Latest posts by J Jackson (see all)
- 14 Year Old Tennis Prodigy Cori ‘Coco’ Gauff Becomes the Youngest French Open Junior Champion in 25 Years
Over the last eight years, her development has thus far proven her to be a tennis phenom- June 10, 2018
- Paul Ryan Posts Selfie With All Of The Capitol Interns and It Exposes A Very Real Issue
Paul Ryan posts picture of Capitol Hill interns with almost NO ethnic diversity- July 19, 2016
- 10 Things We As African Americans Can Do To Move Our Community Forward
It is time for us to stop addressing the symptoms and begin addressing the root of the problem- July 8, 2016
For quite some time, launching a tech start-up as a minority entrepreneur has been considered nothing short of a gargantuan task, to say the least.
The lack of connections to successful industry role models, as well as lack of significant support from the investment community, whose members often inhabit social, academic and professional spheres different from those of African American and Latino entrepreneurs, have been a few of the obstacles that minority entrepreneurs have struggled with when trying to penetrate the industry. Most Venture Capitalist and Angels Investors tend to fund deals that are brought to them by someone they know, but for many minority entrepreneurs not operating in these typical social-circles, simply gaining an introduction can be a tremendous hurdle in itself.
A study conducted by the Center for Venture Research at the University of New Hampshire found that of the 67,000 angel investor deals in 2012, Only 4% involved women-owned start-ups and less than 1% involved minority-owned ventures.
In a recent article with USA Today, Sam Altman, President of Y Combinator, one of the most influential start up accelerators in Silicon Valley, discussed Y Combinator’s efforts to change the current landscape. Altman was quoted as saying, “If we were to limit ourselves to founders of one group, we would miss out on a lot of great companies. We are making it known that we want to do more on this.”
Twice a year, Y Combinator selects a significant amount of entrepreneurs (68 last round) looking to turn promising ideas into full-fledged businesses. These hand-selected entrepreneurs receive an initial investment of $120,000, coaching, and introductions to powerful players in Silicon Valley over a three-month period. Any would-be entrepreneur, would benefit tremendously from this type of opportunity. The application submission period opened August 25th for Y Combinator’s Winter 2015 session. They have also committed to launching a recruiting drive to get more minority entrepreneurs into Silicon Valley’s top rated boot camp.
This comes on the heels of many Silicon Valley tech giants being rebuked at the release of their dismal diversity numbers. As a result, many of the Valley’s most prominent companies have committed to taking an active role in increasing opportunities for minority technology.
This has been a fight trail-blazers like Angela Benton have been having since 2007 when she launched her first start up. As a result of her experiences, Benton went on to launch NewMe in 2011, the first technology incubator (accelerator) for under-served tech entrepreneurs. According to their website, NewMe has successfully assisted their portfolio of entrepreneurs in raising over $16.9 Million in funding since its launch. In 2013, Benton launched NewME VR, a virtual version of the successful 12-week program, with the goal of having even more of an impact in assisting minority entrepreneurs with bringing their ideas to fruition.
Why is Diversity in Tech Important
For critics who don’t see the importance of diversity, I assure you, it is more than just about being politically correct. In my recent blog post, Diversity in tech is not just an ethical issue, it’s an economic opportunity, I lay out a few reasons why lack of diversity causes money to be left on the table. To sum it up, technology companies are built on innovation. The very core of entrepreneurship is simply solving problems and developing solutions that meet a need. The reality is that diverse ethnicities and genders share many similarities, but also share many differences; different interest, different concerns, different experiences, different perspectives and therefore have different needs.
When minority led tech start ups are not able to get the funding they need to develop their products/ services, they are not able to capitalize on blind spots of the mainstream market. They’re not able to develop innovative solutions and solve problems that are relevant to different ethnicities and gender groups. The outcome is that investors, who seek to use their capital to make money, miss out on the economic opportunities that could have resulted from the success of the venture.
For example, Bob Johnson founded Black Entertainment Television (BET) because he knew how important it was to the African-American community to see images they could relate to on television. With an initial $500,000 investment from media giant John Malone, Johnson went on the launch BET and eventually sold it for $3 Billion, netting Malone $700 Million for his investment interest.
The bottom line, diversity is not just about being politically correct, diversity is profitable.
As opportunities begin to open up, savvy tech entrepreneurs are encouraged to seek out avenues to continuously hone their skill. One such resource is the National Black Information Technology Leadership Organization (NBITLO) whose upcoming event, Urban Tech Weekend, promises to provide a wealth of empowering resources to those in attendance. NBITLO was founded in 2009 by Andrew West as a resource to help bridge the digital divide and assist in diversifying the S.T.E.M pipeline.
This will be the organization’s 6th Annual conference as they tout an action packed agenda that includes industry expert speakers, interactive workshops, and recruitment opportunities. The conference will be taking place from Thursday, September 25th to Saturday, September 27th, 2014 at the Wyndham Houston Energy Corridor.
Preparing for Opportunities
When hard work and preparation meet opportunity, the result is success. We at RYSE would like to provide you with a few funding tips you can begin working on right now.
- Explain Your Product Clearly
This may sound simple, but it is a lot tougher than most entrepreneurs think. Take into consideration that your background and upbringing determines how you see the world and therefore influences the problems you seek to solve.
For that reason, you must clearly articulate the problem that exist and why your idea presents an economic opportunity. Do not use marketing jargon. If investors don’t clearly understand the problem (because given their background, they have never experienced it), then they will be less interested in funding a solution.
Recognize that most investors fund majority white teams because they are comfortable with them and can relate. Watch a few episodes of the hit reality show Shark Tank and you will noticeably understand this unintentional psychology. Mark Cuban typically is the investor most excited and aggressive about the tech ventures that are presented, the female investors (Barbara or Lori) often connect with the female entrepreneurs (Lori even wrote a check on the spot to a woman pitching her company), Daymond once went backstage to further pursue an African-American entrepreneur who initially turned down his offer.
When the Sharks are pitched a promising idea that is out of their comfort zone, they quickly turn to one of the other investors who may have more expertise in that area to see if it’s potentially a substantial opportunity. If they still don’t fully get it, they are out!
You want the investor to clearly understand the plight you are looking to resolve. Statistical data that can back up your claim is always a plus. You want them to see that an opportunity exists.
- Show them the Money
At the end of the day, it is not about charity for investors; it is about Return on Investment (ROI). As Kevin O’Leary aka Mr. Wonderful from Shark Tank often says to prospects seeking investment capital, ‘’How are you going to make me MONEY?” Once you get beyond friends and family funding, this is the ultimate question all investors want to know.
Show investors the market that exists for what you are looking to launch. If it’s a problem that they are not familiar with, be able to answer questions such as: how large is the market? Demographically, Geographically? What are the potential economic opportunities?
You don’t want them to see black or brown, you want them to see green.
- Convey Your Strength
Whether you are white, black, brown or purple, investors want to know, do you have what it takes to execute the plan? You’ve clearly articulated the problem that exists and they get it. You have shown them that it has the potential to make them a boat load of money and they are seeing dollars signs. But have you conveyed that you have the fortitude to make it happen?
Launching a start up is hard work. Even with funding, you constantly have to resolve new issues that you did not anticipate. Problems will inevitably arise. How are you going to react to them? Do you have the perseverance to pull through or will you give up at the first sign of trouble?
Struggles you have dealt with and overcame certainly apply here. Do not be afraid to convey a difficult situation that you overcame and pushed through. Remember, everyone loves an underdog with the heart of a lion. You want them to know that you have what it takes to push the company through to the finish line.
- Do Your Research
There is nothing quite as impressive as an entrepreneur who knows their stuff. If you want to be taken seriously, then you need to become a domain expert in the market that you are pursuing. You need to be able to convey why YOU are the one who could become the market leader.
Utilizing a SWOT analysis approach will help you in your research. You need to know your company’s strengths, weakness, opportunities and threats, and be able to clearly articulate them. You need to know the numbers a well. If there is a particular area in which you are weak, seek out assistance from someone who is strong in that area. As the founder, you will be expected to have an overall knowledge of every aspect of your business and the market you are entering. Being prepared further instills confidence in the investor that you are a smart entrepreneur, knowledgeable enough to execute the plan.
Slow Progress is Progress
While it may have taken a little push, or in many cases a bit of a shove, the bottom-line is that the eco-system is growing and opportunities are beginning to open up for minority entrepreneurs in the tech space. And as more minority lead tech companies succeed, it opens up opportunities for more minority participation, more minority tech mentors, and ultimately greater access to capital. Make no mistake, there is still quite a ways to go, as additional emphasis needs to be placed on funding great entrepreneurs from different socioeconomic and academic backgrounds, but we are starting to see things move in the right direction.
So we encourage you to get your application submitted to Y Combinator before the October 14th deadline, connect with Angela Benton and the team at NewMe regarding the resources they have to offer and get registered for the National Black Information Technology Leadership Organization’s Urban Tech Weekend, because it’s a great time to be a minority tech entrepreneur and the opportunities are on the RYSE.