As a country looking to create new jobs, new opportunities and new industries, we're supporting and investing in our regional entrepreneurial ecosystems--which represent the collective of technology-based economic development organizations, entrepreneurial incubators, colleges and universities, venture and angel funds, and other resources dedicated to spurring the creation of a region's high growth entrepreneurs.
Still, we're not reaching everyone. Although African-Americans comprised nine percent of all new entrepreneurship activity in 2011, a CB Insights study revealed that in 2010, less than one percent of all venture capital investment went to digital startups with African-American founders. Similar findings exist across industry sectors with respect to the percentage of African Americans attracting venture capital investment. Meanwhile, the U.S. Department Of Commerce's Minority Business Development Agency reported that between 2002 and 2007, the number of Hispanic-owned businesses increased 44 percent, to 2.3 million. However, of these 2.3 million companies, only 250,000 had employees -- and of those, just 44,000 firms had gross receipts greater than $1 million.
However, the challenge is not so much in the volume of businesses being started by the majority of African American and Hispanic entrepreneurs, but in the type and size of such firms. Even today, these remain primarily smaller service-oriented businesses, rather than the higher-potential opportunities that can attract investment capital and create larger numbers of new jobs. And, while this reality has been well documented for many years now -- and has in part led to a much-needed focus on creating a pipeline of minority entrepreneurs through heavier investment in STEM education (science, technology, engineering and math) -- the focus of this article concentrates on what regions across the country can do today to begin to reverse some of these unfavorable trends and connect more minorities to the nation's emerging tech-based economy.
Communities can best begin to foster the development of inclusive entrepreneurial ecosystems that produce higher growth, diverse businesses by forming connections and collaborations, and creating dialogue. Programs such as America21 realize the importance of communication as it relates to inclusive competitiveness. With a strategy based around building on the strengths of minority communities, America21 strives to "facilitate a new narrative to inspire free exchange of innovative ideas among community, business, government and education leaders, students and entrepreneurs, with a goal of achieving exponentially greater economic growth and prosperity throughout America."
Still, this dialogue can take many different forms and comprise many different organizations. Here are just a few valid options to explore:
Of course the aforementioned ideas are just a few suggestions to begin the process of connecting historically disconnected populations. It is my sincere hope that each example can stimulate additional discussion and potential action plans. Emerging technologies in the biosciences, advanced and alternative energies, advanced materials and manufacturing, information technologies and a host of other key technology clusters are where America is placing heavy bets on its economic future. To maintain our competitive edge in the new and increasingly complex global innovation economy, we will need our full complement of diverse talent to truly put forth the best that America has to offer.
Follow Darrin Redus on Twitter: www.twitter.com/jsamerica
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IMO, we can and should encourage more minority participation in technology for its own sake, and that this can be done while supporting minority entrepreneurship for its own sake. Keep in mind participation in technology can be achieved in countless ways in a multitude of careers as scientists, engineers, programmers, mechanics, and yes... teachers. Then again, entrepreneurism is also achievable in a variety of ways in a number of industries. I believe people like Redus are influenced by the success stories of Microsoft, Google, etc., to ask 'Where are the minority Larry Ellisons' without realizing the risks of entrepreneurship are too extreme to serve as the basis for a socioeconomic revolution.
Today's fast-paced, knowledge-based, tech-driven global innovation economy is producing not only new technologies, but new industries, new business models and new opportunities in new frontiers for creative innovators whose startups and young companies are fueled by risk capital. Last year, more than $52B was invested in nearly 70,000 companies by angel and venture capital investors. They seek both job growth and wealth creation as ROI.
Job growth and wealth creation in Black and Hispanic America cannot (and indeed will not) come solely from producing qualified workers for tech industries. Of course, your point is well-taken. We MUST produce a qualified workforce with STEM education as the core foundation that paves the on-ramp for both high-wage workers and high-growth entrepreneurs. But we need both a qualified workforce and risk-taking entrepreneurs supported by a culture of risk astute capital.
The whole nation will benefit from investing in increasing the capacity of its minority talent pools.
Darrin Redus' points help us understand the direction this nation needs to go to exponentially increase its economic competitiveness. Investing in minority entrepreneurs is key to bolstering the competitiveness of the nation. And that key opens the door to inclusive competitiveness, which strengthens America as a whole.
Let's discontinue the myth suggesting venture capitalists are motivated to create jobs or make other people wealthy. While we're at it, we should also stop using the lure of riches to recruit entrepreneurs as if starting and/or running successful businesses are faits accomplis. I probably wouldn't mind so much if the risks of failure in business were better explained (just as explaining to young athletes the odds against their becoming professionals). There are entrepreneurial skills that can be taught; i.e., planning, raising capital, use of debt, organization, etc., however as with teaching STEM-related skills, there's no accounting for how students might apply the lessons.
My point being we'd be more effective introducing minorities to technology should we provide them an education that includes technology rather than talk about how much money they stand to make as CEOs.
Let's definitely stay connected!
Darrin
I think you hit it right on the nose. It is very important for minorities to make this transfer to hi-tech ventures! If we do not make these changes or implement new initiatives in our communities, we are going to be in a whole lot of trouble. Thanks for using your platform to bring awareness to this issue!. Keep up the hard work!!!