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Today, Denver Startup Week ran a panel on diversity among startup founders and employees. The five panelists in the “Startups & Diversity: The Challenges and Opportunities” discussion covered their own experiences in the unconscious biases of startup culture as well as discussed the Colorado-based nonprofits available to assist underserved entrepreneurs.
The panel follows an announcement from JPMorgan Chase & Co. the day before: They will donate $240,000 total in philanthropic grants — $60,000 each to four Colorado nonprofit organizations that assist small businesses and have strong programs for women, minority, and underserved entrepreneurs. Some of these grant recipients will serve on the panel, which is a joint initiative from Chase and Techstars. The four recipients include Accion, The Commons on Champa, Mi Casa Resource Center, and the Path to Entrepreneurship (P2E) Program for Underserved Entrepreneurs in the Boulder County.
In addition, the panel will debuted a report, also from Chase and Techstars, covering 2016 data from 680 founders and executives in tech companies, further solidifying the often poorly understood differences truly faced by minorities and women in the startup world. Here’s a sneak peek at that paper’s biggest data points.
Diversity Need Is Widely Recognized Yet Seldom Addressed
The most fascinating takeaway from the report? That seven in ten founders say diversity is important, yet a mere one in ten startups are “diversity leaders,” a term used in the study to designate the startups with “practices and policies result[ing] in a technical staff that includes a minimum of five women or minorities.”
In other words, the majority of founders recognize the importance of diversity, yet this group rarely reflects the diversity it needs. As the paper puts it:
“Founders of tech startups worldwide believe building a diverse and inclusive organization is highly important. The challenge for these young companies is identifying the most cost-effective methods to attract and retain employees from underrepresented groups.”
Founders acknowledge innovation and problem-solving boosts as results of a diverse workforce: 81 percent of respondents reported “enhanced creativity and innovation.” How can a company create the diversity-friendly environment that spurs this creativity? By looking at the practices of those who were successful at it.
The Solution: Adopt Practices of Diversity Leaders
The leaders in tech diversity share similar habits in four essential areas: 1) hiring practices, 2) training and development; 3) benefits; and 4) management practices. Here’s the paper’s breakdown of each:
“Startups classified as ‘Leaders’ are more successful in hiring diverse employees by recruiting in nontraditional venues, such as meetups for women who code, and standardizing the interview process. Leaders also provide programs that benefit all employees—mentoring and leadership training—as well as opportunities for technical professional development. Diversity Leaders follow management policies that reduce bias, including auditing jobs for pay equity and ensuring that measurable steps for promotion are clearly articulated.”
For an actionable version of this advice, consider standardizing your startup’s interview process, using the same questions for each applicant. In addition, as mentioned, consider researching new recruitment venues appropriate to your industry, as well as looking into mentoring programs.
Business Challenges Are Similar
The top five challenges for tech startups? Securing funding, acquiring customers, maintaining a consistent cash flow, and marketing. Minority or female founders cited the same challenges as their counterparts, with just two exceptions.
First, minority men find recruiting qualified employees ten percent harder on average than did all the founders (49 percent vs. 39 percent). Second, finding mentors can be more difficult for those who have fewer role models to seek mentorship from:
“Finding mentors is a greater challenge for women and minority founders. Whereas only 8 percent of non-minority men say finding mentors and advisors is a major business challenge, 19 percent of women and minority founders have difficulty finding advisors for their business.”
The takeaway: founders and employees who are minorities or are women face different challenges than their male or non-minority team members. All founders should work to understand these differences in relation to their field in order to benefit from the stronger diversity they need.
To learn more about the report, visit www.techstars.com/bealeader.