In 2018, The Kapor Center released the Leaky Tech Pipeline Report – a framework and website are meant to increase understanding of the causes of disparities in the technology ecosystem, raise awareness about effective strategies and stages for intervention, and drive the development and implementation of comprehensive solutions.
According to the Leaky Tech Pipeline, the primary reasons why fall into three buckets: Entrepreneur Education, Reference Customers and Capital, and Social Networks:
Entrepreneur Education: Entrepreneurship educational pathways tend to be informal and access to entrepreneurship networks plays a critical role in developing knowledge needed to launch a startup, tech-enabled company, or non-profit.
Reference Customers and Capital: Unconscious biases affect funder judgement and decision-making, including the desire for “similarity” between funders and founders, looking for “pattern-matching” and similar demographic or educational traits from previously successful founders, making gendered assumptions about leadership ability, and correlating ability with degrees from top-tier universities. Additionally, gender differences are seen in types of questions asked of founders in pitch conversations: male entrepreneurs are asked questions about their aspirations, while female entrepreneurs are asked questions assessing their level of responsibility and vigilance.
Social Networks: Funders are more likely to invest in companies they have been introduced to through “warm leads” than companies led by individuals not in their social networks. Direct personal relationships and indirect relationships, through shared connections or experiences, are directly tied to the ability of entrepreneurs to acquire funding. Given that social networks are highly segregated by race and gender, women and entrepreneurs of color have fewer opportunities to connect with the capital networks which are predominantly White and male to secure funding.
Social capital is influential in providing alertness to opportunities, endorsements and recommendations, access to funding streams within networks, and becoming familiar with entrepreneurship terminology, compliance rules and restrictions, and financial and licensing agreements needed to launch a startup or small company. Access to peer, mentor, and social networks from prestigious universities and tech companies will help underrepresented groups with access to referrals and introductions to funders.
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