Take 1
Startup founder.
What’s the image that comes to mind?
Here’s ChatGPT4’s answer.
It’s not totally off-base.
Although a 2022 Federal Reserve survey found that a quarter of startups were owned by people of color, the overwhelming majority of venture capital funding goes to male founders, and especially white male founders. They’re the guy ChatGPT4 generated.
Take 2
Here’s the Fall 2023 graduating class of Ward Infinity, an accelerator Incubate Learning designed in partnership with Johns Hopkins University + Medicine. Trenell Eaton, M.J. fearless in hot pink above, is one of Ward Infinity's seven Black female founders (seven out of eight).
It’s a very different picture.
What can we do differently to have many more pictures like this one?
Understanding the Context
Before diving into accelerator redesign, let's ground our understanding in some statistics.
- In 2022, the median net worth of Black families is six times lower than that of White families (Federal Reserve).
- Small businesses account for 44% of all US economic activity and create ⅔ of net new jobs (Small Business Administration)
- “Startups of color are significantly less likely than white-owned startups to receive funding through financial institutions or lenders, despite being as likely—and, among nonemployers, more likely—to apply for financing from a lender. Startups of color are less likely than their white-owned counterparts to be fully approved for the financing they sought when they do apply.” (Fed Small Business)
- In 2022, Black-founded startups in the United States secured less than 1% of the total venture capital funding (Crunchbase).
- In 2022, female-founded startups received just 2% of all venture funding (Pitchbook via the Fuller Project).
- In 2022, Black and Latina female-owned startups received a mere 0.85% of all venture capital funding (Digital Undivided).
Changing these numbers will require pulling on many levers: policy and regulation, hiring practices, success metrics, mental models of who entrepreneurs are, attitudes and perceptions, building more inclusive networks, education and training, and much more.
One place to start is accelerator programs.
A Different Model of Acceleration
Accelerators accelerate startups’ journeys to success.
While Silicon Valley-type accelerators like Y Combinator focus on rapid growth and scalability, often with a tech-centric lens, accelerators for historically underinvested communities place equal importance on social impact and sustainability.
At Ward Infinity, we selected teams because of their impact they wanted to make and their proximity to the problems they wanted to solve.
We then resourced them with three kinds of capital – financial, knowledge, and social – to help them develop their business models, operational models, and impact models.
We needed to adapt the Silicon Valley model to make sense in a different context.
If we want to design accelerators for historically marginalized and underinvested communities, we must incorporate several key elements:
- Flexible Funding Models: The typical equity-for-cash exchange doesn't work for all businesses, especially those rooted in community-oriented values. Alternative funding models, such as low-interest loans, grants, and revenue-sharing agreements, and non-dilutive capital can provide the necessary support without compromising the entrepreneur's vision or control. At Ward Infinity, we opened our five-month accelerator with a $25,000 non-dilutive investment in each of our eight teams, recognizing that the time they were committing to us itself had value and deserved recognition and compensation.
- Culturally Competent Mentorship: Unlike the one-size-fits-all mentorship approach of traditional accelerators, this model requires mentors who not only have relevant industry experience but also understand the cultural and historical context of the entrepreneurs they support. This empathetic approach can bridge gaps in understanding and trust. We learned the hard way that not all mentors, particularly mentors from abroad, understand American and particularly urban African-American contexts.
- Access to Networks and Social Capital: Building networks is crucial for any entrepreneur, but for those from underinvested communities, this can be a significant barrier. A culturally competent accelerator must actively facilitate introductions and create spaces for collaboration with industry leaders, investors, and fellow entrepreneurs who are committed to diversity and inclusion, as well as officials who serve as guides and gatekeepers to government funding, programs, and contracts. Ward Infinity is growing its networks and will engage alumni to continue to grow theirs.
- Transfer of Learning Opportunities: Entrepreneurship is a language with its own vocabulary and methods. Communities of color are fluent in multiple languages and particularly adept at code-switching. One of our biggest realizations was we could tap our teams’ strengths in code-switching to grow their comfort with learning and speaking the language of entrepreneurship – effectively using new terms like B2B2C and run rate and cost structure.
- Trauma-Informed Leadership Development: Recognizing the impact of trauma on decision-making and risk-taking, the accelerator should offer resources such as leadership coaching and workshops on resilience and mental health. This holistic support helps entrepreneurs navigate personal and professional challenges more effectively. At Ward Infinity, we saw the need for this and incorporated it into our workshops and Slack channels. We know we need to go much deeper in future iterations of the accelerator.
- Community Engagement: We don’t know what makes an effective community-based social entrepreneurship accelerator. This means we have to design with our participants, not design for them. Frequent pulse checks, feedback conversations, and input after each meeting were how we approached engagement this year. As we iterate, we’ll be engaging the broader community as well as creating more personalized pathways for our teams. It also means we do action-research as we go, and, over time, network with other accelerators looking to redefine the entrepreneurial opportunity landscape.
- Impact Measurement: Success metrics should extend beyond revenue and profit margins to include community impact, such as job creation, environmental sustainability, and social equity. Engaging community stakeholders in setting these metrics ensures that the accelerator remains aligned with the needs and values of those it aims to serve. As we build out Ward Infinity, we will need to build new success metrics, both for ourselves and for the ventures we resource.
The Bigger Picture
Designing an accelerator for historically marginalized and underinvested communities is not just about providing resources; it's about rewriting narratives of empowerment and success. It's an acknowledgment that the seeds of innovation are present in every community, waiting for the right conditions and nourishment to bloom.
Every one of the eight teams in Ward Infinity saw their work as growing economic opportunities in their communities and also health and wellness ones. Entrepreneurial resourcing in underinvested communities not only opens up new pathways for economic growth but also heals and strengthens the social fabric. In doing so, we create a more inclusive, resilient, and vibrant entrepreneurial ecosystem that recognizes the value and potential of all its members. As one of our entrepreneurs said, “Keep it going. You are building our communities by equipping grassroots entrepreneurs with business knowledge and confidence!”
With a Net Promoter Score of 100, Ward Infinity certainly plans to.
