When It Comes to Diversity in Tech, Silicon Valley Isn’t Leading

18 Feb When It Comes to Diversity in Tech, Silicon Valley Isn’t Leading

A new report shows black women founders raise less money than even failed Silicon Valley startups. An emphasis on assimilation rather than inclusion is one culprit.

If black women are going to achieve parity as founders of VC-backed companies, they’d better not wait for it to happen in Silicon Valley first.

Diversity may be a popular topic in the technology industry’s heartland, but a new study from the Project Diane program of digitalundivided (DID) shows it’s not where the best-funded black women-led startups are getting their support. What’s more, black women founders tend to hail from universities other than famed tech feeders Stanford University and University of California-Berkeley.

Compared with the Silicon Valley startup, even an unsuccessful one, tech companies led by black women are raising tiny amounts of capital. Black women founders surveyed raised $36,000 on average, according to the report. CB Insights reported in January 2014 that failed startups raise $1.3 million on average. DID confirmed funding levels above the million dollar mark for only 11 black women founders.

“We don’t focus on Silicon Valley because it’s very insular and we don’t think that’s where the change is going to happen,” says Kathryn Finney, founder and managing director of New York-based DID. DID, which promotes diversity in entrepreneurship, launched Project Diane to identify and support black women founders. The program is named for civil rights activist Diane Nash.

Finney says as long as the Silicon Valley startup scene approaches diversity from the angle of assimilation rather than inclusion, then the reality is that a black coder from Howard University may be deemed not a “culture fit” for a company made up of white Stanford grads.

“They’re looking for people who are like themselves–black versions, female versions of themselves,” she says of Silicon Valley startups. The New York startup scene also struggles with diversity, she says.

According to the report, black women founders are most likely to come out of Harvard, Columbia and Northwestern. These are competitive universities known for leaving a footprint in business, but not necessarily for dominating the tech scene of the Bay Area.

Funding tends to come from beyond the big-name venture capital firms of Menlo Park’s Sand Hill Road.

“For those in the $100,000-$1 million funding range, a majority of their funders were local accelerator programs and small venture firms (under $10 million in management),” the report states.

Angel investor Joanne Wilson of Gotham Gal Ventures and Comcast’s venture capital firm Catalyst Fund, both based in New York, and Kapor Capital in Oakland are top funders of black women founders in the $1 million funding club, according to the report.

Kinney’s words to localities looking to emulate Silicon Valley: “Don’t.”

She says that while tech companies in Silicon Valley want to be diverse, she doesn’t think the real shift in the makeup of tech companies is going to happen there. This confers competitive advantages to other parts of the country where black entrepreneurs and tech talent may have more influence on company culture and be able to score more funding.

Citing Twitter’s disproportionate use in the U.S. black population — 27 percent of black U.S. adults use Twitter compared to 21 percent of whites — she says there’s economic value in diversity that is being overlooked.

“I think what is happening is that people outside the valley are starting to look at diversity as a competitive advantage,” she says.

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