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Funding and Fear: Two Gatekeepers Barring Black Tech Startup Founders From Entering Silicon Valley

When the lack of diversity in Silicon Valley was brought to the nation’s attention, tech lovers and entrepreneurs from all backgrounds quickly began discussing exactly what was keeping Black people barred from the world of tech.

Disparities in quality of education, lack of access to resources for students interested in STEM (science, technology, engineering and mathematics) and racially biased hiring practices quickly emerged as some of the most popular ideas.

Statistically speaking, there is more than enough data to back up these claims and suggest that fixing these issues could be key to diversifying the world of tech.

As the national discourse continues, however, some tech entrepreneurs are highlighting two more major obstacles that are preventing Black people from not only getting into tech but also discouraging them from launching their own startups.

Funding and fear.

This intimidating duo could possibly be among the great adversaries for aspiring Black business owners, especially in the world of tech.

The number of Black employees at tech giants like Google and Facebook was well below the 5 percent mark in recent years. The number of Black tech-savvy entrepreneurs who launched their own startups plummets to a measly 1 percent.

One key reason for this is the lack of funding.

Even outside the world of tech, Black people have historically faced much greater obstacles than their white counterparts when it comes to seeking financial assistance via loans, grants, investments or donations.

Without the necessary funding to get a startup off the ground, it may be nearly impossible for Black-owned startups to stand a chance in the rapidly expanding tech field.

Companies like Y Combinator are hoping to level the playing the field.

Y Combinator is a major incubator for startups and provides seed money to projects that show great potential.

In the past, the company has backed startups like Airbnb and Dropbox.

Now the company is expanding its reach with a particular focus on Black entrepreneurs.

Even as other programs like Y Combinator have started to shift focus in order to find more Black entrepreneurs with promising tech startups, it’s the other enemy that is still causing many to shy away from opportunity — fear.

At least, that’s how Michael Seibel sees it.

Seibel, the first Black partner at Y Combinator, explained that many Black people have a negative perception of launching their own startups.

“We have to convince Black engineers that they have more control of their careers than they realize and they will always be in demand,” Seibel told The Root.

Statistics would also work to support Seibel’s point.

Less than 5 percent of Y Combinator applicants for the winter program were Black.

It suggests that these entrepreneurs simply don’t know about the opportunity or are convincing themselves to not even take a chance in stepping out on their own.

As frightening of a decision as that may be, it’s a decision that has already led Black entrepreneurs like Riana Lynn and Talib Graves-Manns to life-changing opportunities.

Both of the Black startup founders were announced as a part of the first class of entrepreneurs in residence under Google and Code2040.

The coveted title means they will have access to free office space, mentoring teams from both Google and Code 2040 along with a $40,000 stipend.

They are both urging other Black entrepreneurs to overcome the fear of Silicon Valley and take a massive leap forward with their own tech startup.

Lynn explained that a part of the fear could come from a lack of knowledge or not feeling like one has enough experience in the field. It may seem like a legitimate reason to stay out of Silicon Valley’s deep waters, but Lynn says the solution to such a problem is simple.

“If you don’t have the skills to build exactly what you need, then you should at least have team members or freelancers that can help you move things along faster,” she told The Root. “Then you can also understand a little more about how long the project is supposed to take or how much it may cost, and that’s really key to launching a project as a startup founder with little or no capital.”

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10 Budding Tech Hubs Besides Silicon Valley You Should Know As An Entrepreneur

salt-lake-city-1110-lUtah

The state’s tech sector is growing primarily because of Google Fiber, a faster broadband provider, being moved and expanded there. Tech jobs are on the rise to feed Google Fiber’s work force.

OmahaSkyline_1__fxOmaha, Nebraska

The city has five Fortune 500 companies that all require tech workers. Berkshire Hathaway, Conagra and Union Pacific are major players in the city. SmartAsset ranked the city as one of the top ten cities to be a tech worker.

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From Dream Viewer App to Africa’s Financial Terminal, This Serial Entrepreneur Gives Tech Startups New Life

Jon Gosier Third Cohort Capital

After years of launching and growing his own businesses, serial entrepreneur Jon Gosier is giving new life to innovative tech startups.

Gosier has successfully launched and scaled an abundance of businesses and now he’s ready to lend innovative tech startups his expert advice and some substantial financial backing.

The long-time investor and philanthropist is one of eight partners behind the Third Cohort Capital, a seed-stage investment group that focuses on “high-potential technology companies,” according to the company’s official website.

While the entire team is comprised of successful business-minded individuals, Gosier explained that his experience as a serial entrepreneur makes him incredibly valuable to both his clients and partners.

“I’ve started companies and scaled them several times,” he told AtlantaBlackStar. “Having experience as an entrepreneur is invaluable when it comes to investing. It makes me more valuable to my partners who mostly haven’t been entrepreneurs and it makes me more valuable as a mentor and advisor to the companies we invest in.”

Third Cohort Capital offers two financing vehicles to its clients with one option specifically for other fellow Goldman Sachs 10,000 Small Businesses program alumni, graduates and participants.

While all clients are eligible for equity investments for any amount up to $25,000, only those who have graduated from or are currently working with the Goldman Sachs program are eligible to receive low-interest loans for up to $10,000.

While the company is still relatively new, it already boasts two successful clients who have created innovative mobile apps that are taking tech markets by storm.

Shadow, a mobile application based in San Francisco and Berlin, helps users remember and record their dreams.

By incorporating a social media aspect, the app’s users are also allowed to view the dreams of others around the globe who have decided to share their dreams.

In a more revolutionary aspect, experts believe the dream-viewing app could help make major scientific advancements in the psychology and other health-related fields.

Gosier has also helped to launch Market Atlas, which is described on the company’s website as a “modern financial terminal that uses real-time information and graph search to improve emerging market investment decisions.”

The internationally recognized data scientist serves as the chief technology officer of the self-proclaimed “Bloomberg for Frontier Markets,” which has the ability to help hedge funds, private equity firms and impact investors in Africa make informed business decisions.

These types of revolutionary ideas have led to publications recognizing Gosier as one of the “20 Angel Investors Worth Knowing” and “Innovators of the Year 2013” by Black Enterprise Magazine.

 

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Africa’s Age of Innovation Could Make Continent a Major Economic Power by 2063

Over the past few days, tech experts and global authorities have urged African countries to embrace innovation and technology in order to transform the entire continent into a global, economic powerhouse.

Thanks to a new wave of tech startups and government investments into these new businesses, experts believe Africa could be on the verge of an age of great innovation.

Companies like M-Pesa, the Kenya-based mobile-phone payment system, have already managed to boost economies in countries all across the continent.

According to Leadership.ng, M-Pesa has already “decreased informal savings in the country by 15 percent, increased the frequency of transfers and remittances by 35 percent, and increased usage of banking services by 58 percent beyond the levels of 2006.”

M-Pesa has since expanded beyond the boundaries of Kenya and into countries like Tanzania and South Africa.

Experts say this is just the start of what can be a magnificent burst of growth for many African countries.

The next step is for the continent to continue investing in people-driven technologies and continue discussing how to properly harness the vast knowledge and impressive skill set that many African entrepreneurs possess.

“Investment in skills, technology, knowledge and innovation will ensure democratic and responsive governance that can deliver effective public services and facilitate universal access to basic services, such as food and nutrition, water and sanitation, shelter, health and education,” said African Union Chairperson Nkosazana Dlamini Zuma at the closing of the ninth annual African Economic Conference (AEC).

The conference lasted for three days and brought business leaders, academics and economists from all over the globe together in order to discuss how to launch Africa into the global power it has the potential to be.

Experts at the conference hope to focus on boosting youth employment and furthering the adaption of new technologies across the continent.

Steve Kayizzi-Mugerwa, acting chief economist and vice president of African Development Bank, said now is the time for Africa’s brightest innovators to “stop being lazy” when it comes to innovation.

“We need to stop being lazy analysts and take our challenges for ourselves; stop wasting resources and implement our own ideas,” he said at the conference. “Africa must first understand where we are, what brought us here and then try to understand what to do differently to bring different results.”

Ban Ki-moon, the eighth and current secretary-general of the United Nations, couldn’t have agreed more with those sentiments.

“Technology can be used as a great power to change your life, to change our lives, particularly the life and future of Africa,” he said during his visit to the offices of the nonprofit technology company Ushahidi and its offshoot iHub in Nairobi, Kenya.

iHub/Ushahidi is considered a technology incubator and has already helped many young creators and developers implement new ideas in order to “promote great transformation for our society.”

He went on to say that Africa already has the “power of creativity” and now it’s up to those young innovators to use technology and creativity to change the world.

“When we use your creativity and ideas, I can bet you that the productivity and greater progress of the country will be at least 50 percent more than in the past,” he added.

iHub/Ushahidi has already been responsible for over 150 startups and garnered more than 14,000 members.

The experts who gathered at the AEC plan to continue fostering innovative solutions and working closely with governments and private sectors to boost Africa’s economic growth.

With a vast majority of Africa’s population still under the age of 20, these tech experts and academics believe investing in the younger generation will be critical to the continent’s 50-year plan to make Africa a global powerhouse by 2063.

 

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Lack of Investor Support for Females, Minorities Continues to Stifle Diversity in Tech Industry

Black owned start ups

A recent study revealed that female and ethnic-minority entrepreneurs have more of a struggle garnering support from investors when compared to their white, male counterparts.

The study from Pepperdine University’s Graziado School of Business and Management has exposed yet another way females and minorities are placed at a severe disadvantage in the tech industry.

“We find consistent evidence that minority (non-Caucasian), women and foreign business owners’ establishments are significantly less likely to receive PE (private equity) or VC (venture capital) financing,” the study said, according to a blog post by the Wall Street Journal.

The study analyzed fundraising data from the years 1995 to 2009 and found that female-owned business are 2.6 percent less likely to raise private equity funding than white males.

Female-owned businesses were also found to be 18.7 percent less likely to successfully raise a venture round than companies run by white males.

The numbers were even more troubling for minority-owned business.

Minority-owned businesses were 21.7 percent less likely to raise private equity funding and 22.2 percent less likely to successfully raise a venture round than their white male counterparts.

While the study focused on fundraising on all types of businesses, these statistics are particularly troublesome for minorities and females in the tech industry.

The tech industry heavily relies on private equity to launch innovative start-ups and sustain the growth of smaller companies.

With this industry already struggling with a severe lack of diversity, the inability of minorities and females to garner the same financial backing as white males means the industry’s 2 percent problem could persist.

Earlier this year, tech giants like Facebook and Google released their diversity reports, which revealed that only about 2 percent of their employees were Black.

Out of that 2 percent, very few of the employees had leadership positions with the company.

The authors of the report believe the lack of financial backing is not necessarily a result of overt racism but can still be connected to racial bias.

According to the Wall Street Journal, the venture capital industry is still dominated by white men.

A survey conducted by the National Venture Capital Association (NVCA) and Dow Jones VentureSource back in 2011 found that only 11 percent of investors were women while nearly 90 percent were men.

Researchers suggest that these white men are more comfortable investing in what is familiar to them – other businesses run by white men.

The NVCA claims it is taking steps towards changing this demographic and boosting diversity in investment firms.

Meanwhile, other leaders in the Black community are taking matters into their own hands.

Former NAACP president Ben Jealous stepped down as the head of the nation’s largest civil rights organization and is now working on the West Coast as a venture capitalist.

Back in March, Jealous explained that becoming a venture capitalist would allow him to continue making more opportunities for Blacks and Latinos.

“My life’s mission has been leveling the playing field and closing gaps in opportunity and success,” he told the Associated Press. “I’m excited about trying a different approach.”

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Microsoft Gets Behind African Startups as Demo Africa Gains Momentum

Microsoft is keeping a close eye on the innovation and tech-generated startups coming out of Africa lately and the IT giant is hinting at some major opportunities for the company and the emerging entrepreneurs.

Demo Africa aims to connect African startups to the global ecosystem by giving them a substantial platform with financial backing to launch and grow their businesses.

Apparently, Microsoft is on board with the plan and is ready to create serious opportunities for the young software innovators in Africa.

“For African investment it is an event that touches one of the core pillars of our drive around inspiring local economic development in the continent,” said Kabelo Makwane, the managing director of Microsoft SA, according to CNBC Africa.

Demo Africa is an affair that is sweeping the entire continent, but Makwane stressed the importance of seeing so much local participation in Nigeria.

“It is really encouraging because the same could not be said for the past where the momentum was a bit slow,” he said. “We have seen significant growth through public and private sector participation and also international donors and funders that have really risen to the occasion in helping to support these businesses to set up.”

He went on to say that Microsoft is always looking for opportunities in invest in something that will “contribute to real local economic development.”

Needless to say, the startups being launched through Demo Africa are exactly what they’re looking for.

“The first major reason is a very firm statement that Microsoft globally is very serious about Africa and is also very serious about Nigeria in terms of what this country represents in the broader context of the continent,” Makwane added.

Nigeria holds one of the continent’s largest markets, and, to Microsoft, that screams of opportunity.

“There is a nice catchphrase that says ‘Glocal,’ ” Makwane said. “We want to be more Glocal now as opposed to where we were in the past. So this means coming up with solutions and initiatives that are most relevant in a real way that can make a meaningful impact to the Nigerian context.”

 

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Nigerian Government Invests N1.5 Billion in African Tech Startups

Nigeria’s minister of communication technology, Omobola Johnson, revealed Thursday that the federal government will be investing N1.5 billion on software development and African startups.

The staggering amount is equivalent to roughly U.S.$9 million and will give Nigerian startups the backing they need to grow their businesses and fuel economic growth in the country.

According to Johnson’s address at the third edition of Demo Africa, the government will be conducting the first case of the Information and Technology Innovation Fund in a few days.

This means the first large investment into the African technology startups could be just a few short weeks away.

Johnson said that in the next few days, 40 startups will have the opportunity to pitch their ideas and solutions in order to secure the funding they need to move forward with their businesses.

“I understand that in the two years of Demo Africa, alumni has generated over $8 million worth of investments, businesses and partnership,” Johnson said according to Sun News Online. “This is how you create jobs, new business opportunities, expand economics, improve social well-being of citizens.”

She also said that it’s key that those types of results “speak directly” to the country’s “ ‘companies and not code’ philosophy in the Ministry of Community Technology.”

Johnson believes that fueling new Internet opportunities can create vast economic expansion and create wealth and jobs for many of the country’s citizens.

“It is good to show prowess in software development, but it is even better to develop business and companies that are powered by that software,” she said. “The recent IPOs of Twitter and Ali Baba are testimonies of what is possible. I can’t imagine that it is too often that you get this level of government participation in Demos around the world…But governments, indeed, African governments, have an important role to play in catalyzing the startup industry as evidenced in the U.S. and, of course, Israel.”

If the startups are successful and other African governments follow in these footsteps, the growth of the entire continent’s gross domestic product could be exponential.

“One report highlights this potential and predicts that the Internet can contribute up to $300 billion to Africa’s GDP by 2025 and this is from an estimated $18 billion in 2013,” Johnson added. “While mobile subscriptions in sub-Sahara Africa are forecasted to exceed 635 million by the end of this year and predicted to rise around 930 million by the end of 2019.”

Johnson said Africa is in the “cusp of a mobile Internet revolution” and that itself has the potential to permanently change the playing field for all African startups.

Predictions have already surfaced suggesting that Africa’s mobile Internet use could increase 30-fold in the next five years – roughly double the estimated growth rate for other countries across the globe.