Google for Startups had already launched an accelerator specifically for Black founders when racial uprisings occurred throughout the country in June following the deaths of George Floyd, Ahmaud Arbery and Breanna Taylor, but Jewel Burks Solomon, head of Google for Startups, said the company wanted to do more. So, it launched a fund specifically for Black founders. “Black founders were telling us how difficult it was for them to secure funding amidst the pandemic, and that combined with the longtime barriers that exist for Black entrepreneurs to raise venture capital, we knew we could be helpful by providing substantive cash awards to help these startups grow during an incredibly difficult time,” Solomon says.
A press release published on June 17 said the $5 million fund was created to “provide cash awards up to $100,000 to selected startups from [Google’s] U.S. programs and partner communities. These cash awards will go to startups with Black founders, who have been deeply impacted by COVID-19 and who are disproportionately locked out of access to capital.” Realizing founders needed more than financial support, Google also enlisted a therapy group, run by a Black woman, to provide private sessions for founders.
According to Forbes, “less than 4% of venture capital dollars go to companies founded by women and less than 2% go to people of color.” That stark funding gap, combined with this year’s health and racial pandemics, have caused many companies across various industries to reassess what they’re doing to make a difference. In tech, some accelerators say they’re working internally and externally to create new opportunities for Black founders.
500 Startups venture partner Clayton Bryan pointed to the seed-stage accelerator and venture capital firm’s recent diversity numbers (Earlier this year, TechCrunch reported that 70% of the founding teams from the firm’s 26th cohort had at least one or more founder who “identified as a racial minority.”) as proof that the company has already been focused on diversity. Still, he says the company still has a lot of work to do.
Since June, Bryan says he’s offered office hours, called Solidarity Connect, via Linkedin and has met with more than one hundred founders of color. “I think that there’s moments in time where you need to make time and that’s what I’ve done through this initiative,” he says. “I’ve got to hear some amazing stories. And I made some investments from doing this.” In total, Bryan says 500 Startups is poised to invest in six startups with Black founders during the months of June and July. According to Bryan, the firm will announce additional details regarding recent investments and other initiatives at later dates. “There’s going to be a series of different announcements around things that we’re working on, because while they’re going to have the same or similar objectives, we’re going to be measuring them against different key results,” he says.
Bryan says several of the things 500 Startups will be implementing in the future are related to internal practices. This includes making sure that they’re providing opportunities to founders who are not well-versed in Silicon Valley’s traditional modes of doing business. “Quite frankly, there’s a lot of folks that just don’t have that playbook,” he says. “We’re practicing active listening in a way in which if you don’t have that training, it’s not going to ding you in our process. We really want to know what the value is in this business that you’re working on. We’re willing to spend more time in places uncovering the truth where other investors might be trying to hear more towards these standards that I think are a little antiquated.” Additionally, the company is looking to form alliances with key stakeholders, including firms and individuals involved with pre-accelerators and angel investing specifically geared towards founders of color.
Where 500 Startups has traditionally onboarded two cohorts per year, in the spring and fall, they’ve recently switched to a “rolling admissions structure.” “That’s changed a lot of the paradigm. We can start to build relationships earlier in the journey of some of these companies, watch them grow, help them, and then really encourage them to apply when it’s right for them,” he says. “This is something that I’m encouraging a lot of my colleagues on the investment team to do as well.”
Non-profit accelerator MassChallenge has been reviewing its standards and practices, too. “We know that there are institutional problems [and] long term systemic problems. You can’t just look at them yourself. You have to look outside to get advice. Look at your systems and find out where those extra barriers [are], even if they’re not screaming in your face,” Siobhan Dullea, CEO, says.
Dullea says the company recently hired an external team to look at their multi-step judging process, including application language and competition rules, for women founders and discovered areas for improvement. They’re hoping to repeat this process, zooming in on aspects that might create barriers for founders of color. Dullea says she hopes at least some of these changes will be implemented by the fall when their next health tech and fintech cohorts launch.
The MassChallenge CEO says the accelerator’s non-profit status has already made it easier to partner with organizations that are working with diverse founders. “We have worked with the Boston Foundation, EforAll DivInc, [and] other other accelerators who are specifically focused on founders of color as a way to get them in and get them into our application process. And, sometimes [these startups] even skip a step because we know [our partners] have quality startups,” Dullea says.
Still, both Dullea and Bryan say they know it’s not enough to have a few diverse accelerators. As they’re working to improve their own companies, they’re hoping to also set an example for the industry at large.
In a previous version of this story we wrote that 500 Startups only onboards 2 companies per year. 500 startups onboards 2 cohorts a year and works with several companies.
This story is possible thanks to support from the Ewing Marion Kauffman Foundation, a private, nonpartisan foundation that works together with communities in education and entrepreneurship to increase opportunities that allow all people to learn, to take risks, and to own their success. For more information, visit www.kauffman.org and connect at www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.