Tech leaders work to make startup ecosystem easier to navigate for minority entrepreneurs

Path can be unclear for capital, customers

As a Hispanic, I value diversity and inclusivity. And I support the idea that we have a lot to do in that area regarding our entrepreneurial ecosystem, startups and tech companies, as Steve Case, co-founder of Washington, D.C.-based venture capital firm Revolution LLC and online service provider AOL said in a recent visit to Cincinnati.

“Everybody, everywhere has a shot at the American dream, and right now the playing field is not fair,” Case told the capacity crowd at Union Hall, Cincinnati’s hub for entrepreneurs and tech startups located in Over-the-Rhine.

Startup goals are clear and universal: Founders need more capital and customers to create the next wave of jobs.

Yet if you are a minority entrepreneur, you probably feel like an outsider trying to figure out where the Union Hall conference rooms are located, said Sean Rugless, president of Katalyst, a Cincinnati-based brand design and experience agency, and project manager for the recently released Minority Entrepreneurial Connectivity Assessment (MECA).

Snapping photos of the capacity crowd listening to Case talk with Cintrifuse CEO Wendy Lea about tech startups becoming the next Procter & Gamble or Macy’s, I can see first-hand just how much work lies ahead.

Luckily, there are Greater Cincinnati tech leaders working hard to make diversity and inclusivity a priority in Greater Cincinnati. For them, the first steps involve candid discussions and deep insights.

“I think there are higher expectations on black and brown faces to over-exceed,” said Bjorn K. Simmons. He’s co-founder of Wyzerr, a startup working in artificial intelligence and voice of the customer technology, and StartupCincy Community Catalyst at Cintrifuse, Cincinnati’s tech startup support network.

Simmons

“So minority entrepreneurs end up over compensating,” Simmons said. “We have to overcome our inferiority complex and just be equal. We also need a clear definition of what is investment-ready, market-ready and product-ready, and this definition has to be true for black and brown faces, as well.”

Natasia Malaihollo, chief executive officer at Wyzerr, has led the company on a successful journey since its stint in the 2015 class of the Brandery accelerator. Wyzerr claims a little under $2 million in funding and close to 600 customers, including major corporations like P&G.

Malaihollo

Despite those benchmarks, Malaihollo said Wyzerr faces many of the same inclusivity challenges as fledgling entrepreneurs. Speaking at the National Underground Railroad Freedom Center during the public reveal of the MECA study, Malaihollo shared her frustration over Wyzerr being excluded from the 2017 Innovation Exchange at Cintrifuse for not meeting “voice of the customer” criteria.

“I was working at that event in my Cintrifuse role,” Simmons said. “I was the only African American in a room of 300 people, and I was uncomfortable.”

Events like Innovation Exchange provide access to customers and funding, something Malaihollo and her Wyzerr team need to grow capacity.

“Funding is definitely a key resource that most minorities do not have access to,” Malaihollo said. “This isn’t a Cincinnati problem, though. It’s a national problem. Funding is about relationships. Investors invest in people they trust and like. They nurture these relationships over time before they actually write a check.

“The alternative is they have someone else vouch for you. The problem is many minorities do not have the connections to get into these circles of wealth and investors. They often do not have access to someone that is willing to facilitate an introduction, provide a referral or make a connection.”

Unlocking the doors to entrepreneurial success for all minorities, whether Cincinnati natives, college transplants or new immigrants to our community, is a frequently discussed topic from the University of Cincinnati to Wave Pool, a community art center in Camp Washington.

Slowly, steadily, strong resources for minority entrepreneurs and lifestyle business owners are becoming part of Greater Cincinnati’s business landscape.

On the state level, the Entrepreneurial Services Provider Program (ESP), a service of Ohio Third Frontier and facilitated locally by seed capital investor CincyTech, provides assistance and capital to tech entrepreneurs and startups. Ohio Third Frontier also supports seed capital for minority- and female-led startups via the JumpStart Focus Fund.

There are also resources unique to Greater Cincinnati, including:

  • At Hays Porter School in the West End, for example, programs around robotics and gaming are helping to create future tech entrepreneurs.
  • The city of Cincinnati is providing $100,000 to the recently launched Hillman Accelerator, the nation’s first minority-focused startup accelerator, to support diversity and inclusion in tech.
  • MORTAR, a minority business development service and entrepreneurship lab, continues to expand its portfolio of lifestyle entrepreneurs via its Brick pop-up shops in Over-the-Rhine and Walnut Hills.
  • BLK Hack Cincinnati is building a diverse network of tech entrepreneurs and enthusiasts via a series of events.
  • Aviatra Accelerators (formerly Bad Girl Ventures) continues to be a strong resource for women business owners. The Cincinnati chapters of Girl Develop It and Women Who Code (WWCode) offer accessible and affordable tech workshops for female programmers and coding classes for newcomers. Women in Technology (WIT) strengthens the growing network of women entrepreneurs and startup founders via networking and leadership development.
  • At the Cincinnati USA Regional Chamber, the Minority Business Accelerator continues to enhance its model for growing minority firms like Hightowers Petroleum as well as working with area companies to place local minority businesses in their vendor networks to supply products and services.

“I think that people you form a relationship with and the network you develop as a result are an entrepreneur’s greatest asset,” said Jordan Vogel, vice president, talent initiatives, Cincinnati USA Regional Chamber. “Our entrepreneurial community is unique that way, but they can’t help you if they don’t know about you. So you have to proactively develop those relationships and build that network.”

Vogel

Are these entrepreneur and startup resources enough? Are they available to all entrepreneurs?

Rugless said answering these questions and building solutions are the driving forces behind the data-driven MECA study. The study involved 12 months of environmental forecasting and scans, group discussions, individual interviews and public information requests, courtesy of funding support from the Carol Ann & Ralph V. Haile, Jr. US Bank Foundation and advisory help from the Cincinnati office of business management consultant Ernst & Young.

The goals at the heart of the MECA study are creating diversity and inclusion in every entrepreneurial sector.

The MECA data is sobering. There’s a 50 percent minority makeup in Ohio’s urban metro areas. Yet, there’s just a 16 percent minority makeup in Ohio’s state-funded startup ecosystem. There’s only a 3 percent minority makeup in pre-seed funding, startup deals out of total clients within the startup ecosystem.

Closer to home, there have been seven minority pre-seed deals within the CincyTech network out of 238 startup deals, according to data through September 2016. By comparison, Columbus is at 0.

Rugless said the call to action from the MECA study can feel overwhelming. He and many Greater Cincinnati tech leaders want to attract minority talent; ignite boomerang talent, those serial entrepreneurs creating multiple startups; and build a bridge between minority entrepreneurs and the resources they need.

There’s another key challenge Rugless looks to address via MECA: Many of the outcomes and stats regarding diversity and inclusion are over-stated via 43 percent inflation. Minority-led startups are often counted multiple times, depending on the number of entrepreneurial support networks that help them.

Next steps include standardization in measurement, recruitment, incubation, capital-readiness and market-readiness. There are also efforts to seed “tech-enabled” transformations to lifestyle businesses such as the downtown Cincinnati food delivery business Saundra’s Kitchen, which uses an app and electric scooters to grow capacity and distinguish itself in a competitive market.

“There’s a lot of work to do,” said Candice Matthews, Hillman co-founder and executive director. ”There are outstanding resources minority entrepreneurs need to be successful, especially around funding. Hillman is addressing the need for minority-focused funding, and we are working hard to provide more. Stay tuned.”

Matthews

As a Latino writer and maker working alongside Cincinnati entrepreneurs in the Cintrifuse network and StartUpCincy ecosystem, I also have experiences and ideas regarding diversity and inclusion.

Listening to the panelists at the release of the MECA study, I agree with Ohio State Rep. Cecil Thomas that technology and innovation offer the best opportunities for economic prosperity. I also believe doors of opportunity need to be open to all aspiring entrepreneurs and minority-focused events like BLK hack and Hillman Fridays need to expand and diversify mainstream events like AngelHack.

“It takes the courage to admit that we haven’t licked diversity and inclusion yet,” Rugless said. “It’s important for us to focus on what can we do better versus look at all we’re doing now.”

Minorities are key to a more robust future for the tech startup economy.

As Case said in his Union Hall talk, “250 years ago, America itself was a startup and went from being a fragile, startup nation to a leader of the world. America has always been a magnet for talent and immigration. Ellis Island helped us rise, and other countries see the secret sauce.”

Four rules to win the game

Sean Rugless, president of Katalyst and project manager for the Minority Entrepreneurial Connectivity Assessment (MECA), said minority entrepreneurs need to know the rules if they want to win the game. 

Here are his winning rules: 

  • Advocate from within – helps all of us by raising your voice.
  • Be mentored from someone in the club.
  • Be aware of unconscious bias – people will decide you are not ready enough. Show them something different.
  • Create the best team ever. It takes courage to take the journey, and it’s hard to start something from nothing. Your team must be very tenacious.

The minority entrepreneur punch list

Here are some key, minority-focused assets and events:

  • Aviatra Accelerators (formerly Bad Girl Ventures) is a strong resource for women business owners. http://aviatraaccelerators.org/
  • Girl Develop It and Women Who Code (WWCode) offer accessible and affordable tech workshops for female programmers and coding classes for newcomers. https://www.girldevelopit.com/chapters/cincinnati; https://www.womenwhocode.com/cincinnati
  • Women in Technology (WIT) supports the growing network of women entrepreneurs and startup founders via networking and leadership development with Cincinnati meet-ups. http://www.womenintechnology.org/
  • Hillman Accelerator Program Director Antwoine Flowers highlights available resources for minority entrepreneurs and lifestyle business owners throughout the StartupCincy ecosystem. http://hill7.org/
  • BLK hack – Events-based network celebrating black digital culture and committed to making the tech ecosystem more diverse and inclusive www.blkhack.com; @blkhackcincy
  • Hillman Fridays – Visit the Hillman Accelerator workspace on the fourth floor of the National Underground Railroad Freedom Center at 7 p.m. every Friday for drinks, food and networking with fellow minority entrepreneurs.
  • Cincinnati USA Regional Chamber’s Minority Business Accelerator – Growing, minority-led startups can seek resources to help accelerate their capacity and scale from the Cincinnati USA Regional Chamber’s Minority Business Accelerator.
  • JumpStart Focus Fund provides seed capital to minority and female-led startups. https://www.jumpstartinc.org/#1
  • Black Entrepreneurs Network, Cincinnati chapter – This Meetup group aims to grow and organize a network of black business owners, entrepreneurs and professionals.
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