Closing the Gap – a series of Oxford University postgraduate student insights to the Skoll World Forum 2018
Emily Durfee, 2017-18 MBA at Saïd Business School, reports on the Skoll World Forum session ‘Dismantling Invisible Barriers to Capital’.
The evidence is clear and condemning: investments of resources and support flow unevenly towards entrepreneurs who are white, male, and from wealthy countries. These entrepreneurs have the “invisible capital,” the right skin color, gender, and nationality, to garner attention and resources from investors. This inequity to capital perpetuates limits to the financed perspectives and innovations within social impact, and perpetuates current inequalities and stereotypes. The panelists in the Skoll World Forum session, “Dismantling Invisible Barriers to Capital,” posited that these disparities in investment are caused by a toxic “sameness,” and suggested three action steps to increase fairness in access to capital.
The detrimental effect of “sameness” permeated the stories of the diverse panel. Chaired by Kathleen Kelly Janus, author of Social Startup Success, the panel included Cheryl Dorsey from Echoing Green, Marco A. Davis from New Profit, Vedika Bhandarkar from Water.org, and Halla Tomasdottir from Sisters Capital. These speakers each focused on different issues, from incubating talented global entrepreneurs, entrepreneurs of color, or promoting female leaders. Despite these different geographical and issue focuses, every panelist highlighted that the current system passes capital and support between people who are the “same,” either through the visible characteristics of race and gender, or through family privilege, education, or nationality.
The panel suggested that “sameness” manifests in the incubation, sourcing, and funding of entrepreneurs. First, many entrepreneurs cannot pilot new innovations, because their families and communities lack the saved capital necessary to fund pre-investment experimentation. Second, investors often use networks to source new investees. However, these networks are usually homogenous, and investments based on existing networks perpetuate the power and resources of those already connected to funders and investors. Finally, the processes for selecting entrepreneurs surface existing biases, whether for certain native language speakers, or names on resumes and pitches. This is exacerbated by the “sameness” of internal funding structures. For example, 94% of foundation presidents are white, 85% of their trustees are white, and 74% of their staff are white.
This “sameness” maintains and increases inequity across entrepreneurial systems, and blocks innovative solutions. To overcome it, and open investments and resources to a diverse entrepreneurship panel, the Skoll World Forum panel advocated for a multi-pronged approach of awareness, assimilation, and transformation.
First, funders must acknowledge and measure the types of inequality in their current systems. Marco suggested that funders collect and publish data on the currently invisible biases in their systems, such as the diversity of their investment pipelines, the barriers faced by “un-same” applicants, and their own internal diversity metrics of the board, leadership, and staff.
Second, we must assimilate underrepresented groups into the current systems of funding and investment, breaking the cycle of “sameness”. Funders, incubators, and other ecosystem players must diversify the players in the room. To do this, Hella suggested government bills to enforce diversity standards in board and leadership composition. Hella and Marco also advocated for investor actions, such as simplifying language and requirements, providing unrestricted funding, and extending funding timelines, to improve accessibility of investments to diverse applicants. Finally, Marco and Vedika promoted intermediary roles and events, such as “serendipity meetings” or pitch coaching, to introduce diverse entrepreneurs to existing funders.
Finally, we must transform the current systems by removing biases of “sameness”. This is a very challenging task, and there are no final or proven solutions. However, Cheryl recommended some emerging opportunities, such as blind screening of initial applications, mindfulness training for investing staff, and leveraging AI and machine-learning algorithms to further decrease human biases.
The current invisible barriers to capital for entrepreneurs, driven by a pernicious bias towards “sameness,” prevent talented entrepreneurs from accessing critical capital and support, and limit the generation of creative and effective solutions. The panel highlighted that the solutions to these underlying biases are multi-faceted, and evolving, and called each of us to act on the above steps, and to innovate new opportunities to overcome “sameness” and promote investment equality.