A new effort is gaining steam to promote greater diversity within Austin's small business community in the form of an entrepreneurial pre-accelerator.
Founded by former Dell executive Preston James, DivInc is aimed at the city's tech entrepreneurs. The newly formed nonprofit plans to operate a 12-week program for under-represented tech founders at the Galvanize Inc. co-working space in downtown Austin. The first cohort kicked things off Sept. 19, and already nine companies and 10 founders have signed on. They include three African-American men, two Latinos, one Caucasian female and four Asian women.
For James, the goal of DivInc is a topic close to his heart.
The tech exec left Dell in 2014 after nearly two decades with the company. His last role there was director of the global center for entrepreneurship, where he discovered his passion for startups. After leaving Dell, James founded Ascension International LLC and became a mentor at Capital Factory where he served as an advisor to a variety of startups. A good friend encouraged him to consider angel investing.
James ultimately joined the Central Texas Angel Network and realized quickly he was often the only, or one of very few, African-American angel investors at local and national events. At the same time, he observed that there was a number of ethnically diverse and female entrepreneurs participating in co-working spaces. But far fewer of that group seemed to be participating in pitch competitions or accelerator programs. And, those who were presenting pitches to raise money often seemed underprepared to James.
“As I looked at that, I wondered, ‘Why are they not here?’ James said. “And the fact that many of those that were participating didn’t seem prepared raised a red flag with me. I wanted to understand why this was happening relatively consistently, when there is so much information out there on what you need to do to build a scalable business.”
James determined that a lot of those entrepreneurs were not getting access to the critical network of resources they needed to be successful. And so the concept of DivInc was born.
“The goal is to provide a platform of programs that empower these entrepreneurs with the information and resources they need to take their innovative ideas and build companies around them,” said James, who is working with a team of co-founders including Ashley Jennings, Dan Austin and Dana Callender. “We need to build a bridge between ethnically diverse and woman entrepreneurs who aspire to build startup companies, and the ecosystems that can provide critical resources.”
James hopes to hold two cohorts per year with about 10 companies participating in each. DivInc is being run as a nonprofit so James is seeking corporate sponsorships, foundations and grants.
Making a Difference
Vi Nguyen and Lan Chu are founders of Homads, an Austin-based marketplace for month-to-month rentals, that is among the startups participating in DivInc’s first cohort.
“When it came to making a decision on DivInc, it was a no-brainer,” said Nguyen, who serves as the company’s CEO. “We knew all the people already and trusted them.” The pair has worked out of Capital Factory and gained access to some advice through that experience. But they are ready for more focused help.
“DivInc has a really good group of advisors in this program. Some of them have exited companies or made them into a huge success. Their knowledge can really help us in what we’re lacking,” Nguyen added. “We only know and can do so much.”
The tech community appears to be in full support of James’ efforts. Austin Technology Council CEO Barbary Brunner, in particular, is excited about DivInc and its potential to fill gaps in the city’s startup scene.
“If you think about what it takes to be an entrepreneur and go out and pitch to early-stage investors to get seed funding, you know it’s not easy,” she said. “But the more privilege you have – particularly white male privilege – the easier it is. It gives you a network as well as permission and an ability to approach investors in a much more bold way. And it gives you more access to the people that can tell you how to do this. It's critically important to put women and underrepresented minorities on equal footing.”
Brunner believes that those who fall into the underrepresented minority category face the most challenges, and that those minorities who are already relatively well-represented in tech face fewer obstacles.
“If you are a woman, Hispanic, African-American, Southeast Asian, Native American or Asian-Pacific Islander, you have been in many ways disadvantaged from birth,” she said. “The conversations with investors are different. People have different assumptions about you; you are evaluated differently.”
She welcomes DivInc because she views it as a program that can serve as a boot camp. Brunner believes James is able to provide value in this area, with what she describes as his impressive background, dynamic personality and impeccable connections.
“I think the conversation has to be not just about funding, but whether we are really going to address the deficiencies in the marketplace for preparing women and minorities to have equal footing in creating pitches and business plans, and achieving funding,” she added.
Austin not alone
Joshua Baer, founder and executive director of Capital Factory, agrees that there is a real opportunity to improve the representation of minorities in Austin’s tech world. “A lot of minorities are not well-represented, particularly among founders. That’s pretty widely understood,” he said.
But to Baer, the problem is not exclusive to Austin.
“My impression is that Austin is not significantly worse off than other communities when it comes to diversity in tech,” he said. “I think it’s more of a tech problem. And we have the opportunity now to put Austin on the map as one of the most diverse places for entrepreneurship or technology.”
Baer has seen firsthand James’ passion through his work as a mentor at Capital Factory.
“Preston came in and he was on a mission,” he said. “He was looking to see how he could make an impact in getting more diverse entrepreneurs funded. He’s always been a go-to person in our community in regard to these issues.”
Partner Google is in its second year of sponsoring a diverse entrepreneurship in residence program at Capital Factory. The search giant offers free co-working and office space and a $40,000 stipend to a qualifying startup.
Looking ahead, Baer welcomes DivInc’s efforts and looks forward to working collaboratively with the nonprofit.
“This is one part of the solution. Unfortunately, I don’t think it’s going to solve the problem by itself, but it’s a welcome piece of the puzzle,” he said. “A solution is the kind of thing that happens when we’re conscious of it. We have to be conscious of it to make things better.”