“It’s weird, they always travel in groups of five, these programmers. There’s always a tall skinny white guy, short skinny Asian guy, fat guy with a ponytail, some guy with crazy facial hair, and then an east-Indian guy. It’s like they trade until they all have the right group.”
Lines from the satirical television show Silicon Valleyo n HBO depicts an accurate stereotype about startup life in none other than Silicon Valley. While the show hysterically satires America’s tech hub, these observations scrutinized in the tech world aren’t exclusive to the Bay Area alone. In this scene in particular, where the head of the show’s Google-inspired firm dissects the groups of programmers and their obvious similarities, an all too familiar reality is made clear: the underrepresentation of minorities in startup, specifically African Americans and Latinos.
The truth is that a number of minority groups are both underrepresented and underserved when it comes to tech startups in the United States. An even smaller number of those succeed at actually getting any angel funding. Seven percent of those pitching for angel funding in 2013 were minority-led businesses, with only about 13% of those actually receiving funding. According to the Center for Venture Research at The University of New Hampshire, this number is significantly lower than the 21.6% average of all businesses that are able to translate their pitches into cash in 2013. That is a very small percentage of the $24.8 billion angel investments made in 2013.
There are several reasons why these discrepancies exist. For starters, these are communities that typically don’t have a lot of generational wealth. So, when going down the initial friends and family realm to help get their businesses off the ground, minority entrepreneurs do not get the financial support they need. Without funding in the early stages, entrepreneurs end up going back to work before they can get angel funding or even to the next stage of development.
Minority entrepreneurs also have fewer business connections. Because there are so few minority-led high growth businesses, entrepreneurs from these minority groups don’t have access to mentors. In addition, the white men dominating the business world are less likely to mentor women and those who are of minority ethnicities, as evidenced by a recent Wharton study conducted by professor Katherine Milkman.
To test it out, Milkman and colleagues created emails with names that clearly represented different ethnicities and genders. When these emails were sent to several professors at top universities seeking meetings about their work, the professors, specifically those from business schools, were most likely to respond to the emails that depicted white men. A study conducted by CB Insights in 2010, also found that Venture Capitalists are more likely to back white males over minorities and women. Thus, the cycle continues.
Little has been done to break this pattern, but business leaders in New Orleans hope to remedy this national epidemic with a new initiative called PowerMoves.NOLA.
“PowerMoves.NOLA aims to correct that [cycle] by highlighting that there is quality deal flow,” said Rodrick Miller, President and CEO of The New Orleans Business Alliance. “We are raising awareness that there are quality companies and ensuring that these companies are getting tangible support. New Orleans already has the bones and infrastructure to provide help.”
The startup 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 weekend of Essence Festival (July 3-6), where Lionel Richie and Prince are set to perform, PowerMoves.NOLA will showcase 40 of the country’s top minority entrepreneurs in an effort to break down some of these barriers. Several events – which include three pitches with $25,000 investment prizes, a two-day intensive startup boot camp presented by Techstars and networking opportunities – will focus on giving minority entrepreneurs access to funds and business connections during one the country’s biggest music festivals, which preeminently attracts a large group of minorities as well as media and V.I.P. attention.
“I can’t oversell the amount of talent that’s coming to New Orleans for Power Moves,” added Leslie Jacobs, CEO of The New Orleans Startup Fund. “This is the most credentialed group of entrepreneurs I have ever seen.”
All 40 entrepreneurs have been handpicked out of hundreds of applicants and recruits by a team of experts, and have undergone an intensive application and interview process. From facial recognition applications to robotic bartenders, these companies offer sophisticated services and products. However, they are traveling to New Orleans for more than just business capital and prize money. According to Jacobs, they are all enthusiastic about being part of a major event and the opportunity to raise awareness, in addition to making new business connections.
As for New Orleans, the event comes as the city continues to position itself as a world-class city for business. Now, leaders aim to solve a national problem within the city’s traditionally conservative framework.
“We are continuing to shift the New Orleans brand from a place that is historically conservative to one that is progressive,” said Michael Hecht, President and CEO of the regional economic development group GNO, Inc. “We are taking yet another challenge and pivoting it into a solution.”
After wrapping up their inaugural year, PowerMoves.NOLA will award fellowships to five early stage companies. The $200,000 investment will help the entrepreneurs relocate to New Orleans for at least one year and provide them with office space and technical support. PowerMoves.NOLA also aims to continue to grow the annual event with a national “rolodex” of high-impact individuals who will provide support to minority entrepreneurs throughout the year.
“PowerMoves.NOLA will be for minority entrepreneurs what SXSW is for tech entrepreneurs,” concluded Jacobs. And, with that, you have the birth of a new entrepreneurial movement.
Check out PowerMoves.NOLA to learn more about the participating entrepreneurs.