Scaling Inclusive Entrepreneurship

by Deepak Krishnamurthy, EVP & Chief Strategy Officer, SAP

Each year, I meet with hundreds of entrepreneurs across the world, and I’m continuously shocked to see how a lack of diversity still plagues the tech industry. The challenges of women and minorities in the technology ecosystem are well documented, both in the United States and Europe. Several 2018 stats highlight that it’s still not a level playing field for these entrepreneurs:

· Only 13% of US venture capital (VC) funding went to founding teams that have at least one woman. [1]

· Only 7% of all funds raised by European VC-backed companies went to founding teams with at least one woman founder. [2]

· Across both the US and Europe, 2.2% of VC funding went to all-female founding teams. [3],[4]

· Black women have raised just .0006% of all tech venture funding since 2006. [5]

The startup ecosystem needs to nurture inclusive entrepreneurship by doing three things:

1. Improve access to VC funding for women and under-represented minorities in technology

Although there has been increased focus on VC investments to women and minority-led startups, inclusive investment is still not standard practice for the industry. Across the board, VCs should proactively increase funding to diverse founders as there is clear evidence that diverse teams outperform non-diverse teams. More than anything, investing in women and minorities is a better business bet.

2. Create an inclusive community of mentors

Mentors provide entrepreneurs with role models and resources for addressing their most critical strategic and operational challenges. Mentors also provide valuable advice to founders on how to articulate the value of their ideas for the VC audience and how to raise money effectively. However today, nearly 50% of female founders cite a lack of available mentors or advisors as holding them back[6]. Startup accelerators are a proven way to mentor and help startups scale, especially at an early stage. By having dedicated cohorts focused on women and minority entrepreneurs, we can dramatically increase the mentor network for these entrepreneurs.

3. Inject diversity into the leadership of accelerators and VC organizations

For VCs, having a diverse leadership team that’s managing both investment and growth enables a culture of diversity and inclusion that permeates everything they do. With a more balanced VC management team, much of the unconscious bias that has impacted the industry will disappear on its own. In the US, only 8% of VC investors are women, and racial minorities are also underrepresented in the funder community: only about 2% of VC investors are Hispanic, and fewer than 1% are black[7]. VC firms need to be proactive in embedding a culture of diversity and inclusion in their management teams.

SAP is tackling this challenge head on!

We are proud to announce our SAP.iO No Boundaries commitment to fund and incubate over 200 startups led by women and minorities in the next 5 years. This is the first comprehensive movement focused on promoting inclusive entrepreneurship in the business software industry.

We are leveling the playing field by making 3 commitments in support of SAP.iO No Boundaries:

1. We will invest up to 40% of the investible capital in our SAP.iO Fund into startups founded by women and minority entrepreneurs.

2. We will scale our focus on inclusive entrepreneurship globally across our SAP.iO Foundries, which are zero equity accelerators. SAP.iO Foundry NYC was established last year to exclusively focus on women and minority founders and has just kicked off its second cohort. Next, SAP.iO Foundry Berlin will dedicate its spring cohort in 2019 to focus on women and minority founders.

3. We commit to embed a culture of inclusivity in our SAP.iO Fund and Foundry team. Our team is one of the most diverse teams in the industry, with over 50% of the team comprised of women and minorities.

For too long in the startup ecosystem, unconscious bias has manifested itself as sexism, racism and “broism.” SAP.iO is taking the first steps to empowering the next generation of entrepreneurs and we are beyond excited to lead this movement!

If you or someone you know is an entrepreneur, we proudly invite you to join our next cohort! For more information, visit sap.io.

#InclusiveEntrepreneurship

[1] https://pitchbook.com/news/articles/mapping-investment-in-female-founded-companies-across-10-key-us- metros-interactive-graphic
[2] https://2018.stateofeuropeantech.com/#finding-02
[3] https://techcrunch.com/2018/11/04/female-founders-have-brought-in-just-2-2-of-us-vc-this-year-yes-again/
[4] https://2018.stateofeuropeantech.com/chapter/diversity-inclusion/article/weve-got-problem/
[5] https://techcrunch.com/2018/06/13/an-update-on-black-women-raising-startup-funding/
[6] https://www.inc.com/lisa-calhoun/30-surprising-facts-about-female-founders.html
[7] https://hbr.org/2018/07/the-other-diversity-dividend