Written by Kim Zeuli and Kathleen O’Shea
Until they fully engage women and minority entrepreneurs, incubators and accelerators will not truly jumpstart urban entrepreneurship. Last week, ICIC hosted a national conversation at the Roxbury Innovation Center in Boston, sponsored by JPMorgan Chase, the Boston Foundation, and the W.K. Kellogg Foundation, about what it will take to create more inclusive entrepreneurial hubs. The event attracted over 150 attendees, including entrepreneurs as well as representatives from incubators and accelerators, economic development organizations, foundations and government agencies.
The conversation was kick-started by Professor Jeffrey A. Robinson with the Center for Urban Entrepreneurship and Economic Development at Rutgers University. A leading expert on minority entrepreneurship, Professor Robinson began his presentation by making a compelling argument for entrepreneurial diversity—it makes good business sense and by 2042 our country will be majority minority. He concluded by summarizing three drivers of inclusivity in incubators and accelerators: (1) connecting to the right partners (those with connections to diverse entrepreneurs), (2) creating an inclusive environment, and (3) coercing the “big players” (the large corporates) into action. He also stressed the importance of both “developing and creating pipelines of diverse entrepreneurs.”
The dialogue was further grounded in presentations of new findings on the barriers facing women and minority entrepreneurs in accessing incubators and accelerators. Shirley Leung of The Boston Globe moderated the panel, leveraging her expertise on entrepreneurs and business development. ICIC’s Senior Vice President and Director of Research, Kim Zeuli, highlighted findings from ICIC’s new research on the topic. The barriers they face, she argued, can be categorized into four challenges: recruitment, biases in the selection processes, program design and organizational culture. “Recruitment and selection biases prevent women and minority entrepreneurs from gaining entry into incubators and accelerators, while program design and culture are making them not want to,” Zeuli explained.
Professor Alejandro Amezcua at Syracuse University discussed his new research measuring the effectiveness of incubators on women entrepreneurs, which is one of the few academic studies to explore the effectiveness of incubators and accelerators overall. Amezcua confirmed the presence of a selection bias, commenting that the women entrepreneurs that gained entry to incubators led stronger performing firms than the women entrepreneurs that did not participate in incubators and, thus, were less likely to fail. However, once they participated in incubators, Amezcua found that these women-led firms were more likely to fail than those by women entrepreneurs who did not participate. This “fast failure” may be a benefit, helping them realize the deficiencies in their business model before investing more time and resources.
Gilad Rosenzweig, founder of Smarter in the City, a high-tech accelerator in Boston’s Dudley Square, and Executive Director of DesignX, an accelerator program for MIT School of Architecture and Planning students, validated the research findings. He recognized the importance of entrepreneurial hubs in supporting diverse entrepreneurs and how difficult it was to get there—“it doesn’t happen organically.” Smarter in the City has made inclusivity a priority since it was started. At an existing institutional setting such as MIT, the DesignX accelerator needs to be more intentional in order to address this issue.
But some incubators and accelerators have broken down these barriers—a point that was made repeatedly in a panel showcasing effective strategies to create more inclusive incubators and accelerators, which was moderated (appropriately) by the Venture Café’s Kevin Wiant. The Venture Café Foundation supports innovation through “spaces, programs, and conversations,” operating in four cities and managing Boston’s District Hall Civic Innovation Center and our host, the Roxbury Innovation Center (RIC). RIC was intentionally located in Boston’s inner city in 2015 to serve more diverse entrepreneurs.
Kirstie Chadwick, President and CEO of the International Business Innovation Association, highlighted several of their incubator members that have successfully created organizations supporting diverse entrepreneurs. But she also emphasized the importance of the day’s topic and the need for not only changes to programming, but to the entrepreneurial ecosystem as a whole. This point was echoed by Dr. Cheryl Watkins-Moore, MBA, of St. Louis-based biotech innovation hub BioSTL: “The startup industry is pale and male, and this needs to change.” She spoke to BioSTL’s efforts to create pipelines of diverse entrepreneurs in STEM by partnering with high schools, corporate partners and community organizations, while also supporting the entrepreneurial efforts of women and underrepresented populations in life science, IT, and advanced manufacturing.
Scott Bailey, Managing Director for Boston, MassChallenge, candidly explained how his organization has turned a corner with respect to diversity—placing more emphasis on influencing inclusion across the innovation ecosystem, diversifying its staff and making sure marketing materials are more universal, for example. “The participants in MassChallenge this year, I’m proud to say, were significantly more diverse than a few years ago.”
As one participant in the room noted, the strategies to increase participation rates of women and minority entrepreneurs in incubators and accelerators were all well and good, but “If we want to move the dial on diverse entrepreneurship, we have to move the dollars.” Glynn Lloyd, Eastern Bank’s Director of MBE Initiative, helped guide an informative panel addressing this issue. Women and minorities can certainly learn how to pitch better, as is the case with all entrepreneurs, but they shouldn’t be considered the problem that needs to be fixed. Biases inherent in the pitch process, which favors white, male entrepreneurs, need to be addressed, and incubators and accelerators should consider alternative approaches to funding.
Deb Kemper, Managing Director of Golden Seeds, outlined her organization’s strategy, which focuses on connecting high-potential women-led businesses to a group of angel investors. Village Capital, represented on the panel by COO Allie Burns, takes an approach that turns traditional financing on its head. Village Capital’s innovative peer-review funding model was inspired by the microfinancing lending model of Village Financial Services in India. At the end of each of the organization’s educational curriculum, groups of 10-12 entrepreneurs assess each other, with the two highest-ranked ventures receiving seed capital.
SheEO, represented by Board Chair Abigail Slater, was inspired by Village Capital’s fresh take on financing. Focused on supporting women-led ventures with low-interest loans, their members commit to an $1,100 contribution, 90 percent of which is lent to women-led ventures and perpetually reinvested.
Supporting diverse entrepreneurs will help close the gaping wealth divide in our cities. Incubators and accelerators are one mechanism to do this, but by no means are they the magic bullet. Incubators and accelerators have the opportunity to target and support those who could benefit from them the most, by offering important education, networking, mentorship, and capital access opportunities. But they need to do better—and do more—to support all entrepreneurs equitably.
ICIC’s report outlines four strategies that can serve as a roadmap for these organizations to support greater inclusivity:
The funders of incubators and accelerators can also do more to create diverse incentives and require metrics that track more than ROI. The supporters of this event—JPMorgan Chase’s Small Business Forward initiative, the Boston Foundation, and the W.K. Kellogg Foundation—are doing their part. More foundations and public agencies need to follow their commitment.
To learn more about this topic, read ICIC’s new report: Creating Inclusive High-Tech Incubators and Accelerators: Strategies to Increase Participation Rates of Women and Minority Entrepreneurs.