When was the last time you heard of a great new tech start up in Silicon Valley that was headed by a minority or a woman? How about outside of Silicon Valley? Anywhere? Take your time, I’ll wait. Still nothing? Don’t feel bad, because you’re not alone. There is a severe shortage of minorities and women in the start up world.
A recent Forbes article sheds light on this gaping hole of representation when it comes to tech start ups. If that’s not bad enough an even smaller percentage of those start ups that pitch to angel investors actually receive funding. In 2013, only seven percent of the tech start ups pitching to angel investors were minority-led businesses, and from that percentage, only 13%actually received funding, significantly lower than the nation’s average of 22% of businesses that pitch receiving funding.
A few of the factors contributing to this include:
1. On average, minorities do not come from communities with generational wealth. In other words, these individuals do not have family members and friends they can simply call on for the necessary dollars to get their companies off the ground. This translates into many otherwise viable businesses not being able to get past the initial stages.
2. These same minorities have fewer business connections and are less likely to find a mentor than their well-connected white male counterparts. A recent Wharton study where emails were sent out to potential investors and mentors, showed that the messages sent from email accounts with names that looked “ethnic” or female were way less likely to receive a response.
Very little has been done to fix these issues, but a new initiative coming out of New Orleans aims to fix just that. PowerMoves.NOLA is working to raise awareness of the quality minority-owned start ups and ensure that they receive adequate and tangible support. The program is led by a group of New Orleans business and economic development leaders including GNO, Inc., The New Orleans Startup Fund, The New Orleans Business Alliance and The New Orleans Mayor’s Office.
During the week of EssenceFest (July 3-6), PowerMoves.NOLA will showcase 40 of the country’s top minority entrepreneurs in an effort to increase awareness and interest. Prizes will be awarded to top contestants and will range from cash investments to advisory services.
To read more on PowerMoves.NOLA and the upcoming competition, click here.