Diversity doesn't happen just because you want it to happen.

That's one of the main findings of a new report on high-tech incubators and accelerators, published by the not-for-profit Initiative for a Competitive Inner City and by JP Morgan Chase. The study looks at a range of incubators and accelerators, with the goal of understanding why these startup hubs are overwhelmingly white and male, and what can be done about it. It offers four strategies for creating inclusive incubators, but all of them require proactive change on the part of directors and management.

The study argues that specialized incubators -- those especially for women or people of color -- are not the answer, on the grounds that these targeted incubators and accelerators don't provide the same opportunities for entrepreneurs to network within their industries.

Where's the Data?

Unfortunately, there isn't good data on exactly how many women or people of color have enrolled at incubators or accelerators. The report doesn't tackle that question, except to note that the International Business Innovation Association, a trade organization for incubators and accelerators, is currently working on it.

Instead, the report characterizes the proportion of women and people of color in incubators and accelerators as "relatively low, especially in the high-tech sector."

It also says that incubators that receive public funding tend to do better in the diversity department, with rates of participation by women and minorities "as high as 25 percent on average, by some estimates." Not great, to say the least.

Barriers to Diversity

The report lists a number of reasons why incubators and accelerators may not attract women or people of color.

  • Recruitment. Many incubators and accelerators simply don't recruit. They receive a flood of applications each cycle, so if those applications don't contain a diverse group, the selections committee figures there just aren't that many exceptional diverse entrepreneurs out there. Some incubators that do recruit do so through the networks of managers, and if the manager is white and male, chances are that his network will be, too. University-based incubators can face special challenges, because often the students in the school's tech-transfer and entrepreneurship programs aren't diverse, either.
  • Bias in selection. Selection committees are seldom diverse, says the study, which leads to what Susan Marlow, a professor a Nottingham University Business School, calls the "People Like Us" theory -- that people are drawn to those that look like themselves. Investors have been shown to prefer pitches by men over those by women, even when, word-for-word, the pitches are the same. That's an issue with incubators and accelerators, whose credibility is based on graduates' ability to raise money. Fewer women get through the door in the first place, and "then once women are in the accelerators, they're not getting funded...partly because funders have particular views of who is a high-tech entrepreneur," says Sarah Kaplan, a professor at the University of Toronto's Rotman School of Management, in the report. 
  • Program design. Simple things like scheduling can make a program unappealing to women. If an incubator hosts networking hours from 5 p.m. to 8 p.m., that may blow a mom's only chance to see her kids that day. Why not hold the events at breakfast or at noon? The requirement to be onsite is problematic for women, who can't always spend three months far from home. It's also a hurdle for anyone with a lower income, which disproportionately affects minorities. 
  •  Culture. A macho, exclusive culture doesn't make women and people of color want to join. TechTown, in Detroit, was inspired to make an effort to be more inclusive by the simple fact that 80 percent of the city's population is African American. "We know there are a large number of entrepreneurs, or potential entrepreneurs, that we could do a better job of engaging and attracting," said Paul Riser, TechTown's managing director.

Fixing Things

After outlining barriers, the report offers four strategies for making accelerators and incubators more attractive to women and minorities. But the uncomfortable truth is that institutions that want to increase diversity must make an active effort to do it --proclaiming a desire to be more diverse doesn't persuade anyone.

1. Expand recruitment networks. Diverse management teams attract more diverse entrepreneurs, the report says, "in part because the managers have diverse networks, but also because they are successful role models." Rodney Sampson, co-founder and chairman of Opportunity Hub, says in the report that "you have to be intentional about your leadership reflecting diversity and inclusion starting at the top."

500Startups' classes are about 30-50 percent women, 15 percent African-American, and 10 percent Hispanics. Christine Tsai, one of the founding partners of 500Startups, says that's partly because half of the accelerator's management team is women, and almost half of the investment team is women.

2. Change the selection committee and process. The argument for a diverse selection committee is in some ways similar to that for diversity in other parts of the incubator or accelerator's management, but there's a twist: It can be difficult for members of a selection committee to relate to, and properly evaluate, a startup whose target market is totally different.

Some accelerators are getting rid of the written application and selection process: Talk to the executive director, and if he or she likes your idea or company, you're in. Paperwork, after all, is not a core entrepreneurial strength. Plus, it's well-known that women will only apply for something for which they are 100 percent qualified; men more often believe that 70 percent is good enough. So a strict list of criteria, which are almost impossible to achieve anyways, is going to dissuade women but not, in general, men.

3. Implement flexible schedules. It's ironic that so many women go into entrepreneurship in part to have control of their schedules, and then an incubator or accelerator requires them to put in face time at the same location for 90 days straight. Some accelerators are experimenting with a combination of virtual and in-person programs, or asking entrepreneurs to be on-site for just a handful of days a month. And, as mentioned above, they're rescheduling networking events so parents don't have to choose between seeing their kids awake and working on their startup.

"If a venture's mentor network, investors, and early customers are in Kansas City, for example, why would you pull them out of the community that is best positioned to support them?" asks Megan Christenson, director of the Points of Light Civic Accelerator. "It doesn't make sense to uproot them."

4. Create an inclusive culture. If your incubator or accelerator has a reputation for a "bro" culture, you shouldn't find it surprising that women don't want to join. Bragging about how few hours you and your founders sleep each night isn't attractive, either.

Organizations should also make sure that they talk about the business case for diversity, rather than simply stating it's the "right" thing to do. That can make diverse entrepreneurs feel like they're tokens or valued for something other than their business acumen. TechTown in Detroit, as well as some other incubators, hosts not only its own events but those of other organizations relevant to entrepreneurs: the whole idea is to create an open, inclusive, inviting network.

 

Published on: Jun 7, 2016