We know that starting a new enterprise from scratch isn’t easy.
Setting up a new venture has been described as something akin to assembling a difficult jigsaw puzzle. In these early stages, the job of the entrepreneur is a tricky one involving identifying, retrieving, leveraging and then putting together resources so as to turn their dreams into reality and successfully create a viable venture.
It is in this respect that the maxim “its not what you know, its who you know” has never been truer. The people that the prospective entrepreneur knows (or, the people that they know) may be able to directly provide or to guide access to the finance, know-how, equipment, mentoring, information, assistance and other necessary resources that they need in these early stages of start-up. Other people are known to be so vital to successful entrepreneurial endeavours that entrepreneurship should be understood as an inherently social activity activity that is either constrained or facilitated by the entrepreneur’s social network.
The resources that the network can provide, and their willingness to provide it, are known as social capital. You may not have heard of the concept, but you will certainly have experienced it on a daily basis. Know someone who can keep an eye on your house while you’re away? Someone who could walk your dog while you’re at work? Someone who could fix your PC if breaks down? Those are all examples of social capital.
The value of social capital is obvious. It can provide the nascent entrepreneur with access to valuable resources at below-market prices (and sometimes even for free). So, its crucial to build those networks as early as possible – and to make sure that networks are made up of the right people.
Image: Natasia Malaihollo, founder of Wyzerr
This is what Natasia Malaihollo found when she was setting up Wyzerr, her Kentucky based survey platform that makes use of Artificial Intelligence technology. Wyzerr, which has an all-minority founding team, was funded through venture capital. Malaihollo managed to raise $1.5 million making her just the 11th US woman of color to raise more than $1 million to support entrepreneurial start-up. Malaihollo is clear about the role that personal contacts played in helping her to achieve her goals:
“Funding is about relationships. Investors invest in people they trust and like. They nurture these relationships over time before they actually write a check”.
Virtually entrepreneurs need access to finance. And, the resource needs of entrepreneurs are general the same: in addition to finance, role models, mentoring, brokerage and information are key needs. The problem is that minority entrepreneurs often do not have access to the lucrative networks that can supply this social capital. So, the playing field for minority entrepreneurs and majority entrepreneurs is not level. If minorities are to start up businesses in greater numbers, and to be successful in their entrepreneurial projects, they need to expand their participation in networks that supply financial, social, and inspirational capital. If this seems daunting, consider that the more people you know, the better chance you have of tapping into those networks indirectly. As Malaihollo puts it:
“The alternative is they have someone else vouch for you. The problem is many minorities do not have the connections to get into these circles of wealth and investors. They often do not have access to someone that is willing to facilitate an introduction, provide a referral or make a connection”.
This explains why some people choose to invest thousands in schooling at high profile business schools. The value of an Executive MBA is only partly in the learning – the rest buys invaluable connections to vital networks.
So, start networking! Its crucial to build confidence and social capital.
Sources of networking and mentoring support for minority entrepreneurs:
Divinc: Based in Austin, Texas, Divinc is a 12-week pre-accelerator program available to young, minority prospective entrepreneurs in the tech industry. The goal of the program is to “with top-notch, comprehensive programming and connect them with an extensive network of mentors and investors plus the critical resources they need to turn their idea into a high-growth, scalable business”. Applications for the program usually close around Spring.
Also with a focus on tech startups is Black Founders. They offer programs that help to stimulate the growth of a entrepreneurial ecosystem for black and minority entrepreneurs.
PowerMoves supports entrepreneurs of color at the early stages of entrepreneurship by helping them to make connections, holding intensive startup bootcamps and helping to raise invesment
Jumpstart Inc provides both funds and services (e.g. assistance and matching services) to entrepreneurs with projects that could help economically disadvantaged communities. The focus on “diverse and ambitious” entrepreneurs suggests that this would be a useful platform for minority entrepreneurs
Specifically for Latinos, the Latino Startup Alliance seeks to bring together a network of Latino investors, innovators, mentors and entrepreneurs