Sheila Herrling of the Case Foundation Discusses Changing the Demographics of Innovation

Supporting entrepreneurship has been a key part of the Case Foundation's work throughout its nearly 20-year history. But in 2014 the Washington, D.C.-based foundation began to notice that American entrepreneurs are a surprisingly homogeneous group.

Sheila Herrling, the foundation's senior vice president of social innovation, cites data showing that only eight percent of startups nationwide have female founders and less than one percent have African-American founders.

"Really looking at the demographics is sort of startling," Herrling says. "All of a sudden it kind of hit us in the face."

Since then the foundation has made inclusivity a key element of its entrepreneurship program and undertaken several initiatives aimed at encouraging diversity among American entrepreneurs. The foundation has supported PowerMoves, a New Orleans-based business incubator for people of color, and the Focus Fund, a $10-million Cleveland-based investment fund that provides venture capital to businesses led by women and people of color. This fall the foundation will launch a campaign called "I Am an Entrepreneur," using social media to spotlight female entrepreneurs and entrepreneurs of color.

"We just basically use our megaphone and our social media following to talk about the issues, to raise the issues, to put data on the table and to tell stories," Herrling says.

Herrling outlines three key current trends in inclusive innovation. The first and most obvious, which the Case Foundation is currently emphasizing, is increasing diversity among American entrepreneurs. The second is to make it more possible for entrepreneurs to stay in their cities of origin instead of having to move to New York City, Silicon Valley or other economic centers to find venture capital. The third trend Herrling points to is the rise of social impact companies that demonstrate the feasibility of making both a financial and a social return on investment.

"For us, those three pieces of inclusion are increasingly coming together," Herrling says. "I think that's the biggest trend that we think is going to drive growth: more diverse entrepreneurs driving at social problems and social change while making profits and creating jobs in cities."

Herrling also outlines three current barriers to inclusive entrepreneurship, which the Case Foundation's work is structured around dismantling. The first is access to social capital, which the fund is working to address by investing in programs like PowerMoves and other accelerators. The second is access to financial capital, a problem the foundation hopes to eventually address by finding a strategy to increase diversity within venture capital firms themselves.

"Largely, the people making the decisions [on venture capital investments] are white men," Herrling says. "It shouldn't be too surprising, based on what we know about human nature, that most of the deals are going to white men. If we disrupt that, we can make a difference in who's receiving the funding on the other side."

The third main barrier Herrling hopes to address, starting with the Case Foundation's "I Am an Entrepreneur" campaign, is the issue of what she calls "inspirational capital."

"The visual you're bombarded with every day is a young white guy who is well-resourced and well-networked and had some 'Eureka' idea and became a billionaire," she says. "If I can't look up and see a whole bunch of women entrepreneurs, I will grow up never really thinking of that as a possibility."

Another of the foundation's initial investments in inclusive entrepreneurship is its partnership with Forward Cities, which Herrling describes as "an investment in our own learning." She says she's been impressed with the "extraordinary" work Forward Cities has accomplished so far, and envisions a lasting body of work resulting from the initiative to inspire future innovation.

"To the extent that we can look across and use the data and use the stories to distill some common denominators for really incentivizing inclusive growth and inclusive entrepreneurship, that becomes almost a playbook for any city that wants to take up the mantle," she says. "That would be my big hope."