Don’t blame investors for the lack of minority-owned tech companies
Regardless of the funding opportunities for minority entrepreneurs, the current system will never produce the results expected by those pushing for diversity in tech.
The venture capital industry has been under increasing pressure to identify, support, and invest in minority entrepreneurs.
There have been a number of prominent voices, including mine, addressing the perceived institutional racism and cultural bias facing minorities looking for funding.
CB Insights in 2010 found that less than 1% of venture-capital-backed company founders were African-American and 83% were Caucasian. It has always been hard for me to look at that statistic without qualifying the merit of systemic race issues playing a prominent role.
However, my experiences over the past five years have evolved my understanding of the current ‘diversity in tech’ crisis.
When I first announced the formation of H360 Capital, I was optimistic that I would be able to source investor-ready tech start-ups founded by minority entrepreneurs. My partners and I spent a great amount of time reviewing submissions by hundreds of primarily African-American founders who were excited at the prospect of receiving funding. I personally spoke with over 300 start-ups to learn more about their founding team, their financial and resource needs, and the vision they had for their companies. It was during that initial launch phase that I began doubting the narrative that funding was the primary reason for the absence of a strong community of minority-run start-ups.
To be blunt, we were underwhelmed with the quality of legitimate investor-ready businesses. The ideas were not industry disruptive and lacked the bold innovation that would justify an investment. In the rare case where we found compelling justification for interest, there was a tremendous gap in talent and the technical competence required to scale successfully.
The truth is hard to accept. It doesn’t matter whether or not the venture capital community at-large has an inherent bias towards minority founders; qualitative analysis proves the absence of funding opportunities for minorities is not the primary reason for the absence of greater diversity in tech.
Despite the valiant efforts of those who have fought to diversify the portfolio, talent, and partner strategy at venture capital firms across the country, their current efforts alone will not produce the kind of results that will change the current tech landscape.
I limit my perspective to tech start-ups exclusively not only because of my personal experience, but I believe the justification for investment diversity in other industries has been widely proven and are just. The tech movement, however, is by far the most important of our current generation, and the absence of major minority players does not bode well for income equality, community development, and long-term opportunities for minority entrepreneurs.
Conversation on diversity in tech needs to pivot. The pipeline for minority tech entrepreneurs must be overhauled. Our focus should shift toward investing resources, creating comprehensive STEM programs, and identifying potential partnerships with colleges and community non-profits that show signs of success reaching minorities at an early age.
Taking these steps will not only act as a catalyst for innovation, but will also prepare potential minority tech founders with learned skills that they can apply to developing, running, and scaling viable investor-ready businesses.
Hezekiah Griggs III, the founder and managing partner of H360 Capital, is a popular college lecturer, philanthropist, and business consultant.
