The diversity issues plaguing America’s biggest tech companies often start when they’re founded. Venture capitalists tend to be biased toward white, male entrepreneurs who look the part—which also happens to look a lot like themselves, though sometimes decades earlier.
Just how bad is the problem? Looking at 1,071 funded NYC startups launched since 2005, Vettery, a New York-based hiring marketplace, found a huge majority of founders are white and male, a trend that’s even more extreme among older and often better funded startups. Things have improved over the past decade, but not by much.
Granted, it’s just one city and possibly incomplete. But it does give a good overview of what New York’s founders look like, how far we’ve come, and how much work remains to be done
A lot of any startups have more than one founder, so much of the data adds up to more than 100%. In this dataset, 36% of companies have one founder, 41% have two, 18% have three, and 3% have four.
In 2014, 84.6% of startups had at least one white founder. That’s down from 95% in 2005 but still dramatically out of step with the city’s population. The biggest and most consistent change over time has been increase in Asian founders, rising to 13.8% last year from 4.8% in 2005. The number of black founders has actually fallen to 3.1% from 9.5% over that time, though the average is closer to this year’s number.
On the gender side, there’s been more improvement. Only 4.7% of startups founded in 2005 had at least one female founder. That number was up to nearly 28% last year:
Looking at diversity by startup stage is also illuminating. How many of those minority- and woman-founded startups make it through several rounds of funding, as opposed to petering out after only raising some seed capital?
Startups that have raised multiple rounds of funding tend to be even less racially diverse in terms of their founders. Among companies that have raised three or more rounds, 94% have at least one white founder, 2% have an Asian or black founder, 3% have a hispanic founder, and 13.5% have one from the Middle East:
Nearly 98% of companies that have raised three or more rounds of funding have a male founder, while only 9.4% have a female founder.
There are a growing number of programs devoted to supporting and investing in minority and women founders. But they’re at a disadvantage at nearly every stage, and it’ll take a long time before we see a real shift unless major investors dramatically change their behavior.