Anyone who lives and works in downtown Oakland’s tech epicenter, otherwise known as the East Bay tech epicenter, i.e., “Uptown” knows that it’s both exciting times here in the tech industry and yet equally disappointing, realizing the dismal statistic—that only about three percent of venture capital funding is going to women and less than one percent to people of color. As founder of an East Bay Digital PR firm who’s been here in the tech marketing and PR industry for more than 15 years, watching the growth is indeed meteoric particularly among young men and women of color tech innovators.
In other words the disappointing statistic is not a supply side problem. Hundreds of software startups run by women, African-Americans and Latinos are already online, in the queue and ready for lift-off. All these eager creators need is a timely final push from the venture capital side, but all too often that crucial financial assistance never materializes. Instead the money goes elsewhere, generally to the very same places it has always gone before.
Diversity is Gaining Traction
To some extent this selection bias is based on prejudice, but there is more to it than that. Stakes are high in venture capitalism and that tends to breed a culture where risk aversion dominates. This means endless iterations of the same-old, same-old while promising alternatives are allowed to fall through the cracks. Past relationships also play a pivotal role in the reproduction of sameness, as many investors prefer to funnel seed and early-stage funds to people they already know and trust.
Traditional patterns of venture capital disbursement run counter to the goals of tech industry diversification, and those patterns have proven highly resistant to change. But thankfully the truly talented no longer have to wait around to be discovered. In the software/apps biz startups and founders can gain cheap and immediate market access through virtual sources, giving them an opportunity to gain traction and make an impact with consumers even without the benefit of VC largesse.
Always preferring the real to the theoretical, a growing number of investors are tracking these developments and adjusting their funding allotment patterns accordingly—which could ultimately be a boon to underrepresented demographics. The evolving relationship between traction and venture capital flow is putting us on a path to a purer form of meritocracy, where authentic innovators backed by actual customer demand will be in a better position to obtain the capital they need to take flight.
Earlier this year, I managed the campaign launch inspired by this exciting new trend, a self described serial entrepreneur who’d begun using technology to further the cause of organic diversification in the tech industry through his website VentureFund.io. This platform facilitates real-time data-sharing and relationship-building between fledgling founders and investors looking for a broader pool of talent (and life experience, and perspective) to choose from. Since VentureFund’s launch, I’ve been pleased to see many other venture funding platforms and funding opportunities created and launched providing even more opportunities of real inclusion especially useful for underrepresented groups looking for a way to smash those VC funding barriers.
A Fair Economy is a Robust Economy
Low levels of participation and a lack of support for women and people of color in the tech industry is a social justice issue, to be sure. But it’s also a sign of economic underdevelopment, of a tech industry that’s operating far below capacity. Successful startups expand consumer demand, stimulate tech sector growth and act as a springboard for more wide-ranging R&D expenditures—all of which creates more opportunity and profit for everyone.
Venture capital should continue to seek out potential winners. But they’re found everywhere and the smartest and fairest course of action is to shine the spotlight on them all.