What comes to mind when you think of “entrepreneurship”? Forward-looking, visionary, adventurous?
Founded and settled by innovators and risk-takers who abandoned erstwhile certainties for better opportunities, America has entrepreneurialism deeply rooted in its history. From Henry Ford, Walt Disney, and Alexander Graham Bell, to Bill Gates, Steve Jobs, and Mark Zuckerberg, the United States of Entrepreneurs have been nurturing the next big ideas that would change the world we live in for the better.
Now think of “entrepreneurs” again; who comes to mind? Like those people listed above, are they mostly men? Are they mostly white?
We’ve all seen how entrepreneurship has changed our lives, especially over the past few decades, with the invention of the internet, advancement of technology, and today’s digital revolution. These changes have shaken up all aspects of our lives, from how we consume goods and services or conduct our work, to how we make our life-changing decisions or build relationships with others. As we progress at a brisk pace with innovation and technology that affects nearly everyone globally, the need for an inclusive entrepreneurial playing field has never been more important.
At the U.S. Chamber of Commerce Foundation’s 2018 Corporate Citizenship Conference, business leaders and cross-sector partners joined forces to explore the possibilities when we come together to create meaningful partnerships, and build coalitions to shape the world for the better. From deep-dive work sessions on supporting the entrepreneurial ecosystems for minorities; to dialogues on consumer movements that demand more social justice, vigorous discussion across all fields shed light upon how we can be “better together,” in the field of entrepreneurship included.
A study conducted by First Round Capital has found that companies with a female founder performed 63% better than those with all-male founded teams (For this analysis, performance refers to the change in market valuation between the initial First Round investment and the end of 2014). Additionally, McKinsey published a report revealing that racially diverse organizations are likely to outperform their peers on profitability by 33%. Yet very recent data suggest that only 16% of venture-backed companies had a female founder, and only 1% had a female minority founder.
Many reasons could be contributing to this phenomenon, but we ought to talk more about the psychological and social factors, such as biases and preconceived judgment.
We, as humans, persist with an unconscious bias that influences our judgment, let it be choosing whom to start networking with at a professional event, or making a million dollar investment decision. Entrepreneurs will be categorized as similar to the investor if they share a parallel experience with the investor, and as humans, we have a tendency to connect with and support those who are similar to us. The finance and investments industries hold a very male-dominated view, and a majority of bankers and investors are neither female nor people of color.
Whether inside or outside of conscious awareness, others, unfortunately, tend to hold a bias against female and minority entrepreneurs and so they face more roadblocks in receiving capital and support for their entrepreneurial endeavors.
As such, men still make up almost all of the venture capital territory. Female founders get just 2.2% of investor funding, and female minority women have it even worse. Besides the monetary inequality, this also means a closed door for mentorship and elite networks that could eventually lead to more funding and resources for growth.
As the corporate world embraces all shapes of initiatives on diversity and inclusion, the entrepreneurship space stays a privileged playground. Women and minorities are still being left behind as the advancements in technology revamp the business landscape and promise opportunities for all, yet do not always deliver when it comes to entrepreneurship.
By definition, inclusive entrepreneurship is the entrepreneurship that contributes to social inclusion, to give all people an equal opportunity to start up and operate businesses, especially those who are disadvantaged including women, seniors, minorities, immigrants, disabled people, and many others.
Just like the troubling difficulty to reduce unconscious bias in the workplace, leveling the entrepreneurship playing field for all requires cumulative and collaborative efforts. Expanding access to capital for women and minorities seems to be the most obvious priority for tackling this problem. To go beyond the measurable terms, shaping an inclusive culture and empowering underprivileged future entrepreneurs creates a deeper long-term impact.
To provide more resources for female and minority entrepreneurs, actions could be taken from three key players in the market: investors, entrepreneurs, and consumers. Investors should look for startups founded by people who are historically underrepresented. This not only alleviates the economic divide, but may also provide better returns as the aforementioned studies suggested. Entrepreneurs could actively reach out for peer networks, advocacy groups, and mentorships. They should continue to educate themselves on the available resources, and understand the different stages of business development for their startups. Often, finding the bridge to the right resources is half the battle. Lastly, consumers could support diverse entrepreneurs by purchasing and promoting their businesses. When people think of entrepreneurship, the high-growth sector, which is about the big ideas and big dreams is what typically comes to mind. But there are also those local, smaller businesses owned by women or underrepresented entrepreneurs. These types of businesses make up far more of the entrepreneurial sector than we believe and give us ample opportunities as consumers to support them through the power of our purchasing decisions.
Looking forward, we also need to build an inclusive mindset for future entrepreneurs and investors. Universities need to adapt to prepare their students for an evolving future, where 65% of the jobs don’t exist yet and problems are generated at the same pace of changes. True innovation and social impact creation are critically needed in business models like never before. Entrepreneurialism should be imbued across majors, not only limited to in business schools, and the fight to get more representation within each major should also be continued.
Only diversity can solve complex problems, and entrepreneurs from different backgrounds can show us unique and new experiences that lead to innovation. All of us contribute to building an inclusive culture for entrepreneurship through acting with intention: we must own our power as consumers, speak up about inequalities in our workplace, and empower people from all backgrounds to truly embrace the American Dream.
Because together, we are better. When people think of “entrepreneurship,” the adjectives come to mind should also be: inclusive, just, and collaborative.
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