The startup support and investment community cannot continue to iterate on the current social, financial, and cultural practices rooted in bias that have systematically left Black founders behind. We cannot incrementally fix systematic bias, exclusion, and performative diversity and inclusion. The solution and the path forward for our industry requires a completely new decision-making framework, not based on who you know or how you present yourself, but on standardized, objective data.
Monique Woodward, VC at Cake Ventures, cannot be amplified enough: “Black entrepreneurs don’t need a separate water fountain. You have to fix the systemic issues in your funds that keep Black founders out and keep you from delivering better returns.”
We are in a moment in time where our society seeks to actually change the structures of inequality and systemic racism, not just wring our hands and proclaim our desire for things to look different.
I’m here to say that Fluent is here for this work. It’s the work we’ve been committed to since our founding in 2018. We are not interested in the surface-level appearance of change. We are obsessed with moving this industry forward by fundamentally shifting the decision-making frameworks that currently favor privileged white males over all other entrepreneurs.
Many attempts to fix this obvious and well-known problem have been tried. Their fatal flaw was to only try to improve the current model, rather than realizing the entire system is broken.
The best way to create a truly equitable system is by using smart, objective data to change the way companies are selected for access, resources, and capital. The future of this industry is a decision-making framework unmoored from who you know or how well you match the expected (white, male) founder archetype.
By redesigning the work to focus on data-driven decisions, in all of the places where founders and entrepreneurs seek capital, training, and support, we can contribute to the dismantling of systemic racism in our society within our own industry.
Many, many people know these systems are broken and failing. The current conversation calling for change is focused on how we can improve the rates of Black founders receiving investment. Yes, let’s do that. Black founders are building valuable businesses that solve real problems and can make an even greater impact on our society with the capital they need to succeed. AND we must highlight and fix the foundational root problems that exclude Black founders from fully participating in the industry to begin with, far earlier in their journey than when they start seeking capital.
Let’s spotlight the two primary systems that are preventing underrepresented founders from accessing these resources to understand how data-driven decision-making can make real change in our industry.
The number one currency in the startup world is “who you know”. Founders with the right networks find mentorship and investor support for their work, regardless of the merits of the actual business they are building. Who you know matters more than what you have built or accomplished.
Why is this?
The startup industry relies on relationships because it has not (until now) had data for its decision-making process. Early stage investments and selection for support programs like accelerators are made before there are tangible metrics of success.
Back when I was deep in the world of running accelerator programs, I asked a well-respected, experienced startup attorney to explain why he and the investors from the selection team vetoed all of the companies that our management team had spent weeks vetting and felt strongly were excellent candidates for the upcoming cohort.
And his response was, “They’re all shit.”
He went on to share his opinion that there are no real differences among any early-stage companies, so the accelerator should instead just pick companies that were politically convenient and that the investors in the room were already familiar with.
The reality was that there were demonstrable differences between the companies we had vetted and those with whom he was buddies. Namely, that ours had revenue and his were just an idea on the back of a napkin.
Because this investor didn’t believe that you could parse out risk with data, his decision-making did and always would resort to backing the companies he had pre-existing relationships with, founders who looked like him solving problems he understood.
Since then, I’ve talked to the leaders of some of the most powerful and influential accelerator programs in the country. They have audited the results of their decision-making process and admit they have demonstrable bias in their systems.
For the past ten years, the industry has tried to resolve this problem by introducing robust mentor networks. The idea behind this is noble — if people need social capital to succeed, let’s introduce them to more smart, powerful, and rich people. But this approach just further reinforces a toxic structure based on the old boy’s club model of doing business. Startup support programs that emphasize mentorship reinforce the dynamic and the social expectations that founders must be picked for support based on who they know.
In the absence of a data-driven, objective measure of potential, humans will rely on innate bias and affiliations. Thus: who you know.
Why on earth would the innovation economy, tasked with and capable of solving the world’s problems, decide which problems to solve based on who gets access to the old boys network? Why would we perpetuate this dynamic?
In my many conversations with professionals in our industry about this problem, many of whom have devoted their careers to finding pathways to create more opportunities for underrepresented founders, they acknowledge this truth. But then their next question is always…but how do we fix it? I will get to that, but first let’s talk about Pitch Culture.
The second, even more toxic structure in the startup industry is the Pitch.
Pitch culture favors founders who know how to craft their pitch to fit an expected style over founders who have strong business fundamentals but don’t use the familiar lingo. Founders don’t actually win by having strong unit economics. They win by sounding like winners.
I know this because I have taught the Black founders in my accelerator programs how to “perform” a pitch that focuses on what their business might become, rather than the great work they’ve already done. And those founders have gone on to raise millions of dollars that were previously unavailable to them, despite having killer businesses before and after I entered their world.
One of the people I most admire professionally is Dean Dori Tunstall, Dean of Design at OCAD University in Toronto, Canada. Her work around decolonizing design has taught me a lot about what the expectations of a white patriarchal society does to our female and BIPOC founders.
In Dean Tunstall’s words speaking about the design world, “if we want diversity and inclusion, we have to decolonize design so that the practice itself stops traumatizing our diverse students and professionals.”
This is absolutely true and relevant in the startup industry as well. We cannot ask Black founders to perform as if they are white men in order to be “chosen”. It is a violence baked into the very fabric of our current systems. And I take full responsibility for encouraging that system in my earlier work, specifically around teaching the founders in my programs to pitch.
Every time we ask any founder to pitch their business using the current model, tying up everything in nice little bows of certainty and success, we are harming the very people we claim to support. We are asking them to deny their reality, instead espousing a narrative that mirrors the narrative developed by white men for white men.
The Alternative: Data-Driven Decision Making
So what does our industry do if we don’t rely on 1) who a founder knows and 2) how closely their pitch fits our pattern-matching expectations for a startup? Well, for one, we could join all of the other professional classes that utilize data-driven, objective measures for decision-making, process optimization, and analysis.
Incrementally changing the current structures to fix this problem is impossible. We cannot continue to ask women and people of color to look and sound like a white man in order to get access to the opportunity to pitch and then have to work doubly hard to prove they are worthy of investment.
Using a data-driven approach to this decision-making process is the very best way to actually change the system in ways that do not create additional burdens on underrepresented founders. We cannot ask them to perform as if they are white men in order to be chosen. We must evaluate them based on the actual merits of their work.
This industry is so entrenched in the current way of doing business, many cannot even imagine that this industry could be revolutionized by data. But we have clients across the US who have already experienced the power and utility of this data. It is here, already starting to do the work.
The result is that founders show up telling the truth about their business, not giving the shiny pitch. Investors get to dial into their risk tolerance using a more precise decision-making tool, and support is allocated using the same data.
As a result, the industry takes a giant leap forward in the direction of smarter bets, data-driven strategy, and a level playing field that creates space for everyone.
Black voices have been doing the work of unpacking our industry’s problems. We are in their debt.