Black entrepreneurs are excluded from venture capital, new research shows. NewNew's founder says it's down to bias.

  • NewNew cofounder Filip Diarra has hit out at the prevalence of bias in the tech industry.
  • He says the stereotypical image of a founder will change but only over generations.
  • Around 2.1% of startup executives in the US are Black, according to research from Kauffman Fellows.
  • See more stories on Insider’s business page.

“The problem is bias,” says Filip Diarra of the shortage of Black and minority founders in the tech industry.

“We all have bias and pieces of bias that are at the core of who we are as people since the dawn of mankind. Every war has existed because of bias, every hate crime has pretty much existed because of bias.”

Diarra is a tech founder whose startup NewNew has captured investment from top-tier VC firms Andreessen Horowitz and Founders Fund. It also counts actor Will Smith and execs from Twitter, Google, and Facebook among its backers.

NewNew is an app that describes itself as a “human stock market”. It allows users to control the lives of other people by allowing them to pay to cast votes on personal decisions such as what to wear or who to date.

The app is targeted toward creators, who can embed NewNew polls onto the likes of TikTok, Snapchat, or OnlyFans. While it is only at a beta stage at the moment, some of its early adopters range from pet groomers asking what cut they should go for to creative writers looking for inspiration as to where to take a story.

Diarra’s comments to Insider came after new research showed Black and minority founders in the UK were excluded from venture capital funding.

Diarra, alongside his cofounder Courtne Smith, are rarities in the tech sector in the US.

Around 2.1% of startup executives are Black, with Latinx making up 2.6%, according to a recent study by the Kauffman Fellows Journal. This compares to the wider working-age population of America, which is 13% Black, and 17% Latinx.

In London, around 3% of founders that received venture-capital backing identify as Black compared to the wider population, which is 16% Black, research from angel network Cornerstone Partners found. Cornerstone’s cofounder has attributed this not to a lack of Black and minority entrepreneurs, but implicit bias in the way venture capitalists choose to fund founders.

“You have people who have been very successful in tech who look a certain way,” adds Diarra, who stresses that he wishes to take nothing away from the tech founders that have gone before him.

“That is what drives a lot of the bias. For me, personally I can tell you I’ve spent very little time worrying about the colour of my skin … Life’s not fair, right? And you can cry about it or you can attack it with everything you’ve got, and I chose the latter.”

The NewNew cofounder’s advice to other minority founders is to “build great things, defy the odds, and be good to others”. He says that over time the stereotypical makeup of a tech founder being white will change, but it will take generations to do so.

Diarra’s backers are among some the highest-profile tech investors in the world. Andreessen Horowitz has invested in an array of the biggest tech companies in history, including Facebook, Twitter, Airbnb, Okta, and Stripe. Peter Thiel’s Founders Fund meanwhile includes Elon Musk’s SpaceX, Palantir, and Spotify, in its investment portfolio.

In February, NewNew’s Smith told Insider how she wowed Andreessen partner Connie Chan in just 10 minutes. Investors have eyed numerous selling points to NewNew, particularly the fact that it does not rely on ads to generate revenue. The company generates income by charging a “small percentage” on each transaction. NewNew has yet to decide how much it will charge when it opens up fully.

“I think from their perspective, they took a huge risk on us, because you know we’re not like most tech founders in history who look very similar,” he says.

He also outlined what he believes to be a widespread misconception of what venture capital firms do.

“The thing about VCs that I think a lot of people get wrong, it’s it’s they’re not a charity. I mean, at the end of the day, their job is to make money,” he says.

“People lose sight of that sometimes. Pattern matching, and throwing people into buckets based on who they are, where they’ve been, and where they’re going, is their way of kind of mitigating risk.”

For Diarra, his focus is very much on turning NewNew from a beta-stage success in a worldwide hit. The company wants to become a “utility” much int he same way Instagram and Uber have built long-term business models.

“We’re adding a middle class to the creator economy, and it’s missing it,” he says, adding that he’s thinking of ways to make the average person wealthier as automation threatens jobs.

“In order for it to be a real economy, as any economy, it has to have a middle class, it has to touch your average person. So we’re looking 10 to 20 years ahead and the way things are going down people will lose jobs to automation.

“The goal is not just to make the rich celebrities and influencers richer, that’s part of it, but we also want to touch the 2 billion people worldwide.”

A picture of a switch and lightbulb
Source: Read Full Article