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The US and European tech industries fail to represent the societies they serve and operate in. For example, US startups helmed by Black and Latinx founders have received just 2.4% of venture capital investments since 2015. In the UK, minority ethnic-only teams received only 1.6% of all venture capital funding between 2009-2019.
Yet underrepresented founders are fundamentally underestimated founders. In the US diverse founders who receive funding drive higher returns on average – generating 3.3x realized multiples on exit, benchmarked against only 2.5x realized multiples by their undiverse counterparts.
To address this issue, the SoftBank Vision Fund Emerge Program partnered with Founders Intelligence to publish a whitepaper entitled “Accelerating Diversity: Building Stronger Founder Ecosystems“, specifically focused on improving diversity within accelerators.
As guest speakers at the recent virtual FF Live, investors Ezechi Britton, Principal, Impact X Capital & Catherine Lenson, Head of Social Impact & CHRO, SoftBank Vision Fund shared how their work addresses the ‘opportunity gap’ for early-stage entrepreneurs from diverse backgrounds.
“It’s not a pipeline problem, it’s an opportunity problem,” says Ezechi Britton
From navigating opaque information networks on how to build start-ups effectively to securing the financing to scale businesses, the entire tech ecosystem has a duty and an opportunity to eliminate the obstacles facing underrepresented founders.
The whitepaper offers a number of practical recommendations for accelerators:
- Proactively source underrepresented founders – remove the dependency on often biased and unreliable signals, break down the barriers to allow founders to commit full-time, and build trust among underrepresented founders.
- Help diverse founders ‘break into the club’ – once founders join an accelerator program, strengthen the peer-to-peer networks so they outlive the duration of the program. Empower founders with social capital through meaningful connections that convert into anchor clients and early-stage investments.
- Support in financing the gap – take bold action to ensure that every decision is based on scientific and transparent processes and that the investment teams better reflect the world they operate in through clear public commitments and OKRs.
Only through bold and collective action can the ecosystem begin to eliminate a culture of systemic exclusion – exacerbating societal inequities and preventing founders and investors from achieving their full potential. The industry imperative is to cultivate a pipeline that supports underrepresented founders through every stage of the investment lifecycle, creating a new set of sector champions and role models for the future.
Catherine Lenson, Managing Partner & Head of Social Impact, SoftBank Investment Advisers added, “Given their potential to improve start-up outcomes, programs such as Emerge have an important role to play in addressing systemic imbalances and creating new opportunities. We’ve learned so much in partnering with our first cohort of Emerge founders and are proud to share these perspectives. Sustainable change will require a collective shift both in how we invest and how we run our own companies and we are committed to taking action and doing our part.
Read more about the whitepaper and its recommendations on Sifted.
About SoftBank Vision Fund Emerge: Launched in 2019, SoftBank Vision Fund Emerge is an 8-week program focused on accelerating diversity in tech and entrepreneurship by supporting underrepresented founders and their businesses. An advisory committee made up of SoftBank Vision Fund investors and operators and members of the WeWork Labs ecosystems selected 14 founders from more than 200 applicants to participate. Emerge founders had access to key SoftBank professionals and portfolio companies, educational sessions, and connections across the SoftBank platform to help them scale. The first Emerge cohort for EMEA is scheduled for summer 2021, with applications open in May 2021.
