Startup founders with a good idea and a connection to the open Internet should have the opportunity to succeed, no matter where they are or what they look like. But within the startup ecosystem, underrepresented founders, employees, and investors all face inequities. In the U.S., roughly 77 percent of VC-backed founders identify as white or caucasian and only 1 percent of venture backed startups were led by a Black founder. In 2020, only 2.3 percent of VC funding went to startups led by women.
There’s a moral and a business case for changing that. Diverse teams generally produce better outcomes, with studies showing that racially and gender diverse teams are 33 percent and 21 percent more likely to be profitable than their less-diverse peer teams, respectively. Diverse teams with more gender and racial representation often serve a more diverse customer base and develop solutions and services aimed at a wider audience. Simply put, diverse perspectives lead to better innovation. Diversity within the leadership team of a company is also directly correlated to increased innovation as measured by revenue from new products and services. And studies show that one million employer businesses and 9.5 million new jobs could be created if only underrepresented founders had equitable access to start and scale their businesses. In order to bring more diversity into the ecosystem, it is important to ensure diversity is prioritized throughout; institutions, individuals, and policy must do better to support diverse innovators.
This booklet will examine the barriers many underrepresented founders face across the startup ecosystem, identify the specific roadblocks that stifle their success, and make recommendations for policy changes that could lead to more equity for founders, investors, and employees. Having an inclusive framework is critical for the fabric of our nation and imperative for the U.S. to remain competitive as a global leader at the forefront of innovation.
Read the full report here.
