Tanya*, a 34-year-old African-American chef-turned-food entrepreneur, laughed nervously after her well-rehearsed investor pitch to local food investor David.* For nearly 15 minutes, Tanya meticulously shared her 12-year culinary career working for the Twin Cities’ most celebrated chefs, as well as her business plan, which required $35,000 in startup capital to pay for shared kitchen space, equipment and a refrigerated vehicle. “So,” Tanya concluded, “do you have any questions?”
David leaned back into his chair and folded his arms. “Your business plan is impressive, but don’t you think you should start smaller?”
While some may interpret David’s question as benign, it is loaded with low expectations. Without knowing it, David discounted Tanya’s competence as a business owner and the investment-worthiness of her enterprise due to her race and gender. Unfortunately, situations like Tanya’s are common. It is so common that scholars have given it a name: “implicit bias.”
According to the Kirwan Institute for the Study of Race and Ethnicity, implicit bias is “the attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious manner.” The definition does not specify race, gender, religion or sexual orientation, as implicit bias is a cognitive behavior that is experienced and practiced by everyone. However, women and people of color are disproportionately impacted by its often severe real-life consequences in employment, education, housing, health care, and policing.
Implicit bias especially is evident in investing. According to Minne Inno, women-led firms in the Twin Cities received only 4 percent of local venture capital funding in 2016. Of that group, according to Wired, only 24 Black women-led firms received venture capital funding out of 10,238 firms between 2012 and 2016 — that is .2 percent.
A study conducted by Sarah Thébaud, a University of Santa Barbara professor, revealed that women entrepreneurs are often seen as “less skilled and less competent than men” seeking venture. Implicit bias often creates hurdles that women entrepreneurs and entrepreneurs of color cannot overcome no matter how credentialed, prepared and competent they are.
My employer, Social Impact Strategies Group, is challenging implicit bias by organizing ConnectUP! MN, a summit on March 14-15 bringing together investors, women entrepreneurs and entrepreneurs of color. Participating investors have attended a series of briefings that examine issues such as implicit bias and how it shapes the decision-making process.
Investors can employ the following strategies to reduce bias:
1) Develop partnerships with business incubators and social enterprises to expand the pool of women-led and person of color-led firms;
2) Implement criteria that does not eliminate all women and person-of-color firms in early stages of the due diligence process; and
3) Ask questions that allow founders the opportunity to create connections through story sharing.
* Names are fictitious
Stephannie L. Lewis is the Strategic Partnerships manager at Social Impact Strategies Group. When she’s not working, you can find her “rooting for everybody Black.”
Blindspot: Hidden Biases of Good People by Mahzarin R. Banaji and Anthony G. Greenwald
The New Jim Crow: Mass Incarceration in the Age of Colorblindness by Michelle Alexander
Feminism Is for Everybody by bell hooks
Delusions of Gender: How Our Minds, Society, and Neurosexism Create Difference by Cordelia Fine
White Fragility: Why It’s So Hard for White People to Talk About Racism by Robin DiAngelo
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