Jump right in, the water's fine is the big takeaway from First Round's most recent annual survey of 700 startup founders. Ninety-one percent of respondents report that now is a good time to launch your business.
Zooming in on the results, there are a few gotchas in the good tidings. Responses also conveyed significant slip points in the state of startups.
Top concern: hiring
Hiring good people ranked as the top concern for founders. Thirty-seven percent are behind on their hiring plan.
Of course, the hiring plan may be struggling because of a striking monoculture, as reported by the founders.
- A majority (61 percent) had male-only boards.
- 61 percent also had all-male or mostly male teams.
Compare that directly with:
- 68 percent say they have some sort of diversity or inclusion plan.
- 70 percent say they talk about diversity and inclusion.
Hard to believe?
Striking disagreement between founders based on gender
From a gender perspective, First Round's State of Startups' reporting was well balanced between male and female tech founders. That means 17 percent of respondents were female tech founders and the rest were dudes. That's "market rate," according to Crunchbase--about 20 percent of tech founders pitching venture are women.
Essentially, the big picture goes like this. The boys blame the system (which is overwhelmingly male) for a lack of diversity. The girls blame the system too, but they see the guys' subconscious bias as the system. Got to admit a point there.
- Men founders are twice as likely as female founders to believe in a pipeline problem.
- 49 percent of the guys feel that the problem is not enough women or minorities going into tech. In other words, it's the women's issue--they aren't choosing tech.
- Eight times as many men as women believe there is a recruitment problem. It's interesting to note that women didn't report there being much of a pipeline or recruitment problem.
- Twice as many women founders as men founders think unconscious bias is the key factor in tech's lack of diversity.
- 88 percent of the guys don't see unconscious bias (theirs, of course) as an issue. Which only underlines the point that it's unconscious. Also, women founders are five times more likely to cite lack of key role models as a problem.
What's interesting--and positive--about these concerns around hiring and diversity is that they are mostly issues within the founder's complete control. If startups are truly concerned about hiring good people, they'll increase their pool of possibility by creating more diversity from the top---founders and board included. Once an all-male team and an all-male board get going, the die is cast and it's extremely tough to flow the startup toward an inclusive culture and the broader hiring opportunities that come with it. That said, one of my favorite shots in the arm for inclusive hiring is the new Women Who Code job board, which helps startups reach the WWC global community of 80,000. (Full disclosure: I'm on the board of Women Who Code.)
Are investors gaining the upper hand?
Aside from concerns around inclusion and hiring, founders pointed out another issue: that the balance of power is shifting significantly to investors.
- 67 percent of respondents feel that "power is more in the hands of investors" than founders.
- 55 percent of respondents feel that it will be harder or much harder to raise capital in the coming year. And with five straight quarters of venture capital downturn, that's real pessimism.
Despite the consensus that building a startup is hard, founders were united in optimism about their chances for success in 2017. When asked who they hope will acquire them, the popular answers were the big dogs--Alphabet, Facebook, Amazon, and Salesforce. Plus,
- 20 percent of founders say they're working on a company that will someday have a billion-dollar valuation.
- 72 percent believe there will be more opportunities for exits in 2017.
- 68 percent report good relationships with their co-founders.