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Why We Lack Black Tech Founders and How to Do Better 2021

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Key Takeaways

Black tech founders need more venture capital, but more entrepreneurial resources are just as important.In order to grow, tech communities need to start acknowledging the inequities and biases Black founders face. Investors need to learn about founders that don't look like them because those founders' ideas may be gold. WOCinTech / flickr

Why are there so few Black tech founders in the US, and how can the tech ecosystem better support them? 

That's a loaded question, because there are various reasons. Let's start by pointing out that white people in 2019 made up 77% of the labor force, according to data from the US Bureau of Labor Statistics, while Black and Asian people only comprised 13% and 6% of it, respectively.

Still, data shows Black entrepreneurship is on the rise. Now, experts interviewed by Ach5 say the challenge turns to revamping the nation's tech ecosystem to better support them.

Melissa Bradley, managing partner of 1863 Ventures, told Ach5 in an email interview that many Black people simply lack the resources and pathways to technology careers. Once there, they also lack the same access to capital as white entrepreneurs.

"Black founders are not getting as much VC money because they lack the social capital. They lack the relationships with folks who can cosign deals, and because there are only a few Black fund managers, the expectations are unreasonable," Bradley said.

"We have seen Black founders with more traction get less money than white founders with less traction."

1863 Ventures

Bradley's firm, Washington, DC-based 1863 Ventures, is a business accelerator program primarily focused on helping minority entrepreneurs scale by honing in on their operations, sales, customer acquisition, finances, and the like.

With an extensive background in social entrepreneurship, technology investing, and working with emerging startups, Bradley has seen first hand the lack of support for Black tech founders. 

She said about 20% of Black entrepreneurs in the US work in technology, yet they lack the most resources in this sector. Reversing this trend must start with uprooting the tech ecosystem as a whole, she said.

"Traditional tech ecosystems need to recognize that there are active and growing Black tech ecosystem builders," Bradley said. "Therefore the diverse systems need to connect to better understand Black tech founder needs and how to help increase their success."

As an example, Bradley highlighted the work of Kelly Burton, the CEO of Founders of Color, an online platform connecting entrepreneurs of color, and co-convener of the Black Innovation Alliance, a national coalition focused on aiding Black startup founders.

The Struggle of Being a Black Tech Founder

As a Black woman, Happied co-founder and CEO April Johnson can attest to the challenges first hand. Johnson's company operates an online service that delivers food-and-drink kits to groups for in-person or virtual happy hours.

Johnson, a lawyer by trade, has bootstrapped Happied from the outset, and said she and co-founder Sharon Cao often have faced doubts about their capabilities to run a tech business. 

"The challenges I've faced can be broadly put into two buckets," Johnson told Ach5 in a phone interview. "Microaggressions, with respect to my competency and my audience, as well as access to capital and customers."

When Johnson started her company, she targeted busy business professionals from all walks of life. Often in her sales pitch meetings, however, she found that bar owners would subtly ask about the race of her target audience.

This made her feel uncomfortable, since she suspected her white counterparts weren't being asked the same questions. To test her theory, she even went so far as to hire non-Black sales agents, and quickly found her company's sales went up.

"There is often an assumption that as a Black founder your product is solely for a Black audience and/or you're doing something diversity-focused," Johnson said. "People really need to stop that. Black people can and do build products for broad-based audiences and customers."

This is the stark reality for many Black tech founders, whether pitching to potential clients or investors.

"The diverse systems need to connect to better understand Black tech founder needs and how to help increase their success."

Sometimes, she said, investors don't trust that Black tech founders are capable of being successful, or customers don't trust purchasing products from Black-owned businesses. 

"If your competency is automatically questioned and your audience automatically thought to be limited, you're met with questions that no matter how you answer—it's just not quite good enough," Johnson said. 

This experience is like a never-ending domino effect, Johnson describes. While she feels generally supported in the local DC tech ecosystem, she said tech startup communities need to be more intentional and direct with their support of Black founders.

And while she's found local support from organizations like 1863 Ventures and the city's BLCK VC chapter, she feels that national tech ecosystems really could use an overhaul. Tech communities need to start acknowledging the inequities and biases that are present and fund more Black founders, she says. 

"I think like in any industry, where there is a small number of Black people already existing in the space, coupled with a lack of pipeline and mentorship programs, you'll end up with a self-perpetuating cycle of a relatively small number of Black tech founders," she said.

"You don't know what you don't know, and many potential Black tech founders may not even know how to get started with a tech product."

Ecosystem Leaders Can Become Better Allies

When Adam Mutschler became a partner at The Kedar Group, a coaching and leadership development company, he was ready to dedicate his time to working with clients from traditionally underserved backgrounds.

He told Ach5 that the lack of Black tech founders has been exacerbated by the dearth of Blacks in positions of leadership at established tech companies. 

"When a community of people are systematically oppressed generation after generation, and are aggressively and intentionally under-resourced it will have, and has, a direct impact on people's abilities to start and run companies," Mutschler said.

The Kedar Group

"When people don't see people that represent them in positions of power and influence, it's that much harder to move into a role."

Mutschler said there's a lot of pressure for change in the tech ecosystem, especially when it comes to venture capital. He chalked up the lack of capital for Black tech startups to the laziness of investors, who in many cases haven't been willing to learn about tech founders that don't look like them. 

"The truth is, and the stats are there, most venture-backed startups fail. Not a slight majority, a large majority. With this in mind I would say that the laziness becomes even more evident," he said.

"Traditionally VCs invest in industries, markets, and communities they understand. Even if they don't feel comfortable investing in a slightly unknown space or demographic, start doing the research, get to know new markets, new innovators, become a student and understand the potential."

Mutschler has been a long-time advocate for entrepreneurs of color. One way he gives his support is by entering spaces where he's the potential minority, like attending AfroTech's annual conference or other similar events, and starting conversations. he said there are more ways than one to support Black tech founders, and venture capital isn't the only answer. 

"There's a lot to be said about cutting checks to minority founders. If you're reading this and you cut checks, do that, we need as much of that as possible," he said.

"...many potential Black tech founders may not even know how to get started with a tech product."

"I'm not at a stage where I cut checks, so I cut my checks in the currency of time. I spend as much time investing my energy and support in minority tech founders. I give time, I coach, advise, mentor, and maybe, most importantly, I introduce and raise their names and companies to anyone that will listen."

Above all, he said, if you want to be an ally in this space, educate yourself on what issues Black tech founders face and brainstorm ways to help overcome them. Ask them what they need, since the struggle to raise venture capital may not be the issue in all cases.

Challenge your peers to do this hard work as well, Mutschler said, because the more allies the Black tech ecosystem gains, the more support it has to grow. 

"We have so much work to do to truly attract Black tech founders," he said. "We need to show them we believe in their abilities and capacity by investing in them, by believing in their products and by believing in the markets they're innovating in."