Advice on Launching a Tech Startup When You’re Not a White Man
Whether intentional or not, the tech startup landscape has been optimized for middle- and upper-class white males. According to one analysis, 77% of venture-backed founders are white and 90% of them are men.
If you are a nontraditional tech entrepreneur — meaning you aren’t a white man — it’s important to understand the environment you’ll be navigating and the challenges you need to overcome to succeed in this field.
1) Don’t Be Afraid to Fail Up
While every entrepreneur knows failure is a possibility, women and minorities feel more social pressure to be risk averse. Risk carries a higher price for them, real or perceived. This is especially true if you are a black or brown person. We are surrounded by news and media that teach us we will be treated differently because of the color of our skin, even in seemingly safe situations. This narrative is validated every time we are eyed suspiciously for simply walking down the sidewalk, told to “dim our light” or “smile more,” and of course, when we are confused for another person of color in the office.
Don’t let it stop you from moving forward. It’s true that discrimination and bias are prevalent in the workplace. It’s true that microaggressions are still widespread. It’s true that you might not get the result you want because your appearance doesn’t match someone else’s expectation. It’s true that if you make a mistake, it might seem larger in someone’s mind than if the offender were white. It’s also true that, to have the same amount of success as a white male entrepreneur, you’re going to have to work twice as hard and be twice as good. What all this means is you need to conquer your fear and go in with the right mindset.
Initially, you’re going to feel a lot of pressure. Maybe becoming an entrepreneur is perceived as a bold and an unconventional career choice in your community. Maybe your ambition makes you a role model, and your success would mean you beat the odds. Maybe you’ll ask yourself: “Will the people who look up to me be ashamed if I fail? If I take this leap and it doesn’t work out, will I ever be able to get another job?”
Move past this fear of failure by remembering that a startup can bring returns, even if it fails — and most startups do fail. Whether it’s low revenue or core team conflicts, sometimes your business won’t work out the way you hoped. But if that happens, the next VCs you approach, or the next company you apply to, will see an ambitious, hard worker who took a chance, ran a company, and made executive decisions. They’ll see a person who’s been through the fire and held their head up high when they came out the other side. Someone who has learned a lot in a short period of time.
And when you pitch yourself for the next big opportunity, your story should never be “I failed.” It should be “I tried something bold and it didn’t work out the way I’d hoped. Here’s why.” Remember, if you don’t take the risk at all, you fail before you even begin. Think of risk as a chance to succeed — even if you fail.
2) Find the Right Investors
Conventional wisdom will tell you the first startup funding round should take about six months. This may be true for the traditional founder, who, because of his background, often has more resources at his fingertips. He is more likely to come to the table with financial backing and interpersonal connections. Those connections can help with introductions to potential funders, team members, clients, media, and strategic partners. He may even come from a family of entrepreneurs, or have access to higher-ups who serve as mentors.
But if you’re a woman, a minority, or you come from a low-income background, you probably have fewer resources to tap. Many minority and female startup founders are just like my business partner and me. As a technologist, I’m one of the highest earners in my extended family. If I tried to pass a hat around when I launched my startup it’s more likely that, by the end of the conversation, I’d have a list of people who owed me $20. When you are the most successful person in your family, a “friends and family” round of funding will not be possible. Investors might read your lack of resources as a lack of hustle and be more reluctant to offer you that all-important seed capital.
This means you’re going to need investor or bank funding earlier in your startup’s lifecycle. But who receives money is too often determined by who feels the most familiar to those giving it. Some investors have been quite blatant about their own bias — and even discrimination — in making these kinds of decisions. John Doerr, the acclaimed venture capitalist, spoke about this during a 2008 interview. “They all seem to be white male nerds who’ve dropped out of Harvard or Stanford, and they absolutely have no social life,” he said of his investments in Google, Amazon, and Netscape. “When I see that pattern coming in — which was true of Google — it’s very easy to decide to invest.”
Nontraditional founders don’t fit that mold. Finding the right investors and raising the funds you need could take a long time. This will impact your burn rate. To prepare, plan to be looking for twelve months or longer. If you have six to 12 months to raise money, and it takes you twelve or longer, that will directly impact your payroll. Be smart about stretching that dollar as far as you can. Look into strategic partnerships. You know the space and the technology with which you need to integrate — those are the potential partners you should prioritize. Many organizations may be especially interested in a partnership if you show them how you can improve their products, and if you do, your relationship may even lead to an offer.
And don’t give up. Even if you’re beyond the twelve-month time frame, focus on finding that first investor who gets you and your vision, and who wants to support you. Early seed investors are a good option, and are easier to find than you might think. Simply search keywords like “angel investors,” “angel networks,” “startup accelerators,” or “startup incubators” online. Then add phrases that help narrow the search towards those looking for people like you. Joining a social network specifically designed to help investors and entrepreneurs connect, such as Angel.co, F6S.com, or even LinkedIn, is another a good way to meet the right people.
3) Level Up Your “Army of One” Mentality
There was a time in my career when I was passed over for a big promotion as a result of gender and/or racial bias. I had to make a tough decision to stay at the company or go out on my own. When I decided to take the leap and leave, I knew I was ready to launch a tech startup and be my own boss — an idea I had thought about for years. I tweeted in attempt to put feelers out and expand my network: “Hey y’all, I’m available for new projects. Who wants to partner with me?” I sent that message because I knew this truth: Even the best founders can’t do everything themselves.
But for so many people who’ve been in my shoes, there’s a temptation to isolate. When you experience discrimination at work, it can fracture your trust in larger systems and their ability to recognize your talent, contributions, and drive. Instead of connecting with others, you become an “army of one.” This mentality can carry you to the point I was at — ready to launch — but it can also keep you from going any further.
To succeed in the startup world, you need a good team. Research shows that investors are looking for a team that not only has experience, but also entrepreneurial passion and shared strategic vision. A good team will supplement your weaknesses as a founder, help you refine your idea, and handle parts of the business that aren’t your superpower. You don’t have to have all of your team members in place when you start fundraising, but you should have an idea of where you sit on the team and where the other team members will factor into the overall equation. Other core team members usually include the tech lead, sales and marketing lead, and an advisor.
Make sure that your team is a diverse and inclusive one, in as many forms as possible. Beyond race and gender, consider people from different economic and ethnic backgrounds, people who are differently abled, people who identify as LGBTQ+, and more. Investors and future team members will look for diversity as a signal of your values and your understanding that having multiple perspectives will help you outperform competitors and maximize outcomes.
4) Skip the Business Plan in Favor of a Pitch Deck
The best way to find investors, customers, team members, and suppliers is to talk to as many people as possible about your idea. Go to networking events, seek out mentors, and tell friends. Find an accelerator or incubator program that can help you work on your business and introduce you to investors. Use AngelList, LinkedIn, F6S (as mentioned above), and find other social media communities on platforms like Twitter (#startup, anyone?) and Facebook Groups dedicated to your topic of interest. Don’t worry if not everyone gets it. Your objective is to get feedback, adjust, and connect with people who want to join forces, or who can introduce you to stakeholders who do.
Once you’ve determined that your idea is viable and you’ve gained some support, begin working with your team to develop a startup pitch deck. (Nobody reads traditional business plans these days.) To capture the attention of investors, make 10 slides that tell the story of your startup, and answer the questions that prospective customers or stakeholders will have. Here’s a rough blueprint you can use to get started:
Slides 1-4 introduce what your startup is trying to do:
- Slide 1: your vision or big idea
- Slide 2: the problem
- Slide 3: the solution
- Slide 4: the market
Slides 5-10 address your business model:
- Slide 5: how you’ll make money (cost vs. price)
- Slide 6: where people will buy your product
- Slide 7: your marketing strategy
- Slide 8: how you compare to the competition
- Slide 9: your team (reference the previous point)
- Slide 10: the investment you’re asking for
Show your pitch deck to as many people as possible before you go into formal pitches. You’ll gain insights that will help you identify areas for improvement and fine-tune each slide.
5) Show Investors the Money
You are likely very passionate about your product or service and how it can change people’s lives. But investors want to know first and foremost how you are going to make them money. Don’t diminish your passion when it’s time to pitch, but be sure you are also presenting the cold hard facts.
Your startup may be solving a problem that impacts your community. Maybe you’re pitching a service focused on the multibillion dollar black haircare market, or shapewear designed for women (believe it or not, some investors had a tough time wrapping their minds around Spanx at first). But there is a chance that the problem you care deeply about doesn’t impact the daily lives of your white male investors — and the majority of investors are white males. Don’t be surprised if they are dismissive, write your idea off as irrelevant, or demand more information. You will have to work harder than most to take them on a journey during your pitch, to help them see the world through your eyes, and to imagine the game-changing opportunity your startup offers.
One way to do this is to “show them the money.” Present data points that highlight the size of the market they’re unfamiliar with, how much that market spends on the competition you’re going to crush, and how much they could be spending on your product.
Take the case of Candance V. Mitchell and Chanel Martin, two entrepreneurs who wanted to raise funds for Myavana, a startup offering personalized hair service for women of color. When presenting to investors, they drove home the fact that hair products for African-American women is a $3 billion market in the U.S. and secured $200,000 in funding from pitch competitions, as well as $25,000 from Dream It Philly’s accelerator in 2014.
If you do manage to secure funding, don’t think you’re out of the woods just yet. Remember, none of this will be easy. Chances are, you’ll be undercapitalized. While there’s been a big increase in startups with nontraditional founders over the past 10 years, those with black female founders have raised only 0.0006% of the $424 billion in total tech venture funding raised since 2009 — almost nothing. This means you probably won’t have as much money to play with as your white male Silicon Valley peers.
Stay on the up and up. During your entrepreneurial journey, a lot of things will happen that will make you think you can’t go on, or that you don’t have what it takes, or that you will never be good enough, or that you should just do what others tell you to do. Believe in yourself and follow what is the next right move for you. If you fail, you will learn. If you slip, pick yourself up. Just keep going. Entrepreneurship is about having the resolve, the persistence, the character, and the perseverance you need to keep rising toward your prize.
via Harvard Business Review http://hbr.org
October 8, 2019 at 08:10AM