Technology startups still lack diversity across race and gender. While 71% of people who start a new business are white, only 6% are Black. This gap is even wider for Black women, with less than 1% of fast-growing tech startups founded by them. A new study published in the Strategic Management Journal highlights an important way to support black women in founding their own startups—working as startup employees.
“Previous research shows that individuals who work as employees at startups are more likely to start their own companies than those who do not work at startups,” explains Christopher G. Law, the lead author of the study and an Assistant Professor in the Department of Management at Texas A&M University. “We examine whether this effect is stronger or weaker for certain demographic groups— especially for Black women, who face both racial and gender barriers. In other words, we explore which demographic groups are most likely to found a startup after having worked at one.”
To investigate this, Law, along with co-authors Travis Howell of Arizona State University and Chris Bingham and Sekou Bermiss of the University of North Carolina at Chapel Hill, used datasets from Venture For America (VFA). VFA is a nonprofit organization that offered an annual fellowship program to help recent college graduates who are interested in startups find jobs at tech startups. The researchers analyzed the application details of 8,324 individuals who applied to the program between 2013 and 2023 and identified as either Black or White. They also analyzed applicants’ career details that were publicly available on LinkedIn.
“Similar to previous researchers, we found that people with startup experience are about 91.33% more likely to found their own companies,” highlights Howell, an Assistant Professor of Management and Entrepreneurship. “Interestingly, this effect was particularly strong for Black women.”
To understand why, researchers interviewed 39 people—including 10 Black women—who were either startup employees or founders. “Most of the Black women we spoke to never viewed themselves as someone who could be a successful startup founder because they rarely saw startup founders who were Black women. However, their self-perception changed when they became a startup employee. Working closely with like-minded founders helped them realize that these founders were people just like them and were figuring things out as they went along. This real-time exposure to the startup world drastically increased Black women’s motivation to found their own startups,” notes Bingham, Phillip Hettleman Distinguished Professor of Strategy and Entrepreneurship.
“Underrepresented groups, such as Black women, often have new perspectives, questions, and goals. Therefore, promoting entrepreneurship among them can help reduce socioeconomic inequalities and even drive innovation, which is beneficial for both consumers and society,” concludes Bermiss, an Associate Professor of Strategy and Entrepreneurship. “Future policies and programs can leverage our results to design initiatives that help more Black women secure jobs at startups, which can ultimately increase their chances of becoming founders.”
