaged in the eco-system is good for the overall community
  2. View the growth of the startup community as a positive force for all, rather than a zero-sum game in which new entrepreneurs compete locally for resources and status
  3. Have deep commitment, effort, and involvement in the entrepreneurial eco-system

Entrepreneurs

As President Barack Obama so wisely said, “Entrepreneurs embody the promise of America: the idea that if you have a good idea and are willing to work hard and see it through, you can succeed in this country. And in fulfilling this promise, entrepreneurs also play a critical role in expanding our economy and creating jobs.”

Entrepreneurs are the ONLY leaders of the entrepreneurial eco-system. Every entrepreneur, whether they drive their eco-system growth through active eco-system leadership or influencing through their company should embody the following principles in order for everyone to win:

  1. Have a high growth mindset
  2. Establish initiatives for their company and community
  3. Socially conscious, where they need to be very intentional about their specific impact on their company, family, community, country and the world as a whole
  4. Willingness to build, learn and share
  5. Charismatic
  6. Honest and straight forward
  7. Open minded
  8. Ability to self-reflect and analyze your own motives, decisions and mistakes
  9. Gritty
  10. Long term vision, where they are in the game for the long run. Brad Feld stresses having a 20 year + commitment, if you want to lead building your startup eco-system.
  11. Self-motivation, because the going will get tough.
  12. Have a strong ethos of mentorship where they regularly devote their time to assist the next wave of startups, through mentorship, knowledge and resource sharing, and leading by example.
  13. Leadership and evangelism. They need to be tireless in their evangelism for their startup community, put their community and geography ahead of their self-interest, and just do stuff. By taking action, they provide authority for others to become leaders.
  14. Is conscientiously inclusive, and not hierarchical in the startup community.

Non-Entrepreneurs or Feeders

Everyone else in the startup community who are not entrepreneurs. Feeders should comprise of people who are willing work hard in their domain, and devote a great amount of time to help startups succeed and execute. Some examples of feeders are service providers, governments, universities, investors, and large companies. All of the above we have to be intentional on how we engage and funnel their services to our diverse communities.

Metrics of Success

This is not a comprehensive list and I look forward to any contributions from the public and will update as my research progresses.

This can be measured at both a macro and individual level.

Macro Level

  1. Number of jobs created through all the community’s startups
  2. Number of entrepreneurs within our community that are employers
  3. Movement of people in and out of our community, especially new college grads.
  4. Generation of relatable quality content on various subject matters.

Individual Level

  1. Annual Revenue
  2. Company Growth over periods of time
  3. Acquisition and retention of talent

Current Problems that exist among diverse founders

This is not a comprehensive list and I look forward to any contributions from the public and will update as my research progresses.

  1. Non-technical founder dilemmas. I see too often, non-technical founders who have great vision and ideas but are often limited due to their lack of technical talent and lack of access to reliable technical talent or co-founders.
  2. Lack of knowledge about startup mechanics.
  3. Intimidation by Fundraising and Silicon Valley

Things to be intentional about

This is not a comprehensive list and I look forward to any contributions from the public and will update as my research progresses.

  1. We don’t want to replicate Silicon Valley, but we can learn from it. Specifically how to avoid your community from creating great disparities in wealth, massive homelessness and so on.
  2. Riding the ups and downs of the economic cycle within their city, state or country. This is best done when you have a long term vision.

What’s next?

This is not a comprehensive list and I look forward to any contributions from the public and will update as my research progresses.

  1. Solid collaboration among all who is striving to create such eco-systems within their diverse communities.
  2. Using current successful ventures by diverse founders as catalysts to propel the establishment and maintenance of our own eco-systems.

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Whitney Griffith

Whitney Griffith

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Avid Learner. Tech Enthusiast. Social Entrepreneur. Blockchain Developer. Founder.