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Startup accelerators are selective programs that give early-stage companies education, mentorship and financing. For many early stage founders, getting into an accelerator is the moment that they quit their jobs and make the leap into full-time entrepreneurship.
The big question around prestigious startup accelerators such as Y Combinator, Techstars and 500 Startups is, are they contributing to or working against the diversity challenges common in later-stage startups. Getting into a prestigious startup accelerator is—especially for first time founders—a proof point that many investors look for to confirm whether or not they will invest. If diverse founders cannot get into an accelerator, their ability to raise venture capital later becomes that much harder.
In 2017, Y Combinator released their diversity numbers and despite making this issue a priority, only 22% of their companies were founded by a female founder, 8% by a black founder and 4% by a Latinx founder. As compared to the nationwide stats where only 10% of VC-backed companies have a female founder, fewer than 1% have a black founder and fewer than 2% have a Latinx founder, this may not seem that bad, but when you consider that almost 51% of Americans are female, 16% of Americans are black or mixed race and 18% of Americans are Latinx, it seems like diversity efforts may be losing ground at the earliest stage of a startup, namely the startup accelerator.
Last year (2018), Techstars Boston had a similar diversity problem. Arguably the best accelerator outside of Silicon Valley, their 2018 class (TS 122) had 10 companies, but only 1 female CEO and 1 co-founder who was a person of color.
Remarkably this year, their class now has 4 female CEOs, 2 co-founders who are people of color and 50% of the class are immigrants (and these numbers are still from a cohort of 10 companies).
This 400% improvement is exceptional in the scheme of diversity and tech, so I sat down with Clement Cazalot, the Managing Director, in order to unpack the lessons that he learned so that others can mimic his diversity success. Here is what he had to say:
1. Diversity cannot be an afterthought. When Cazalot first took over Techstars Boston, he had 5 months to hire his team, recruit strong companies and then decide which companies he wanted to fund. Because the entire process felt like a sprint, he leaned on tech networks he already had at MIT and Harvard to get introduced to the “best” up-and-coming companies. Because the tech ecosystem is not diverse, this meant that his pipeline of companies was mostly comprised of white cisgendered men. He was understandably unhappy with his pipeline, which did not represent the future he wanted to see, but it was already too late. The 2018 program was starting and although he scrambled to get more diverse referrals, as he said, “Because I didn’t make it a priority, it wasn’t going to change.”
2. You have to acknowledge your mistakes to fix them. During Cazalot’s first class (which was not diverse), he decided to acknowledge his mistakes up front. As he says, “I was open with CEOs, mentors and founders. I mentioned [our lack of diversity] to everyone. I spoke about it for 12 months with every person I met. I told them I was looking for companies outside the standard tech ecosystem [for our future classes].” He realized that in order to improve and build the strongest tech accelerator program possible, he needed to be honest that he had not put together a diverse class in his first go. He then proactively prioritized introductions to female-led companies and person-of-color-led companies. These conversations were difficult because of the lack of diversity in his 2018 class. He gave speeches about his “personal failure” and how he was making changes to empower founders from all walks of life. As he told me, “the more self-aware you are about this, the more self-conscious you are, the more discussions you have, the more this drives you to open opportunities to invest in better founders and founders you wouldn’t have met in the past.”
3. Finding diverse candidates means looking outside the traditional tech ecosystems. For Cazalot’s second Techstars class (2019), he spent 12 months not only talking about the diversity mistakes he made with his first class but also actively taking steps toward meeting with and recruiting more diverse companies. For example, Cazalot started spending time in locations that are more diverse than Boston. He has flown a number of times to Atlanta to learn from some of the great tech companies sprouting there. As he told me, “Inclusion is about inviting people to discuss their journeys with you. Diversity doesn’t happen overnight but it does yield long-term results.” Cazalot has done a lot of work to seem more approachable. He says that as a white, cisgendered male with strong opinions (who also happens to be a successful tech founder), he needs to be wary about seeming intimidating or exclusionary. He consistently asks for referrals to companies outside of the traditional ecosystems and he prioritizes his time so that he spends more time with strong companies led by diverse founders.
4. Building a diverse ecosystem takes time. Despite all of his hard work, about 6 months before Cazalot started this year’s Techstars program he still felt that his pipeline of companies was not diverse enough. As he told me, “I didn’t schedule the investment committee until there was 60/40 representation in our top 40 companies that we were considering. All of the companies around the table were of the same quality, but until the pool was diverse, we didn’t do the selection.” This meant that he had to push the start date of the program by a month so that he could spend more time recruiting great companies.
5. Your team needs to be diverse to recruit diverse talent. When Cazalot did call his selection committee, he made sure that it was 50/50 men and women. This was another major learning from his first go around. His leadership team in 2018 was comprised of 4 men including himself. This was by no means a purposeful choice, but he surrounded himself with people who are proactive about tech, which, as an industry is 80% male. In 2019, Cazalot knew that mistakes like that couldn’t stand. Not only did he actively recruit diverse companies, but he also diversified his selection committee. For instance, he brought Jen Riedel onto his team as the program manager. She has been extremely proactive in making the program more approachable for all companies, alumni and partners.
Cazalot’s progress has been tremendous but as he points out, they have not yet proven longevity. In 5 years he can celebrate, but structurally he continues to face challenges. The earlier you get in the startup lifecycle, the more problems you can identify that limit diversity. Before the startup accelerator there are universities where only 19% of women are graduating with computer science degrees. Before the universities there are schools and toys that limit girls’ confidence in themselves as builders.
Each part of the startup lifecycle exists with constraints from the steps before it but also opportunities to make the world better. Like what Cazalot has done, other startup accelerators and VCs must focus on doing their part in making this world a better, more diverse place. There is not one solution to fix these problems, but instead all of us in tech must remain open and honest about the world we want to create, we must question our own assumptions, and we must prioritize with proactive actions the changes we want to happen. The more that diversity is discussed, the more likely this space is to change.
April 26, 2019 at 11:35AM
Forbes – Entrepreneurs