Black Women Founders Don’t Have the Privilege of Failing
This is a part of series of discussions around the release of the #ProjectDianereport, a report on digitalundivided’s proprietary research study about the state of Black women in tech entrepreneurship in the United States. The report will be released on Feb 9th, 2016.
Failure is an important part of success in the startup space. Travis Kalanick failed twice before he founded Uber, including being sued by one of his investors and running into trouble with the IRS. The Founders of the social media app Secret closed its doors after raising over $35 million. Ev Williams and Biz Stone, both ex Googlers, created Twitter (along with Jack Dorsey and Noah Glass) after their podcasting platform, Odeo, was made obsolete by Apple’s iTunes. All continued to receive support, and venture funding, post failures.
Black women Founders don’t have the privilege of failing, and this limits their ability to be successful in the tech startup space. For them, entrepreneurship can be a high-stakes game in which persistence through multiple startups and pivots may not be a viable or even an available option.
A Missed Opportunity…
Despite a clear opportunity for the angel investing and venture capital communities to connect with promising Black women-run companies, a substantive ecosystem has not yet fully emerged. From 2012 to 2014, Black women start-ups comprised less than .002% of all the venture deals, according to information compiled from CBInsight Reports.
This shocking statistic, which emphasizes the challenges in funding, could be related to the lack of diversity in the investing community itself. Richard Kerby, a seasoned investor and Vice President at Venrock, found that less than 1% of the top venture firms had a Black member on their investment team. Furthermore, Kerby’s research noted that only one fund, the corporate fund Intel Capital, had a Black women partner. #ProjectDiane has identified five other Black women venture partners: Kesha Cash of Impact America, Deborah McGriff of New School Venture Fund, Monique Woodward at 500 Startups and a newly created fund targeting Black and Latina women launching in March.
The lack of Black women investors is problematic, especially when the majority of new businesses in the Black community are being created and led by Black women. This disparity highlights a potential disconnect as those in positions to fund these businesses may not have the domain knowledge necessary to accurately source and assess their market potential.