There is a glaring disparity between white and black startup founders and the inequality is so profound and has caught the attention of US Senator Elizabeth Warren. According to research by the University of California, a black entrepreneur on average will start a business with capital of around $35,000 which is around 30% of the total capital that a white entrepreneur will start with.
The data from the research is a reflection of what happens in the venture capital world where black entrepreneurs have little space. For instance a Harlem capital report indicated that only 105 black entrepreneurs have managed to raise $1 million after several years despite there being close to $100 billion venture capital industry.
The problem of diversity
There is lack of diversity in venture capital ranging from investment banking to technology to law as well as other specialized sectors where there is limited representation of non-whites. Although there might be reasons like not many minorities venturing into these sectors representation of females and minorities is very limited. The reason for underrepresentation might also be systemic or obvious bias. Around 70% of the personnel ion most venture capitals is predominantly white and diversity still remains low when talking of startup founders.
The domination of whites in venture capital firms is not surprise and for the minority they have to work extra hard as well as take a different approach when it comes to entrepreneurship by exhibiting high levels of creativity and tolerance for them to succeed. The existing diversity gap can be a hindrance to those who want to start business and they have to deal with venture capital and whiteness of technology through.
Aligning with venture accelerator
Venture accelerators such as Techstars and Y Combinator are good places to start because they have partners who are focused on diversity. The accelerators offer portfolio exposure to investors than an entrepreneur could meet individually.
Network and contact building
Building connections and growing your circle can greatly benefit the business. Most successful founders of great enterprises the first people they engaged when they were starting were friends. Minority founders should thus concentrate in consistently growing their networks because venture capital is about having contacts and networking.
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