According to Google image, ‘startup founders’ are young white men. Listed at the top of the ‘most inspiring movies for entrepreneurs’ comes The Social Network, a movie about young Mark Zuckerberg building Facebook out of his college dorm room at Harvard University. It is no wonder then that the myth of the young startup founder becomes a self-perpetuating prophecy and that any other group is largely under-represented. According to the EEOC, 83% of tech executives are white. A Gender Gap Grader study shows that Women represent 9% of Developers in the startup ecosystem, 4.2% of software architects. So why should startup founders care about attracting and retaining a diverse workforce? Why should investors fund diverse startups and even encourage startup founders to diversify their workforce? Here are 6 common startup myths to bust to innovate and grow.
Myth #1: Startup founders are young
As mentioned earlier, the myth of the young startup founder who built his app in his parent’s garage is everywhere. From Google to Apple, to Microsoft, Amazon, Disney to HP and Facebook, the media can’t get enough of the legend of the young entrepreneur starting in his parent’s garage. Although it’s a fascinating story, a 2019 influential academic study by the Kellogg School of Management, Northwestern University shows just how misguided the popular narrative is. Economists Pierre Azoulay, Benjamin Jones, Daniel Kim, and Javier Miranda, analyzed administrative government data on the founders of all U.S. businesses that were started during a recent eight-year period (2007-2014). The authors calculated the average founder age (at the time of founding) along key startup characteristics (industry, financing, patenting, location) and outcomes (hyper-growth, acquisition, or IPO). Below is the average founder age along these dimensions:
All companies (with at least one employee): 42 years
Fastest growing 0.1% of companies: 45 years
High-tech industry: 43 years
Venture-backed: 42 years
Filed patents: 45 years
Successfully exited (acquisition or IPO): 47 years
Located in Silicon Valley: 42 years
Located in an entrepreneurial hub: 41 years
According to this academic research, founders aged in their 20s and 30s are less likely to start high-growth companies compared with their share of total companies founded . Conversely, founders aged 40 years and above are more likely to start high-growth businesses relative to their contribution of total companies founded. The average age of startup founders is more or less around 40 years of age—far greater than the popular narrative of the mid-20s college dropout. Finally, the study shows that conditional on starting a company, the probability of achieving “high-success” (fastest growing 0.1% of firms or successful exit) is lowest for founders in their early-20s and increases in a linear fashion along with founder age up to the late-50s.
Myth #2: Startups founders are men
What are the first names that come to mind when thinking about startup founders? Mark Zuckerberg? Steve Jobs? Bill Gates? According to a 2017 Crunchbase study, only 17% had a female startup founder that year. According to research by All Raise, only 15% of venture capital funding is allocated to female founders. A lot of this gender imbalance is due to unconscious bias at the funding stage. One 2018 study found that, during investment pitches, female entrepreneurs are more likely to be asked “prevention" questions—questions related to safety and potential risks and losses. In contrast, male entrepreneurs are more likely to be asked "promotion" questions—questions related to their hopes, ambitions, and achievements. However, the business case for female funded startups is clear: A Boston Consulting Group study revealed that, for every dollar of investment raised, female-run startups generated 78 cents in revenue, whereas male-run startups generated only 31 cents. Women outperformed their male counterparts despite raising less money ($935K versus $2.12M). These findings are consistent with several other studies. Data collected by First Round Capital found that the female-founder companies it had funded performed 63% better than the all-male founding teams it had funded. Additionally, research from the Ewing Marion Kauffman Foundation found that women-led teams generate a 35% higher return on investment than all-male teams. Research clearly shows that women outperformed their male counterparts despite raising less money.
Myth #3: Startup founders don’t have kids
According to the popular narrative of the young male startup founder in his garage, startup founders simply don’t have kids. This narrative clearly disregards some great examples of successful mum entrepreneurs and startup founders. The Baby Einstein Company was founded in 1997 by stay-at-home mom Julie Aigner-Clark at her home in Georgia. Aigner-Clark and her husband invested $18,000 of their savings to produce the initial product, a Video Board Book, a VHS entitled Baby Einstein, later sold as Language Nursery. They saw the opportunity to develop products that assist in the intellectual development of a child from a very early age. Baby Einstein grew revenues from $1 million in 1998 to over $10 million just a few years later in 2000. This growth, rapid brand recognition, and the quality of the products caught the eye of The Walt Disney Company who acquired the business for an undisclosed amount the following year in 2001. For about eight years following the acquisition the value of the brand continued to multiply and was rumored to be valued at $400 million at one point. Sheila Lirio Marcelo’s inspiration to found Care.com was based on the foundation of solving a problem that she knew was not just her own. A young mother with two small children, Sheila was challenged to find quality child care solutions. She knew there had to be a better way than using the phone book or asking the neighbors if they knew a good sitter. Sheila founded Care.com in 2006 and today, the company is the largest online care destination in the world, with more than 10.7 million members across 16 countries.
Little Mizz Kit was recently founded by mother of two, Nicole Gleeson. Nicole decided to fulfill her vision by launching this brand. Little Mizz Kit provides a monthly hands-on activity kit based on five specific pillars including Life Lessons, Fitness, Nutrition, How To’s, and Arts and Crafts with the goal of inspiring creativity and confidence in girls from an early age. Kits can include everything from lessons in etiquette and fun dance routines to recipes for nutritious snacks and do-it-yourself jewelry making.
The transferable skills from mums to startup founders are many: the ability to multitask, to prioritize, to be efficient with a limited amount of time are all critical skills for startup founders that should not be under-estimated by investors.
Myth #4: Startup founders are white
The current conversation around systematic racism is especially relevant in the startup ecosystem where non-white founders have long been ignored, under-represented and overlooked. The reality is that non-white startup founders not only exist but are extremely successful and should be highlighted more in the media, in the movies, in books and podcasts to share their success dtories. Here are some powerful examples of successful black startup founders:
Nana Addison – Born in Ghana and raised in Germany, the self-titled Afropean and tech entrepreneur Nana Addison has founded not one, but two of her own companies. Addison is the brains behind CURL, the creative agency behind CURL CON; Germany’s hair, beauty, and culture convention which caters to the textures and darker skin tones in the DACH beauty world. She is also building Stylindi, a booking and product shopping platform for the independent hair and beauty community, due to launch later this year.
Gerald Manu – Gerald Manu’s entrepreneurial tendencies started from an early age; he famously built his fashion business Devacci through selling crisps and drinks at school in Croydon, London, generating little more than £10 per day. Forward a few years and Devacci is a fully-fledged wearable tech brand, selling 1000s of his designs per month, with a dedicated team of five employees. You can find Devacci in a dedicated online store, and more recently, in the aisles of TK Maxx, who offered to stock the line.
Emilia Makosa – London-based entrepreneur Makosa has answered the call of Black women struggling with hyperpigmentation, with a complete cosmeceutical skincare collection catering exclusively to Black skin. After a struggle with acne, she founded Emeilleurq, a luxury skincare and lifestyle brand with a total of 13 products, ranging from cleansers, to toners, to spot treatments, and an intensive moisturizer. Officially released online from August 20th, the collection has already received rave reviews from customers during the pre-launch trial phase.
Myth #5: Startup founders are straight
The popular narrative of the white male startup founders comes with the assumption that he is also straight. Mark Zuckerberg is well-known for his wife Priscilla Chan and their initiative, the chan zuckerberg fondation. Bill Gates is equally known for his wife Melina Gates and their foundation, the Gates Foundation. However, LGBTQ+ people have had an immense impact on the tech industry, from founders to venture capitalists to innovators. Here are some success stories of LGBTQ+ startup trailblazers:
Joel Simkhai: Cofounder of Grindr, a social networking app for gay, bisexual, trans and queer people. The company, which was a subsidiary of Beijing Kunlun Tech, was acquired in March 2020 by San Vicente Acquisition for $620 million.
Arlan Hamilton; Founder and managing partner at Backstage Capital, a VC firm that invests in women, people of color and LGBT founders.
Alicia Garza: Activist and cofounder of Black Lives Matter, a globally recognized organizing project that focuses on combating anti-Black state-sanctioned violence and the oppression of all Black people.
Myth #6 Startup founders are atheists or Christian
It is a well-recognised fact that Venture capitalists, typically eager to back apps with the potential to reach billions of users, are more standoffish when it comes to startups with Muslim founders, or one that are targeted at a Muslim audience. Mashable recently wrote that “ignorance and fear are big obstacles for Muslim startup founders”. However, Muslim startup founders represent a unique opportunity for investors to reach the 2 billion Muslim people in the world. Here are a few successful exmaples of Muslim startup founders:
Rashid Dar, founder of Musallah
When Rashid Dar moved to New York City to complete graduate school, the Muslim entrepreneur found it challenging to locate quiet spaces to perform Salah, his five daily obligatory prayers."I’d find myself praying in dressing rooms at H&M, in empty stairwells, or on the side of a highway," Dar said. These experiences led him to start Musallah, a mobile app launching later this year on iOS that crowdsources prayer locations across the globe. Dar's app, which has the chance to be used by more than one billion Muslims worldwide, hasn't been met with millions in venture cash. He turned to Kickstarter, where it drew more than $14,000 in backing.
Navid Akhtar, CEO & Founder - Alchemiya Media
Navid Akhtar is the Founder and CEO of Alchemiya, a global streaming and Video-On-Demand (VOD) platform that showcases the best films docs and lifestyle content from across the Muslim world. Launched in 2015, he has contributed to its successful growth, with paying customers in over 40 countries, and recent inclusion as an ‘add on’ channel on Amazon Prime.
Shahed Amanullah, co-founder of Affinis Labs
Shabed, co-founder of Affinis Labs, an incubator for business with a positive impact on Muslim communities, says “I believe that entrepreneurship is a good deterrent to prejudice and racism. If you can enhance someone’s life through a product, they’re going to look at you differently,” he said. “And now is not the time to abandon your Muslim customers, either. The Muslim customers are doubling down on their identity.”
Innovate by investing in diversity
Startup founders CAN be older, female, mums, non-white, LGBT+ and non-Christian, and they can be even more successful than their younger, male counterparts, as demonstrated earlier. These under-represented startup founders often bring more innovation, open up interesting new markets and represent a unique untapped potential for the global economy and for their potential investors.
On the other hand, young, male startup founders can increase creativity, innovation, problem-solving, diversity of thought and building better products by actively diversifying their workforce. Startup founders who diversify their workforce as early as possible, when they are still building their team, benefit from a competitive edge, increased innovation, and reach new markets, all of which set them up for greater success. Angel investors, accelerators, incubators, venture capital firms and corporate investors funding startups led by older entrepreneurs, female, mums, non-white and LGBTQ+ founders also reap the benefits and enjoy better return on investment thanks to increased innovation.
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