Why diverse voices are critical to the startup economy
Underfunded and underrepresented, women and people of color face systemic challenges as entrepreneurs — but the landscape is shifting.
Our blog series on issues in entrepreneurship features 36|86 insiders exploring topics including innovation as a catalyst for social change, self-care as an entrepreneur, and why community is critical in the startup ecosystem.
Today, a chat about the importance of women’s voices in the entrepreneurial economy. Meet Alexandra Bacchus, Brand Partnerships, Nisolo; Netta Dobbins, cofounder and CEO of Minorities in Media; and Bianca Caban, Director of Partnerships at Republic.
Why are women’s voices critical in today’s entrepreneurial economy?
Entrepreneurship could only go so far without women. The non-male voice is critical because it can redirect a company’s target customer and brand positioning by posing a simple question like, “Have we thought about X or Y?” When women (who make up over 50% of the US population!) are in the room to represent new solutions, it creates companies that have real, lasting market power.
Let’s start with the facts. Founding teams with women perform better, generate more income, and are more innovative in the long run. The grit and “by any means necessary” mindset that a lot of women founders exhibit shows me that they are often the backbone to their organizations.
Additionally, when you bring diversity to the table, you’re able to create a product or platform that’s a true value-add for the world we live in. Through these diverse voices you’re able to analyze different perspectives that come from different economic statuses, home environment, sexual orientation, etc. Despite these facts, women still remain underrepresented and underfunded.
For a first-time entrepreneur like myself, I value meeting women founders and hearing their perspectives to get an inside view of what their process has been like and to know that I can make it. Often times, I leave those conversations with a new ally and stronger network where we’re all lifting as we climb.
Women are the fastest-growing group of entrepreneurs in the US, and their businesses are also leading employment and revenue growth in this country. According to the American Express State of Women-Owned Businesses Report, women-owned businesses grew by 58% in the last 11 years while all businesses increased by only 12%.
Therefore, it’s so important that we support women business owners to get the capital, resources, and networks they need to get their businesses to the next level, which will ultimately benefit society and our economy as a whole.
What are some inspiring changes you’ve seen for women in the workplace that are paving the way for a more equitable future?
It seems like the workplace has been shifting constantly in recent years. Last year seemed especially monumental when the law was passed in California requiring at least 50% of a public company’s board (of 6-plus members) comprise women by 2021. Silicon Valley and San Francisco’s startup scene will hopefully look a lot different when that shift is fully implemented, which is a win for women and minority groups that are lacking representation in large, impactful, and emerging companies.
After the #MeToo movement, I began to see workplaces take women issues a lot more seriously. I’ve seen internal employee resource groups catered toward the upliftment and empowerment of women.
Women are demanding equal pay, longer maternity leave, and they’re actively speaking out against discrimination and harassment within the workforce. Because of this, they’re holding their workplaces — where everyone male or female should always feel safe — accountable.
Building an inclusive environment where you feel seen and listened-to is the first step toward really ensuring an equitable future. Too often in the past women have been discounted and undermined, but today, we’re requiring and demanding a better future.
I am inspired by companies that have a mandatory paternity leave policy. Data shows that after the birth of each child, when women leave the workplace, they see their earnings drop by 4% while new fathers receive a 6% bump or greater.
By mandating that new dads take paid leave when they have children, this could not only help to destigmatize the act of doing so for both men and women, but also go a long way in reducing the gender pay gap by relieving women of the full burden of childcare and from having to take the full time away from work.
Data shows that VC money goes to only 8% of female founders, and in 2017, 2.2% went to all-female founding teams. Minority founders are further underrepresented, raising only 1% of VC. What are steps we can take as an ecosystem to remedy the imbalance?
This imbalance can hopefully be corrected through more diversity in venture capital and targeted VC funds that seek out under-represented founders. With more funds focused on both impact and inclusion, I think we’ll see a lot more founders feeling empowered to start companies, knowing that there is funding already there to meet them.
Every founder that has tried to raise money talks about the uphill battle they face when it comes to funding. When that founder is a minority or a woman, their ideas get thrown into question even more … and sometimes that discouragement becomes too much. I can’t help but wonder how many companies didn’t make it because they were pitching to a group that didn’t understand the problem they were solving or the customer they were talking to.
Over this past year, I’ve seen an emergence of Black VCs and funds focused on women of color (i.e., Bumble’s Fund). The opportunity to have VCs and funds that cater to this demographic specifically already helps to establish balance.
Additionally, I’ve seen funds generate reports on how many women and people of color they’ve funded. This is another step in accountability, and they’re publicly allowing us to ensure they do what they said they were going to do. As women of color, we have never been afforded more opportunities to build a scalable, VC-backed business than we are now.
Beyond developing relationships with funds and investors, it’s equally important to establish real relationships with women and POC founders. Many investors believe the best intros come from companies that they’ve funded. Building a strong ecosystem where we’re all lifting as we climb is equally important when it comes to building a more inclusive ecosystem.
I think a huge part of the problem is the fact that women only make up 7% of venture capital partners (check-writers) and 22% of angel investors in the US. In terms of underrepresented people of color (Black or Latinx) in check-writing roles and angel investing, the data is even more dire.
In order to diversify the people getting funded, we need to work on diversifying the decision makers. We see this working in other areas outside of venture. For example, the Fortune 500 now has more female CEOs than ever before, which industry experts attribute to the uptick in women and minorities on corporate boards, who ultimately drive such hiring decisions.
As an ecosystem, we can work to improve this imbalance by making a concerted effort to increase the number of women and minorities in venture capital through mentorship programs and proactive hiring practices, as well as educating women and minorities who have amassed wealth on how to angel invest. I’m excited that Republic is working on doing just that!
If you’re interested in learning more about funds and organizations seeking to shift the players at the table when it comes to VC and funding, these 36|86 alums are good places to start: iFundWomen, Backstage Capital, The JumpFund, ModernCapital.