Opinion: Minority founders need venture capitalists to break old habits
Black Americans in particular have been severely hampered by disparities in representation in American businesses and startups due to historical and current exclusionary models. These deep-rooted models help make Chicago’s venture capital and investment community a walled garden that’s hard to break into. As Brian Lowery, a Stanford University Graduate School of Business professor who studies racial privilege, said, “inequality is a function of systems, not of individuals within a system.”
In Chicago, hubs like 1871 help break down some barriers, but more can be done.
To be frank, the VC community needs to be more liberal with check writing and eliminate the subjective excuses that limit black founders. VCs bet on startups, but they bet on founders they have a connection with. If VCs hired more black and brown associates and specifically tasked them with identifying black and brown startups, that would be a step forward. As a tech entrepreneur in Chicago, I may remember a handful of VC associates or partners that I introduced who are minorities.
Diversity efforts can also be like support groups like the 100 Black Men and Chicago Scholars, two organizations that groom the next generation of talent that will fuel the workforce and portfolios down the road.
Venture capital firms could also use new standards to assess investments in black and brown startups. For example, they can invest in a black startup that doesn’t have a lot of traction and connect that startup to an acceleration program.
In many ways, technology allows us to break old habits. VCs should also break old habits.
Funding black startups is the best way to hire black tech talent. If you look at our team at SwayBrand, it’s a case study of how I was able to hire talented black and brunette people in the tech field.
But I do it in Los Angeles. Just like my grandfather, also named Horace, who left East Texas during the Great Migration to find an opportunity in Chicago, I moved to the West Coast. For my grandfather in 1953, Chicago was the place to be.
I represent a digital generation that understands the needs to make similar geographic movements for fair and financial gains. Like my grandfather, I made the difficult decision to leave a city to which I am fiercely loyal in order to seek more opportunities to advance my tech startup. Why there ? The funding community is more liberal when it comes to investments and partnerships with startups founded by Black and Brown. The doors opened for me in LA after only nine months.
Chicago has started discussions to define frameworks for resolving DCI issues, but I think we’re a long way from many (written) investment checks and at least some “exits”.
The black founders are on the pitch and could use some assists. When we score, so do investors, and so do our beloved city, which wants to see itself as the Silicon Valley of the Midwest. Let’s work together to get this ball through the hoop.
Horace L. Flournoy is the founder of SwayBrand and a mentor for minorities in the field of technology.