#ProjectDiane: Breaking Tech’s Diversity Catch-22

Tech is the living, breathing example of a Catch-22. Diverse founders don’t receive crucial seed funding to grow into viable businesses that lead to an exit (in the case of a start-up, a purchase or an Initial Public Offering/IPO). Yet, an exit is necessary to create diverse investors who have the capital to invest in the next crop of diverse start-up entrepreneurs.

For example, top venture capitalists like Mike Seibel of Y Combinator, were able to become investors because they had successful exits from their companies (in the case of Seibel two exits- $60MM and $970MM). digitalundivided, the social enterprise focused on finding, developing, and supporting urban entrepreneurs, that I founded and lead as Managing Director, was funded in part from the sale of my online media company.

The larger investment community cites the lack of investment in black and latino led start-ups on a pipeline that is more of a intermittent “drip” when it comes to diverse founders, versus the massive “drop” of the “young-white-guy-from-insert-big-name-school” founders. This is true if you’re only looking at certain schools (MIT, Harvard, and Stanford) or in certain companies (Google et al.). By focusing only on these institutions, certain patterns are reinforced, and because many of these institutions have dismal diversity numbers (less than 3% in most cases), black and/or latino founders and, in many cases, women, are often excluded from funding opportunities.

#ProjectDiane’s Goal

digitalundivided’s #ProjectDiane (www.projectdiane.com) disrupts pattern-matching in tech start-ups by identifying black women founders of tech-enabled companies. It enriches the diversity of the current tech pipeline by collecting and utilizing data to build programs that grow the number of start-ups led by these founders.

Launched in February 2015 from an idea by one of our FOCUS Fellows, Brit Fitzpatrick, founder of the SaaS mentorship platform MentorMe, the initiative itself is named in honor of Diane Nash, an unsung heroine of the Civil Rights era whose brilliant tactical mind led to several of the movement’s major victories- including the march in Selma.

Ms. Nash’s courageous fight for equality inspired us in a time where diverse women in the overall tech community grapple with “similar but not the same” treatment from the larger start-up community.

Why #ProjectDiane (and Black Women) Matter

#ProjectDiane is about more than just data— it is about changing a long-prevailing worldview.

By design, tech is a schematic field. When dealing with the constant, lightning-paced influxes of information, patterns are crucial for high-stakes industry players to make quick decisions. In order to disrupt this pattern, we have to rewrite the industry’s source code to recognize a new pattern.

From an economic development perspective, women are the key to refactoring the current code for the black community. Over 70% of black households are led by black women (US Census, 2014). While this statistic should not be construed to suggest that black men aren’t involved in their families (they are), it does suggest that black women make the primary economic and lifestyle decisions for their families and for the community as a whole.

Yet, little attention is paid to black women (and other brown women) as a group . While focus on the early end of the pipeline is important (ie. coding programs for kids), a number studies have found that this early work is for naught, especially for black children, unless you can change the economic status of their parents.

So, if you want to get black children in the tech pipeline, you must get their moms in the pipeline as well.

This is where #ProjectDiane comes in.

What We’ve Found So Far…

At one month into our data collection, the digitalundivided team has already begun to see concerning figures that reflect the deep challenges on both the investor and founder sides.

Of the 138 founders submitted so far to #ProjectDiane, we’ve been able to verify three black women founders who’ve raised more than $2MM each in Venture and/or Angel funding (Heather Hiles of Pathbrite, Kellee James of Mercaris, and Cheryl Contee of Attentive.ly) in the past five years. Furthermore, we’ve only verified eleven black women founders who have raised over $100,000 in outside investment.

This is extremely troubling since this suggests that over a five year period (2012–2014), black women start-ups comprised less than .2% (YES, LESS THAN .2%) of all the venture deals, according to information compiled from CBInsight Reports.

We hope that as we continue our data collection this dismal number increases, however our initial research of the 70,000+ start-ups listed in Crunchbase and AngelList (we’re about a quarter of the way through), found only one black woman startup founder who is not already a part of the #ProjectDiane database.

The early data (and #ProjectDiane is still VERY early) suggests that we don’t have a pipeline issue per sé, but an existence issue.

Black women are starting companies, we’re just not starting tech startups. We don’t exist in the start-up space anywhere near the numbers of our white or asian counterparts nor do exist anywhere near our percentage of the overall US population (around 7%).

In 2014, the State of Women Owned Business Report from American Express OPEN found that black women started companies more than any other group of women. However, black women also had the lowest average revenues of all women and their companies tend to be consulting and human service related.

Interestingly, a majority of the founders submitted to the #ProjectDiane database also lead consulting companies. This presents a very interesting pipeline opportunity for programs like digitalundivided’s FOCUS Fellow Incubator/Accelerator to help these entrepreneurs “softwarize” their current work, possibly leading to a new crop of Software as a Service (SaaS) companies led by diverse founders.

So, What’s Next?

We’re still early in the game, but #ProjectDiane has already had an measurable impact on bringing the lack of inclusiveness and intersectionality in start-up communities to the forefront.

Specifically, #ProjectDiane:

1- Shows that there are viable startups, no matter how small the number, founded by black women.

2- Promotes these founders via a documentary project.

3- Builds data-centered programs that lead to the development of more successful black women founders.

digitalundivided is analyzing the data and gathering insight on the factors that make these founders successful. The initial data collection phase will be completed by July and we’re producing a number of infographics, papers, and talks about the data that will be shared publicly at projectdiane.com.

A Word About Our Data Collection Methods

As a Yale-trained Epidemiologist, with more years of biostatistics than I care to admit, I understand the limitations of data. Our primary method of data collection is via self reporting at projectdiane.com, which has some limits that could affect the quality of data we receive like the (awareness bias, misreporting). To reduce possible data collection bias, we’re also collecting data on the racial makeup of companies in both Crunchbase and AngelList databases. This method of data collection also has its limits, such as identity is determined by outward appearances- there may be some founders who self identify as “black” or as a “woman” (or not identify as such) and therefore may be misclassified. Also many black founders may not be aware of these databases, therefore leading to inclusion biases.

We also take a very global view of the “black” racial identity and include anyone who considers themselves as part of the African diaspora (African, African-American, Euro-African, Afro-Caribbean, etc). There are folks who may not self identify as “black”, but society identifies as such and we use the overall society definition when we don’t have a self identification.

In order to be included in the findings, we must be able to independently verify the amount of funding raised- either via an article published by a major publication (we assume that the publication has verified the data) or direct confirmation from an investor. We do this to ensure the integrity of the data. There are a number of founders added to #ProjectDiane who are not included in these preliminary results because we’re unable to independently verify certain aspects of their information.

How You Can Help Project Diane

Project Diane is proud to be an organic, crowd-sourced endeavor. We receive no funding for the project. The project’s first phase — data collection and validation — is underway. Anyone can, and should, submit a black woman founder here: www.projectdiane.com.

Kathryn Finney