Inside The Tech Funding Game
(please note: original image from study was removed. To view, please see links inside piece) While news breaks that Facebook is now a top 15 among the most popular stock for investors and LinkedIn gets bought for $26 billion, issues and complications pertaining to investments and funding, particularly at the seed stage, for under-represented tech start-up founders has hit an absolute crisis point. And the topic has been basically hit or miss by the predominant male voices deemed valid by media for coverage on the topic tech and diversity. It is for this reason that an unprecedented congressional briefing recently took place on Capitol Hill in order to not only discuss the devastating funding crisis and its cultural and psycho-social bias contributors possibly affecting under-represented tech founders, but also a new way forward beyond mere pitch fests.
Although we may not be comfortable addressing such issues, race, image, and deep seated beliefs seem to intersect with and elicit strong reaction when it comes to business and technology. The impetus for briefing arose from an unprecedented Twitter sentiment study I conducted to determine real-time current sentiment around what seems to be the homogeneous nature and image of "rockstar" tech founders over the last few years.
Taking three iconic Beatles album covers, with the fourth being that of an iconic John Lennon solo album, an ethnographic study team substituted John, Paul, George, and Ringo for the faces of some of today's top tech "rockstars" from such companies at Facebook, LinkedIn, Google, Snapchat, Twitter, Tumblr, and several others. Unique founder faces to each album cover.
The graphic design team then altered their skin tone to that of a brown hue in order to imply that a different ethnic background from that of their natural one, i.e. Latino, African-American, Middle Eastern, Multi-ethnic. Several images from the series were posted per day throughout various times of the day including morning, afternoon, and evening. The intent of the action was to provoke questions around the seemingly well-entrenched cultural pattern of the same ethnic background and gender of what are considered today's "rockstar" tech founders over and over again.
When the images were released, the response was wild and included the good the bad, and the ugly.
In this unprecedented real-time Twitter sentiment study, many respondents understood right away that the point was about what could be seen as a funding bias with some mentioning that "even Middle Eastern founders have trouble finding funding." This grouping included many re-tweets and "favorites"/hearts. Conversely, other respondents could simply not get past the racial depiction and zeroed in what they interpreted as some literal statement. In this case, some type of perceived stereotype was deemed immediately offensive while the stereotype of who gets to be a "rockstar" is patiently endured.
Why? And why are reactions to race still so very strong in what many have said to be a post-racial America. And if, the findings of such reactions are accurate, just what impact does race, stereotype, and cultural patterns have at all in today's high-stakes game of tech, power, and money?
To understand this phenomenon, we need to understand the game board on which we are currently playing. Indeed, PBS recently released its own study on race which demonstrated figures including the fact that 60 percent of both black and white respondents said that race relations were worse than they had been in years. When it came to the question of if blacks and whites had the "same opportunity to get a job " 52 percent whites agreed while 76 percent blacks did not.
How far is the leap, then, from a getting a job to getting funding?
In fact a recent Quartz article brings together collective scientific studies over the years that demonstrates that most times, we actually stereotype without even being consciously aware. If this is the case, could it have any impact on these additional findings from a recent study that shows, among many other figures that of the $1.92 billion dollars invested 61 percent was handed out to Caucasian CEO's or a Caucasian founding team, Asians at 17 percent and African Americans at less than 1 percent (despite the fact that the latter is the most active consumer of digital)?
From these figures it might seem that venture capital--from angels, to firms to the VC arms of most of today's tech giants-- is simply broken and in need of a major overhaul. Even the pattern-matching in funding decisions, often flaunted, seems deeply flawed. If it weren't, a Harvard lecturer wouldn't have revealed something that the funding game might now want you to know: that three out of four startups they select, fail. So why maintain the almighty pattern?
The answer is very complex. What is most fascinating about implications behind this entire phenomenon is that the answer is not just the quick band-aid fix of a cultural sensitivity class a two, a demo day, a mere pipeline, or even extra "office hours" for those outside the traditional winner's circle who manage to shoulder their way into top tech incubators.
Even University of Washington professor William Bradford said in an 2001 interview (which unfortunately still holds true today, 15 years later) with the Seattle Post-Intelligencer "Venture capital is quite often doled out through a system that is partially old-boy, partially not. But in either case, you have to be connected to the right people to get the best access, and quite often minorities and women just are not connected to the white decision maker. Quite often those who are looking for this type of financing do not know where to look because they do not hang out in the same cocktail set as many of the white and/or male entrepreneurs."
It is for these reasons that new organizations such as Silicon Harlem both an entity and a movement, exists. If America is to maintain its position as a leader in technology, the full human capital of the nation will need to be utilized. Turns out that a large portion of untapped resources is located right in Harlem. Such voices will need to be supported and featured in order to create thriving start-ups that often times solve social problems unbeknownst to those outside of a mainstream experience in an increasingly brown America. In fact, the co-founder of Silicon Harlem Bruce Lincoln along with behavioral scientist and Director, Microsoft Startups Matt Wallaert; Associate Dean, Close School of Entrepreneurship, Drexel University; Marques Colston, Super Bowl winner and President of Star Ventures; along with Ryan Burke, Senior Analyst, The National Economic Council at The White House at the unprecedented congressional briefing sponsored by Congressmen Charles Rangel (D-NY) and Hakeem Jeffries (D-NY).
One thing is certain, there is an immediate and forceful reaction around race and tech that is fascinating and revealing. The various-hued entrepreneurial constituents of policy makers across the country will only increase, and the voices will rise up creating greater collective pressure. Yet presently, it is undeniable that nearly all current tech "rockstar" founders are homogenous in gender and ethnic background. Thus, we all just may benefit from full and deep analysis, information, and new strategies to further determine impact on the intersection of race, gender and tech founders and ponder: just what part does race and culture play into economic rights and tech funding game today because #VentureIsBroken.