As a country looking to create new jobs, new opportunities and new industries, we're supporting and investing in our regional entrepreneurial ecosystems--which represent the collective of technology-based economic development organizations, entrepreneurial incubators, colleges and universities, venture and angel funds, and other resources dedicated to spurring the creation of a region's high growth entrepreneurs.
Still, we're not reaching everyone. Although African-Americans comprised nine percent of all new entrepreneurship activity in 2011, a CB Insights study revealed that in 2010, less than one percent of all venture capital investment went to digital startups with African-American founders. Similar findings exist across industry sectors with respect to the percentage of African Americans attracting venture capital investment. Meanwhile, the U.S. Department Of Commerce's Minority Business Development Agency reported that between 2002 and 2007, the number of Hispanic-owned businesses increased 44 percent, to 2.3 million. However, of these 2.3 million companies, only 250,000 had employees -- and of those, just 44,000 firms had gross receipts greater than $1 million.
However, the challenge is not so much in the volume of businesses being started by the majority of African American and Hispanic entrepreneurs, but in the type and size of such firms. Even today, these remain primarily smaller service-oriented businesses, rather than the higher-potential opportunities that can attract investment capital and create larger numbers of new jobs. And, while this reality has been well documented for many years now -- and has in part led to a much-needed focus on creating a pipeline of minority entrepreneurs through heavier investment in STEM education (science, technology, engineering and math) -- the focus of this article concentrates on what regions across the country can do today to begin to reverse some of these unfavorable trends and connect more minorities to the nation's emerging tech-based economy.
Communities can best begin to foster the development of inclusive entrepreneurial ecosystems that produce higher growth, diverse businesses by forming connections and collaborations, and creating dialogue. Programs such as America21 realize the importance of communication as it relates to inclusive competitiveness. With a strategy based around building on the strengths of minority communities, America21 strives to "facilitate a new narrative to inspire free exchange of innovative ideas among community, business, government and education leaders, students and entrepreneurs, with a goal of achieving exponentially greater economic growth and prosperity throughout America."
Still, this dialogue can take many different forms and comprise many different organizations. Here are just a few valid options to explore:
- Communities should connect with the executive directors and presidents of the growing number of minority technical and professional groups across the country in such key clusters as bioscience, energy and information technology--such as Hispanic-Net, The American Association of Blacks in Energy and the National Society of Black Engineers (NSBE), to name just a few. Proactive engagement by leaders of mainstream technology-based organizations with this growing segment of minority technical associations will begin to establish the necessary connections, dialogue and relationships that form the basis of many tech start-ups.
- Consider presenting joint and "cluster-specific" educational and awareness-building conferences with diverse stakeholders. For example, in late May, Cleveland, Ohio hosted a national Minority Biomedical Entrepreneurship Conference (MBEC), an event dedicated to promoting African American and Latino biomedical entrepreneurship and innovation.
- Promote greater access to "risk-based" capital among minority groups, versus the more traditional access to capital discussions. The Venture Capital Access Program (VCAP), a partnership between Harvard Business School Alumni Angels of Greater New York (HBSAANY) and The National Association of Investment Companies (NAIC), is specifically geared toward providing women and diverse entrepreneurs with access to capital through venture capitalists and angel investors.
- Engage corporate America in structured "pilot programs" to test new technologies developed by minority entrepreneurs. In partnership with the Northern Ohio Minority Supplier Development Council, we've launched an initiative which provides opportunities for minority entrepreneurs to test their new innovations and technologies with established regional and national corporations and institutions. The goal is to subsequently convert the larger institution into the first customer of the minority entrepreneur should the pilot testing prove successful.
- Engage Historically Black Colleges and Universities (HBCUs) in the technology transfer and internship components of the ecosystem. Minority alumni associations such as the Black Ivy Alumni League, and graduate level fraternal organizations are also valuable resources to connect to diverse talent.
- Connect with existing minority focused entrepreneurial support organizations and create a unique set of new programmatic efforts focused on technology-based, high-growth entrepreneurship. While most existing minority assistance organizations offer some form of business assistance workshops, a significant opportunity exists to modify many of these workshops in partnership with mainstream technology-based organizations to then focus the revised workshop on the profiles and characteristics of high growth venture backed businesses.
Of course the aforementioned ideas are just a few suggestions to begin the process of connecting historically disconnected populations. It is my sincere hope that each example can stimulate additional discussion and potential action plans. Emerging technologies in the biosciences, advanced and alternative energies, advanced materials and manufacturing, information technologies and a host of other key technology clusters are where America is placing heavy bets on its economic future. To maintain our competitive edge in the new and increasingly complex global innovation economy, we will need our full complement of diverse talent to truly put forth the best that America has to offer.