Opinion: Strengthening Black entrepreneurship will boost our economy’s potential. Here’s why.

By Abdullah Snobar

Executive Director, DMZ and CEO, DMZ Ventures

Some like to deny its existence, but it’s there. Systemic racism is embedded in every corner of our country. The policies and practices rooted in employment, education, law enforcement, medicine, and across countless other institutional systems, have been built to benefit the white experience. And while we like to point out differences between Canada and our neighbours to the south, we are by no means radically unique from the U.S. in this arena.

The tech startup world — despite its progressive image — is by no means immune to the problem of systemic racism. For decades, Black tech founders have been building ventures in a society that continues to limit their opportunities due to generations of institutional racism.

We know that tech ventures are great for the economy — GDP in the software industry has expanded at six times the pace of the overall economy in Ontario in recent years. Startups create revolutionary technology, help the private and public sector innovate and increase employment opportunities. Additionally, it’s been shown that the more ethnically and culturally diverse a company’s executive team is, the more likely they will financially outperform their less-diverse peers — reinforcing the business case for enabling the success of Black leaders. This should be of particular importance as we navigate a global health crisis and time of economic instability. We must call on both public and private sectors to support underrepresented entrepreneurs as an explicit part of our action plan for economic recovery.

By empowering Black-founded startups, our economy will prosper. We’ll see more innovation, more jobs created and an increase in wealth distribution. If we can promote talent development and startup development in an environment that addresses societal barriers for Black professionals, we will level the playing field in tech – an industry where the need for race equity is long overdue.

The intersection of race and money for Black entrepreneurs

Race continues to be a key barrier in acquiring small business loans and venture capital distribution. A recent U.S. study showed that white and Black applicants with identical business profiles and credit histories receive different treatment in how bank representatives encourage them to apply for loans, the products they are offered and the information they receive.

Similarly, the distribution of venture capital differs. In 2018, only 1 percent of venture capital dollars went to Black founders, while Black women-backed ventures received a mere 0.2 percent of all VC funding. When you take into account the founders who can’t rely on a “friends and family’ round of funding, you can see how their journeys and access can end before they start.

When looking at the tech ecosystem through the perspective of talent, the labour market also continues to fail Black job seekers. Having an extensive social network, especially in the startup industry, holds immense value when it comes to how people find work today. If a white hiring manager’s professional network remains largely racially homogenous, will an employment opportunity arise for a Black individual? And when an opportunity is brought to the table, will the employer channel the Black employee into the least secure and prestigious job at the company, creating little opportunity for growth and advancement?

How do we ensure folks are not in the same cycle of social injustice generation after generation? We must build ecosystems that proactively connect Black entrepreneurs with funding, networks, and mentorship in a seamless and authentic way.

Building entrepreneurial opportunities for Black founders and aspiring innovators

The DMZ’s Black Innovation Fellowship (BIF) is designed to strengthen Black-led startups by helping improve their social and economic mobility. BIF acts as an additional layer of support and gives Black founders access to best-in-class programming and the right connections to industry and capital. Providing these resources will help level the playing field, especially in the competitive tech space.

Canada’s tech wages are shown to be 51 percent higher than the average private-sector wage. Entrepreneurship represents a viable way to engage marginalized youth in early talent development and funnel them into the high-paying tech industry.

We’re working on introducing the Black Innovation Launchpad, where we can foster early idea development in Black youth and expose them to mentorship opportunities. Career interests are formed at a young age — if we engage with marginalized youth early, we can help shape prosperous future career pathways and break down the intergenerational cycle of poverty.

Talent and startup development are solutions that can work hand-in-hand to break the perpetual cycle of inequity, ensure long-lasting generational wealth and fuel positive economic impact. These factors interact and create a welcoming place for aspiring and established entrepreneurs of all races and socio-economic backgrounds to thrive. As the startup ecosystem grows and job opportunities open, let’s fill them with a pipeline of Black talent.

Fostering generational impact

If our public and private sector leaders prioritize programs like the Black Innovation Fellowship, we will have the opportunity to tackle the factors that induce the performance gap between Black- and white-owned ventures. We want to build sustained momentum and drive for Black-founded companies and optimize their financial performance to make valuable contributions to our economy.

Startups are major engines of growth for the economy; they’re deeply entwined in every facet of it.  If we continue to ignore the blind spots where racism exists in tech and do not make conscious intentions to create equitable opportunities for underrepresented founders, our economy will suffer long-lasting effects — end of story.