Deeper Dive: Diversity, Inclusion and Equity in Nebraska Venture
Our state is waking up to the well-documented research that diverse teams yield stronger results. So much so, that diversity and inclusion have become a focus of nearly all state-wide initiatives.
According to Blueprint Nebraska, Greater Omaha Preferred Future 2040 vision and the Aksarben Foundation’s most recent Stakeholder Report, diversity is an imperative measure of our state’s overall economic health. Yet, we have a lot of work to do. So, how does our state do supporting founders of all backgrounds, networks, experiences?
“Nebraska entrepreneurs are more successful than elsewhere, overall. Yet, that was not the case for female or minority founders.” (Economic Outlook Report, Greater Omaha Chamber 2019)
Of Nebraska’s preseed venture capital deals in 2019, only two went to teams with a female CEO and/or founder and only three went to a team with a minority-led (male) founder. (CrunchBase)
The state ranks #48 in the U.S. News & World Report Best States Rankings measuring equality among states’ citizens, ahead of only one peer state, South Dakota.
Nebraska ranks #40 on income gap by gender, #37 on racial and ethnic diversity, and #28 on best states for LGBTQ+ families. (Blueprint Nebraska)
On the basis of gender: 11.2 percent of venture deals were into female CEOs. For startups that have at least one female cofounder, that number rises to just shy of 19 percent. (PitchBook 2019)
A 2017 study of 140 venture capitalists (40% women) and 189 entrepreneurs found that men and women are asked inherently different questions in a pitch for funding. In the study authors’ words, men are asked to win whereas women asked not to fail. For example, men were asked, “How do you want to acquire customers?” While a female founder was asked, “How many daily and monthly customers do you already have?” The study surmises that this disconnect in questioning prevents deals and could also be linked to over-valuing deals led by male teams.
Exerting even more pressure on the startup funnel, Dr. Dana Kanze asserts that pay disparities and other systemic and structural barriers inhibiting women from accumulating personal wealth to the same extent as men, female founders are also less likely to be able to self-fund their startups while awaiting outside funding.
Go beyond venture dollars and look at equity — in this case, shares of a company — across companies, it’s just as bad. In venture-backed companies, women employees own 49 cents of every dollar male employees own. Even for female founders, they only have 49 cents for every dollar their male counterpart has in equity. Men founders represent 6.5% of equity owners, but they own 64% of all equity.
Sadly, when you look at the statistics for minority founders the numbers are even more saddening. Just 1 percent of venture-backed founders were black; Latinx founders made up 1.8 percent of those receiving funding, while Middle Easterners totaled 2.8 percent.
The systematic issues for women in venture have been well studied. Unfortunately, they are not as well studied for persons of different races or ethnicities. We can assume there is some similarity in the path to capital, but as a fund will need to do more work to uncover and break down the barrier.
