Don Charlton learned early on to steel himself against double takes about his race in technology circles while he built his recruiting-software business, the Resumator. “Unless they researched me, they had no idea I was a black guy,” says Charlton, who founded the Pittsburgh business in 2009. “So I was always prepared to surprise people when I walked through the door. That’s a shock to the system that I had to fight through in order to get trust.”
Investors were skeptical about mainstream appeal for the content on Delmond Newton’s entertainment site, UrbanClout, despite his assurance it would attract viewers across racial and ethnic lines. The Philadelphia entrepreneur launched it last year, using an investment from his father. “African Americans have to go an extra mile in every industry,” he says. “Once we build it and turn it into a $100 million company, with 10 million followers, that’s when Hollywood will say, ‘We want in.’”
There are very few African American tech entrepreneurs in the U.S. Challenges such as those described by Charlton and Newton, a lack of mentors and role models, and the scarcity of black engineering and computer students at the nation’s elite universities are common explanations for the dearth. A 2010 CB Insights study showed that blacks make up 1 percent of venture capital-backed founders, despite comprising 11 percent of the U.S. population. They’re even losing ground as employees, according to an analysis of U.S. Census Bureau data by the San Jose Mercury News in December 2012. It showed the percentage of black tech employees in Silicon Valley decreased, to 2.3 percent from 2.8 percent, between 2000 and 2010.
Charlton feels that scarcity: “I go out [to Silicon Valley for events and meetings] and feel like I’m integrating it, to a certain extent. A lot of people underestimate the importance of personal relationships, but people invest in other people they know and like and believe in. The organic segregation that occurs in Silicon Valley means that less black people are networking with the who’s who—the kingmakers—and that puts them at a natural disadvantage.”
The lack of diversity also means would-be customers get overlooked. Education startup Tioki’s co-founders, Mandela Schumacher-Hodge and Brian Martinez, say they’re often surprised by the assertions made at industry conferences. “These guys will start talking about the shift to one-on-one education and yadda, yadda, yadda, and I’m wondering what kids they’re talking about who all have their own computers and tablets,” says Martinez, whose racial background is black and Hispanic. “My family is in Watts—their oldest son is running a tech company, and they’re still using dial-up. I gave a Chromebox to my little brother, but he couldn’t use it for six months because my parents wouldn’t get Wi-Fi.”
Some black tech entrepreneurs don’t want to talk about their unique challenges for fear of ruffling investors’ feathers. Others insist that, in a system based purely on return on investment, they face less prejudice in the technology sector than elsewhere in the U.S. economy.
Indeed, Martinez says, he and Schumacher-Hodge pitched angel investors in their native Los Angeles without success. “No one wanted to touch education, and no one knew who we were. When we came up to Silicon Valley, it took us about a week” to secure funding from Oakland-based Kapor Capital, whose founder, Mitchell Kapor, has a history of working with and investing in minority and female entrepreneurs. “Walking into that firm, two of the five people we were pitching were black. We still pitched the hell out of them, but it hasn’t been that way at any other firms we pitched,” Martinez says. The pair has raised a total of $200,000 from Kapor, 500 Startups, Imagine K12, and angel investors.
Bitcasa founder Tony Gauda says he doesn’t feel at all like an outlier in tech culture. He grew up with an entrepreneurial father, who introduced him to computers when he was eight. After college, Gauda designed fraud-protection systems at MasterCard (MA), then founded his online storage company in St. Louis in 2011. Now headquartered in Mountain View, Calif., the business has 43 employees and has attracted $11.5 million in funding. “The Valley is actually a lot more open than the Midwest, because things that are interesting and hard are celebrated here,” Gauda says. “When I came, I felt like I didn’t notice I was the only African American in the room. You walk down the street, and nobody’s from here, so that’s a fundamental shift for me.”
Wayne Sutton, co-founder of online event ticketing company Cosemble, grew up in rural North Carolina, where a co-worker and mentor bought him his first computer when he was 20 and working as a graphic designer. He cannot escape the feeling of being an outsider, but that only makes him more determined, he says. “I feel welcome here, but at a majority of the tech and VC events I’m still one of a handful in the room. I need to be confident in order to show why I deserve to be here. No matter what race or gender you are, the culture here in Silicon Valley is about making money, having good relationships, having a great product, and changing the world.”
In February 2011, Sutton was an early partner in San Francisco’s NewMe Accelerator, along with Angela Benton. NewMe is a 12-week residential training program for blacks and other underserved minorities who want to become entrepreneurs. About half of the 33 startup entrepreneurs who have completed the program have gotten startup funding, mostly from angel investors, for a total of $5.9 million, says Benton, who now runs NewMe solo. A number of the most recent graduates expect to close funding rounds in the near future, and the program has expanded on a pop-up basis around the country, including in Detroit and Atlanta.
“In order for things to really change, we need a multi-pronged approach. More [African Americans earning] computer science degrees. More access to mentors,” Benton says. “More role models, which means changing the way the technology industry is represented, where the industry looks like a white male with glasses who is coding in his basement. Once we show different images of what it looks like to be in technology, with people who look like me, or like my cousin, than all of a sudden it becomes relatable to the next generation.”
African Americans who want to be successful should seek out mentors and role models, rather than waiting for them to surface, says Stephan Adams, a serial entrepreneur and chief executive officer of Adamation, a 3D-printing company in Oakland. “We always hear about the glass ceiling, but the way to get through it is to seek out a person to help you get through it,” he says. “My first mentor was a white woman that I met on a panel discussion.”
Tita Gray, an African American diversity consultant and business professor at San Diego State University, says she hopes today’s black entrepreneurs and investors will become role models themselves. “African American entrepreneurs and angel investors and venture capitalists can do a lot more to make sure that money is put into programs in technology, math, and science in poorer, underprivileged neighborhoods. Let those children see who you are and what you’re doing—don’t wait for them to come to you,” she says.