November 29, 2014
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Asians Secure Most Funding In IT World

 

NEW YORK - Before presenting its charts, CB Insights reported, 'When we ask venture capitalists what gets them excited about the young, emerging and unproven companies in which they invest, we never hear about deals and dollars. Rather the first answer is frequently 'the team' or 'the founders.' '

Report Finds Asian Teams Secure the Most Funding

African Americans are dramatically underrepresented among the founders of Internet start-up companies, according to an analysis of the founders of private, early-stage Internet companies that raised their first round of institutional venture capital funding in the first six months of 2010.

The private investment research firm CB Insights found that whites were 77 percent of the population but 87 percent of the start-up founders; Asians were 4 percent of the population but 12 percent of the founders; and blacks were 11 percent of the population but 1 percent of the founders. Native Americans barely registered, and "other races" accounted for 7 percent of the population. Hispanics were not listed; they are not a race.

Other findings of the first-ever Human Capital Venture Capital report, as summarized by Sherri L. Smith for BlackWeb2.0:

  • "The majority of the black founders were part of an all-black founding team. As far as mixed raced founding teams, New York led the pack with 14% with California and Massachusetts bringing up the rear with a close 13%. 

  • "The median amount of funding secured by an all-black founding team was $1.3 million, compared to $2.2M for a racially mixed team, and $2.3M for an all-white team. 

  • "Asian teams secured the most funding with a median range of $4 million." 

The report said that "nationally, South Asian and East/South Asian founders are funded to a similar extent."

"So what does this mean for burgeoning black techpreneurs with the next great Web breakthrough?" Smith wrote. "If you’re a younger company, New York’s Silicon Alley might be the best place to start your business. With an increasing population of young start-ups setting up shop, NYC is the best place for a fresh-[faced] talent to catch the eye of a potential investor. Overall, African Americans are still underrepresented in both the tech and entrepreneurial sectors."

Raising venture capital for media start-ups was a focus of the Eighth Annual Access to Capital and Telecommunications Policy Conference last month in Washington.

At a standing-room-only question-and-answer session at the conference, sponsored by the Minority Media & Telecommunications Council, three members of the Federal Communications Commission said minority communications entrepreneurs should be focusing on opportunities in new media, according to a report from John Eggerton of Broadcasting & Cable.

"All three commissioners also said access to capital was the top barrier to boosting minority participation," Eggerton continued. "The other side of that equation is that the opportunities in traditional media are on the wane, they suggested."

The commissioners were Robert McDowell, Meredith Attwell Baker "and, via a sometimes hinky video link, Mignon Clyburn."

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