The Impact of Ethnicity on Startup Investment

tubman 20 bill.jpgAs a minority entrepreneur in the education technology space, I don’t often think about the intersection of my ethnicity and my venture’s success. Perhaps I should.

EdConnective was founded with a desire to impact the education system, especially for people of color. I’ve worked hard to keep this venture sailing into new seas: research, selling, building financial models, acquiring stakeholders, project management. I have enjoyed invaluable support from startup networks such as the Wharton Venture Initiation Program, the Education Design Studio, and the Village Capital EdTech Accelerator, which all appeared to be inclusive.

Perhaps the support I received is uncommon, or perhaps I just haven’t reached the glass ceiling yet. An education forum event I attended in April as part of an Inclusive Enterprise Series shed some light on the matter and brought some realities to my attention.

The inclusive enterprise event, in partnership with Learning EDGE, showcased 15 early-stage education ventures founded by minorities. The event provided access to investors, industry stakeholders, and mentors who provided feedback.

Two salient points about minority entrepreneurship that stood out to me that day. One, according to event organizers Village Capital and Citi Community Development, is that “minority-owned companies receive just 3 percent of venture capital investments.”

This statistic made me stop in my tracks. After a quick Google search I learned that in comparison, 83 percent of venture capital backed founders are Caucasian.

“Raising funds for your startup is hard,” is something I’ve heard countless times. Difficulty comes with the territory. However, when it comes to fundraising, the aforementioned stats suggest a disparity in difficulty that is downright startling.

My team at EdConnective recently began raising a million dollars in seed investment to fuel our growth. I’m confident we will achieve that goal because of our team, traction, and potential for scalable impact. However, I do wonder to what extent implicit, cultural, or institutional norms will effect the fundraising process for our firm or for other minority-led firms.

Luckily there are organizations like Village Capital, Citi Bank, Camelback Ventures, and Kapor Capital that have identified this problem and are making efforts to chip away at the phenomenon.

The second revelation at the Inclusive Enterprise event came from a  panelist who noted that 50 percent of K-12 students in the U.S. are people of color. Meanwhile, most people doing the innovating have no shared experience with the people being innovated upon.

I am believer that social impact can come from anywhere. Yet, there is something to be said about having a deep understanding of the problem you are trying to solve as an entrepreneur.

If you’re not from the community the user is embedded within, a great entrepreneur will do all he or she can to constantly gather feedback and information about the users, so the product can be as impactful and thoughtful as possible.


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For more information visit @EdConnective on Twitter.

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