For years, many in the venture capital world have been concerned at the lack of racial and gender diversity in startup companies and the investors who back them.
And for years, Austin's annual South by Southwest conference has made diversity and inclusion a central topic at panel discussions and entrepreneur meetups.
The event brings CEOs, venture capitalists and others from around the globe together to collectively highlight the progress made on the issue -- and the ground still left to cover. A 2017 report by the National Bureau of Economic Research shows that from 1990 to 2016, women represented less than 10 percent of the entrepreneurial and venture capital labor pool, while Hispanics represented about 2 percent and black people represented less than 1 percent. That was despite participation rates in education programs that led to careers in these sectors being much higher.
“We should be reflective of the larger society we live in,” said Chris Valentine, producer for SXSW Pitch. “If we can create a platform where we can showcase different types of people, then we are doing ourselves and the community a favor.”
SXSW Pitch has increasingly represented that view. Previously called SXSW Accelerator, the event has 50 startups compete in front of a panel of judges and venture capitalists. The 50 finalists are chosen from a pool of more than 800 applicants, according to SXSW.
About two years after SXSW started the event in 2008, Valentine began to fill its advisory board -- which is responsible for choosing startups for the competition -- with industry experts from various U.S. regions. Eventually, Valentine started to recruit advisors from outside of the country.
Over time, as the board became more diverse, the startups competing for investment did so, as well.
No time highlighted that better than this year's conference, Valentine said. Three of the 10 companies that won the competition are based outside of the United States. The rest are spread throughout the country. At the winner’s ceremony, entrepreneurs on stage showcased a range of ages, genders and ethnic makeups.
Investing in minority-owned businesses has proven to be fruitful. In 2016, entrepreneurship nonprofit the Kauffman Foundation reported that minority-owned businesses contribute about $49 billion in local, state and federal tax revenues.
Backstage Capital, a California-based VC firm aimed at investing in startups begun by women, people of color and LGBTQ entrepreneurs, has been at the forefront of the issue. Since being founded by CEO Arlan Hamilton in 2015, Backstage has invested more than $4 million in 100 companies.
In Austin, startup accelerator program DivInc has had a similar goal since being founded by Preston James and Dana Callende in 2016. The program has invested more than $3 million in 35-plus startups.
The growing number of such operations is encouraging, Hamilton said during a SXSW panel. But she also lamented that much of the momentum is happening by small firms like hers, rather than by longstanding, larger VC firms in Silicon Valley and other major tech hubs.
“You have these (large VC) companies investing millions into cryptocurrencies and (artificial intelligence), but then they don’t invest in minority-owned companies,” Hamilton said in an interview with the American-Statesman after her panel. “Stop talking about it, and just do it.”
Some VC firms are already doing that -- at least in early stage funding rounds, said John Lilly, an early-stage investor based in Minneapolis who partners with investment firm Lateral Capital.
About 25 percent of the companies his firm invested in during their last fund are led by women, Lilly said. The change in demographics throughout time among the firm’s portfolio companies has been dramatic, he said. “Especially in the past five years.”
Some VC firmss have also moved the needle on the investor side. At the Central Texas Angel Network, executive director Claire England said that since in 2014, the amount of female investors has ballooned from representing 4 percent of the group to 32 percent now. Roughly a quarter of CTAN’s portfolio is also now made up of women-led companies, she said.
The next generation of entrepreneurs say they’re determined to do even more.
During a SXSW panel, Kimberly Bryant, founder of San Francisco-based education program Black Girls Code, brought four students on stage to discuss the state of minorities in the high-tech industry. Since being founded in 2011, Black Girls Code has established seven education institutions and reached more than 3,000 students.
The group of black female tech experts discussed the experiences they shared in coming up as minorities in the tech industry. They talked about the progress made and those who helped them achieve success within the competitive industry.
Near the middle of the session, Bryant looked out at the audience, which was made up of numerous minorities and women.
“I hope that I live to see in this industry an industry led by (people) like you,” Bryant said. “The world has so much to gain by having you all.”