Identifying Inequitable Access to Venture Capital

Creating an equitable startup ecosystem goes beyond merely providing funding. It involves a comprehensive approach to inclusivity from the ground up, ensuring entrepreneurs from all backgrounds have access to the necessary resources, networks, and support systems to succeed. 

Forge North, based in Minneapolis-St. Paul, has been leveraging their EcoMap Minneapolis St. Paul (MSP) startup guide and ecosystem data to identify opportunities to improve equity in startup funding. It serves as a critical tool in mapping the ecosystem, highlighting disparities in funding access, and pinpointing sectors and demographics where interventions are most needed. 

Forge North coordinator, Ben Ihde, joined me to walk us through the MSP startup guide and how this approach analyzes startup performance, funding patterns, and the demographic makeup of founders to understand where gaps in equity exist. He then uses that data to create targeted initiatives that address specific needs and ensure resources are directed where they can have the most significant impact.

"Equity in startup funding isn't a nice-to-have; it's a must-have for the health and diversity of our ecosystem," Ben said. "As we strive to improve racial equity, every entrepreneur, regardless of background, deserves a fair shot at success."

The MSP area is unique in that it has the highest concentration of Fortune 500s per capita in the region, including strength sectors such as agriculture, medical technologies and banking. They are also home to many Hispanic/Latino residents, early generation immigrants from Somalia and Ethiopia as well as Native resident such as those from Dakota and Ojibway tribes. 

Forge North’s approach is holistic, aiming to change the ecosystem's fabric to be more reflective of the community's diversity.

"The history of redlining and racial exclusion has left deep scars on our community. It's time for our startup ecosystem to be part of the healing,” Ben said. "In our journey to boost the startup ecosystem, we're not just chasing numbers; we're pursuing meaningful change for underrepresented entrepreneurs."

This includes addressing systemic barriers that entrepreneurs of color and women face, such as access to venture capital, mentorship, and strategic networks. The numbers tell one part of the story, but it’s also important to Forge North that the stories of founders of color are heard so they can truly understand the barriers these demographics are facing. 

Forge North’s strategy includes not only financial support but also mentorship programs, networking opportunities, and educational resources designed to empower founders and dismantle barriers to entry. By building networks and collaborations among startups, venture capitalists, and support organizations, they can craft a more inclusive strategy that leverages local strengths to address equity gaps and create a vibrant and diverse startup ecosystem. This involves engaging the robust network for Fortune 500 companies in the region as partners within the ecosystem, utilizing their resources, networks, and influence to support early-stage companies, particularly those led by underrepresented founders, whether that’s through direct investment and mentorship or providing platforms for startups to showcase their innovations.

"Building an equitable startup ecosystem is like weaving a tapestry; it requires different threads, colors, and textures to come together harmoniously," Ben said.  

Identifying opportunities for equity and startup funding is not just about finding gaps; it's about creating bridges for those traditionally left behind.