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Pipelines and silos: minorities struggle to access Boston’s startup ecosystem

When Netia McCray needed funding for her Roxbury-based education startup, she couldn’t find a bank that would give her a loan. She couldn’t find a foundation that would give her more than $5000. Despite her MIT degree, connections in Cambridge, ten-person staff and manufacturing capabilities on two continents, McCray found herself scrambling for resources. Although her company, Mbadika, eventually found a home at the Roxbury Innovation Center where McCray is entrepreneur-in-residence, the roadblocks she faced all too often come with being an African-American and a woman in Boston’s startup ecosystem.

McCray’s not alone in hitting these roadblocks. Reginald Swift, an African-American entrepreneur and Harvard Law alum, has encountered them, too. “In biotech, a lot more people of color will get shot down by VCs and will not be taken seriously in incubators and other spaces,” said Swift, who runs his company out of Lawrence and comes to Cambridge to pitch. “I’ve had that happen to me. No one chooses to associate with you after that conversation takes place. It’s just a lot of unnamed behavior that takes place afterward. They won’t say it on record, but it’s something that’s observable.”

Diversity in Boston’s startup ecosystem is difficult to measure. That’s because the data isn’t there, according to researcher Kim Zeuli from Initiative for a Competitive Inner City. “I think a lot of organizations still aren’t tracking it,” she said. “I would say anecdotally we think everyone’s trying harder, which should lead to better outcomes. But there’s no data.”

Travis McCready, president of Massachusetts Life Sciences Center and former vice president of The Boston Foundation, has observed the ecosystem for years. “We’re doing a really nice job of attracting an internationally diverse set of entrepreneurs,” he said. “We’re doing a good, not great, job with women. When you go even narrower in the definition of diversity and you start talking about underrepresented minorities, the experience is just poor.”

For minority entrepreneurs from underserved neighborhoods, accessing the ecosystem can feel like an uphill battle. “If I’m struggling like that to scale up my business, I cannot imagine someone without those resources and network being able to scale,” said McCray. “I think that’s the large problem we’re having here in Roxbury, Dorchester and Mattapan.”

‘The money is never there’: Roxbury, Dorchester, Mattapan

It takes about twenty minutes to commute from Roxbury to Seaport by car. It’s a distance of about four miles. But in many ways, the two areas could not be farther apart.

Seaport is home to Boston’s Innovation District, including companies Zipcar, Vertex Pharmaceuticals and, soon, Amazon. It’s also home to hi-tech accelerator MassChallenge, which doles out millions of dollars each year to early-stage companies. It has a 3.2% unemployment rate, according to a 2014 report from the Boston Redevelopment Authority.

Roxbury’s unemployment rate, meanwhile, sits at 16.8%. It’s the third highest in Boston. Its poverty rate sits at 34.6%. Its population is majority African-American and Latino.

“I think that all of the neighborhoods in greater Boston that have higher percentages of minority residents and businesses have fewer of the capital and infrastructure supports than the Kendall Square, Seaport areas,” said McCready. “That’s just a simple fact. The money is never there.”

Danielson Tavares, Chief Diversity Officer in the Walsh administration, also noted the disparity. “When you look at Boston, we still have tracts in Dorchester, Roxbury, Mattapan with double-digit unemployment. As we talk about spreading the wealth, because the downtown-Seaport area is not struggling, we’ve got to make sure that the success, the building boom, the economy we’re bragging about, that every part of the city is experiencing that as well. It’s going to be some of these startups and entrepreneurs working on the ground that are going to help turn that around.”

There has been a lot of buzz about Dudley Square revitalization. Roxbury once had a vibrant economy, according to its residents. That’s one of the things Roxbury Innovation Center has been working to kick-start, through programs that seek to cultivate Roxbury’s homegrown talent.

Roxbury Innovation Center inhabits the Bruce C. Bolling Municipal Building on Washington Street, just a block away from Dudley Station. McCray positions the center as part of “a growing movement of everyone emerging from their silos” as minority entrepreneurs from greater Boston gain wider exposure. The center, which was founded in 2015 by the City of Boston and the Venture Café Foundation, hosts monthly café nights, workshops and a pre-accelerator program with TLE consulting group.

McCray sees herself as a translator, helping entrepreneurs from Roxbury and the traditional innovation district understand each other. “I’ve been fortunate that I went to school in Cambridge, so I know what one side of the river believes is innovation and entrepreneurship,” she said. “While working on the other side of the river in Roxbury, I understand what the community thinks when you use those words.”

In Cambridge, an entrepreneur is simply someone who comes up with an idea and tries to take it to market. In Roxbury, McCray said, people tend to narrow the definition to businesses built around technology. So people who would be considered entrepreneurs in the innovation district’s lexicon instead refer to themselves as small business owners.

“The Roxbury Innovation Center allows them [startups] to go from idea to pre-stage,” she said. “We can’t get them to the growth stage unless we have MassChallenge, City of Boston, other people, help us pull people from the pre-stage to growth. When it comes to startups, it’s all about growth.”

Roxbury Innovation Center wants to be part of that growth—more specifically, it wants to be a pipeline to help minority entrepreneurs access accelerator programs.

Pipelines

Just a few blocks away, next to the Dudley fire station, sits another pipeline: Smarter in the City. The accelerator moved into the four-story Hibernian Hall building on Dudley Street last month.

Smarter in the City was founded in 2014 with initial funding from The Boston Foundation. It runs a five-month program for entrepreneurs from underrepresented minorities. There are two cohorts each year, with five companies per cohort. It gets about thirty applications per period.

Smarter in the City seeks to be a pipeline to highly-competitive accelerators. It’s had some success. BeautyLynk, a company from its cohort, went on to win $50K at MassChallenge last year. ScholarJet is one of the 128 startups in MassChallenge’s 2017 cohort.

“What we help them [startups] with is that initial traction and getting to that first stage of growth into revenue,” said Kofi Callender, executive director of Smarter in the City. “We hope to be a feeder to MassChallenge. We see MassChallenge as a growth catalyst.”

There’s research to support the pipeline idea. Zeuli from ICIC said that building a pipeline between sector-specific accelerators and demographic-specific accelerators could help improve inclusion and access for minority entrepreneurs.

“It’s just making sure that there is this commitment by sector-specific organizations and if they can work with demographic-specific organizations they can work together to build a really diverse pipeline,” said Zeuli. “I think there’s a role for both to play.”

How has the collaboration been overall? It depends on who you ask.

“I actively try to go to Seaport and engage with the MassChallenges and Techstars of the world,” said Callender. “As an organization, we’re becoming more connected as people learn about us and what we’re doing. But we’re not as connected as we hope to be.”

Part of the reason, he explained, is that businesses in Smarter in the City’s program are at different stages from the venture-driven or investment-driven businesses in Seaport and Kendall Square. Another reason, he said, is that people don’t see innovation happening in Roxbury.

“I’m not of the mindset that it’s all them. It’s partly [on] us, to show them what’s here. If they don’t know what’s here, why would they come,” he said. “But I think it’s a two-way street. There’s lip service to it right now. I don’t know if there’s a concerted effort.”

Innovation district

Less than four miles away, MassChallenge resides in the eight-story innovation and design building on Drydock Avenue. MassChallenge, which bills itself as “the most startup friendly accelerator on the planet,” is among the most prestigious hi-tech accelerators in Boston, perhaps surpassed only by Techstars. Around the world, its startups have raised over $2 billion in funding and generated over $900 million in revenue. Its flagship program in Boston accepted 128 companies this year. At the end of the four-month accelerator, the winners split $1.5 million in equity-free cash prizes.

As a leader in Boston’s startup ecosystem, MassChallenge said it is committed to diversity. “We’ve been making efforts to really think thoughtfully about diversity and leverage all the resources we have,” said Kiki Mills Johnston, managing director of the Boston program.

Even so, MassChallenge Boston didn’t publish any diversity statistics last year. It consistently published data from 2012 to 2015. MassChallenge attributes the dearth to changing the format of its survey from program-specific to global.

“We didn’t have that data last year, but we are surveying for it this year,” said Hannah Perry, MassChallenge’s PR manager. “It’s just a global survey, so some of the countries in which we operate, you can’t ask those questions. We know it’s really important and we want to be really transparent about everything.”

9.8% of MassChallenge Boston startups had at least one Black/African-American founder and 12.5% had at least one Hispanic/Latino founder in 2015, the most recent data available.

To its credit, MassChallenge has made efforts to connect with minority entrepreneurs from Roxbury, Dorchester and Mattapan. McCray confirmed that MassChallenge has attended several of Roxbury Innovation Center’s café nights.

“I know that we, on our end, we have collaborative relationships with the Roxbury Innovation Center and with others to help on our application recruitment,” said Mills Johnston. “We’re friends with different organizations around Boston because they can be a source of entrepreneurs, they can be a resource for entrepreneurs, they can be a potential funder for entrepreneurs.”

Perry echoed Mills Johnston’s comments. “The best ideas come from anyone, anywhere in the industry and we can’t do that if we’re only focusing in a city’s center,” she said. “I think that’s how our partnerships with foundations like The Boston Foundation and the Kauffman Foundation are helping out.”

Since 2014, MassChallenge has held a two-month bootcamp during its offseason, geared toward underrepresented entrepreneurs. The bootcamp, also called a “mini-accelerator,” provides anywhere from 10 to 20 startups access to MassChallenge’s programming, work space and network of experts. There is no prize money. Two winners are fast-tracked to the second round of the application process for MassChallenge’s main competition.

The bootcamp began at the behest of The Boston Foundation, which issued MassChallenge the initial $450K grant for the program and has since renewed funding for two more years. Left to its own devices, McCready said, not very many, if any, minority entrepreneurs were making it into the MassChallenge competition. “So what we worked on with MassChallenge was taking the other five months of the year and deploying that for underrepresented minorities,” he said. “That seemed to be a good way of getting MassChallenge to pivot and focus on the talent that’s out there.”

Silos

The bootcamp is not without criticism, however. It’s held during the offseason. And it tends to draw from a familiar pool of minority-owned businesses already supported by accelerators and incubators in Roxbury and Dorchester, instead of finding new talent.

“That’s our issue with it,” said Callender. “They just take the companies that are in our cohort. The past two years, we’ve won it. But it’s just replicating what’s already there. It’s not sufficient, from our perspective.”

McCray expressed a similar concern. “There’s a lot of businesses I know that have gone through that bootcamp. I feel those are kind of lip service programs and can be expanded,” she said. “It’s great that you take ten minority businesses, because you have partnerships with Roxbury Innovation Center and others. But I also feel like the ten businesses they pick are businesses that already have other resources they can rely on. Last year, the majority of people came from a pre-accelerator program or an accelerator program. They just weren’t in a big-name accelerator program. So it’s kind of sad.”

Last year’s cohort of thirteen included three startups from Smarter in the City and four startups from Dorchester-based incubator Commonwealth Kitchen.

“These organizations just want to showcase they’re doing something in minority neighborhoods or helping minority startups, but it’s almost the exact same group of people or companies,” said McCray. “They’re not tapping into a new pool of people. They’re reusing the pool of people who were savvy enough to reach out to an accelerator program and not the people who are still in silos and need to be brought into the spotlight.”

“How they solve that, I don’t really know,” said Callender. “I think it’s partly reaching out to others in the pipeline and working with us, Roxbury Innovation Center, Fairmount Innovation Lab.”

In response to a general summary of the criticism, Mills Johnston said, “That’s great feedback. We’d love to get some more data on that. That’s exactly why we’re looking at the program moving forward and saying how do we ensure that it’s a great program. I’m all ears on that type of stuff.”

Moving forward

The challenge of minority entrepreneurs accessing Boston’s startup ecosystem isn’t just limited to accelerator pipelines. It’s systemic, involving VC firms, angel networks, donors, university-to-startup pipelines and other stakeholders. And it exists at all levels, from the startup to the C-suite.

“I don’t profess to be the smartest, most accomplished person of color in the state of Massachusetts,” said McCready. “But even someone like myself, who’s had the privilege to do what I’ve done, to lead the organizations I’ve led, to have responsibility over billions of dollars’ worth of physical or financial assets, I’ve never been asked to join the board of a publicly traded company.”

Some progress has been made. Both McCray and McCready praised the City of Boston’s efforts. McCready also praised the Roxbury Innovation Center, New England Venture Capital Association’s Hack.Diversity initiative and individuals such as Jeff Leiden, CEO of Vertex Pharmaceuticals.

As a Roxbury-based entrepreneur, McCray said she is hopeful moving forward. “It’s going to be slow progress, I understand,” she said. “But I think there is a lot more that can happen.”

It’s not about charity, McCready maintained. “This is not about doing something which is ‘good to do.’ This is about competitiveness as a state,” he said. “We’ve got great talent out there in the community—great, diverse talent—and we can’t leave anyone on the sidelines.”

(Techstars did not respond to request for interview.)

Amy Pollard

Amy Pollard

    Amy Pollard is a candidate for the MA in Communication and International Relations at Boston University. Her interest in health care began with her first trip to Tanzania, where she volunteered at a medical dispensary in a rural village and saw firsthand how access to health care impacts patients. She’s excited to learn about health care technology in Boston. She’s originally from Seattle and holds a B.A. in English from Saint Martin’s University. When she’s not writing, she’s probably drinking coffee, making tacos or watching Parks and Rec. Follow her @amyannexu.

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    1 Comment

    1. Always great writing and interesting topics. Way to go Amy!

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