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One of the most persistent barriers in the tech world is funding, particularly for minority entrepreneurs. Research shows they get far less funding than white entrepreneurs.
A tech accelerator in Boston that focuses on underrepresented groups hopes to change that.
Smarter In The City is the first high-tech accelerator in the predominantly black neighborhood of Roxbury. Its executive director Kofi Callender says while innovation happens all over Boston, funding does not.
"There's a dividing line in Boston that sort of starts at Roxbury," Callender says. "A lot of people of color don't go much further north of here and [investors] don't come south as well."
So Callender asked angel investors and venture capitalists to come to the Roxbury Innovation Center on a recent weekday to hear pitches from minority entrepreneurs.
David Rodriguez, CEO and co-founder of Food For All, an app that aims to reduce food waste by allowing people to buy discounted meals from restaurants an hour before they close, was there to deliver his startup's pitch.
"It is an easy way to save food, money and the environment altogether," Rodriguez told the investors.
There was also a pitch from Melissa James, CEO of The Tech Connection, which helps tech companies recruit diverse talent.
"We've actually created a software platform focused on inclusive hiring best practices," James explains.
And there was a pitch for a platform called ScholarJet, where students can complete challenges to earn college scholarships.
"These are scholarship competitions created by companies, enabling students to showcase their skills and talents," ScholarJet CEO Tuan Ho shared.
The room was packed with about 30 investors, who discussed the companies after the pitches were done. They praised the quality of the presentations and the product ideas, but also wondered about some of the financial projections and possible competitor products.
This was the first time some of these investors came to Roxbury to hear investor pitches, like David Voorhes, an angel investor with Launchpad Venture Group. Voorhes said he liked what he heard.
"Like all startups there's a lot of risk. Some are going to make it, some aren't going to make it," Voorhes said. "But I think these were as good as what you normally see in startup presentations. So I thought it was time well spent."
This is what Smarter In The City wants to hear. The tech accelerator wants to give these entrepreneurs exposure and an equal chance to grow their businesses.
Rodriguez, who pitched the Food For All app, has raised some money but needs more. The 28-year-old grew up in Mexico and says the process is tough.
"It is challenging. Essentially English being our second language, that's challenging," Rodriguez said. "But also because we're targeting a new market, the market of surplus food."
Studies show minority entrepreneurs are less likely to get loans, lack access to networks and face discrimination. One study found less than one percent of startups funded by venture capitalists were founded by Latinos. Another report found black-owned businesses represent 1 percent of venture-backed companies. And another report found black women get .2 percent of venture capital.
"We're better off just going out and buying a lottery ticket and being hopeful that we win the lottery," says Harvard Business School professor Steven Rogers.
Rogers says more pressure needs to be put on investors and financial institutions.
And as for entrepreneurs: "We must go and find those entities that have an affinity for doing business with us," he says. "Go to those places to try to continue to procure money."
Closing the funding gap for minority entrepreneurs is crucial, Callender says. The startups in his program tend to have a broader social and economic impact that can transform local communities.
"There are problems that they see in their communities that they want to solve," Callender says. "And that's not the next Facebook or the next Twitter that's going to give them the return that they're looking for. So it's tough in these communities."
Callender says the investor meeting in Roxbury is a first step. He wants to make this a regular thing, so more connections are made and more minority entrepreneurs get the funding they need to flourish in Boston's innovation economy.
This segment aired on April 18, 2018.
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