Entrepreneurship is one of the engines that makes the American economy go. A report from the United States Small Business Administration’s Office of Advocacy describes small businesses as the “lifeblood of the U.S. economy”, accounting for 44 percent of U.S. economic activity.
“This useful benchmark shows us that small businesses continue to be big contributors to the U.S. economy,” Acting Chief Counsel for Advocacy Major L. Clark said. “Small businesses continue to be at the forefront of driving innovation, jobs and economic growth.”
In keeping with MIT Sloan’s commitment to supporting all kinds of entrepreneurs from its classrooms to their boardrooms, there’s research showing how ideas aligned with action can create impact. A 2015 study of MIT’s influence on business-building showed an alumni cohort whose companies created millions of jobs and generated trillions of dollars in revenue.
MIT's Entrepreneurs Transform Ideas Into Impact
That's greater than the gross domestic product the world's 10th-largest economy.
MIT Sloan students and alumni, meanwhile, have found themselves the beneficiaries of a system that preaches preparedness and highlights the importance of partnerships.
“I connected with people who shared my values and interests as an Executive MBA student and MIT Delta V participant,” said Christy Fernandez-Cull, MBA ‘22, founder of DaVinci Wearables. “Participating in startup founder events in New York City alongside other Black and brown people helped me on my journey.”
Being In The Room
It’s important for underrepresented groups to see themselves in the businesses and boardrooms where they want to make an impact. However, C-suite and executive leadership representation from these populations is a rarity in these spaces.
Reporting shows yawning disparities between the numbers of minority and female leaders at Fortune 500 companies versus their white, male counterparts.
Additionally, less than two percent of venture capital funding finds its way to minority-led startups like Fernandez-Cull’s. “How are these ecosystems fostering Black and brown talent?” Fernandez-Cull asked. “Who’s building and sustaining these pipelines?”
Black and brown entrepreneurs seeking access to start-up capital have sometimes found themselves at the mercy of structural and social forces that can prevent access to funding. There are some places that actively support the creation and sustenance of minority-owned businesses, however.
An MIT Sloan Management Review article outlined a series of lessons learned from using a “cooperative advantage” approach to build diverse and inclusive ecosystems for businesses. The piece also describes the kinds of tools and support needed to ensure these businesses’ long-term viability.
“Hayti’s long-lasting success compared with other Black Wall Streets around the country,” the author notes, “had much to do with the cooperation between the Black and White business communities.”
Training and Tools
TracFlo’s Khalid David, MBA ‘19, touted access to MIT’s Delta V, Sandbox, and completing his MBA courses as important stops on his path toward entrepreneurship. "They gave me enough to let me know I was on to something,” he recalled.
Still, David found himself unprepared for the rigor and acumen required to fund his ideas. “I was a highly-accomplished Black man, but this was new territory for me,” he said. “There were still barriers to meeting some of the greatest wealth generators of my lifetime.”
David described access to startup capital as the “last, best piece of market validation for an idea”.
Additionally, classroom training, while valuable, might not prepare novice entrepreneurs for the realities of seeking and establishing funding: capital acquisition, sound legal strategy, pre-, post-, and long-term strategy, and parsing funding types.
“I wasn’t aware of what I’d need as an underrepresented minority that was different from what my other classmates might need,” David recalled.
There was, David remembered, one member of the MIT Sloan faculty who was amazing. “She helped me feel seen and was always supportive,” David recalled. “But she didn’t share the kinds of challenges people who looked like us faced: skepticism, lack of credibility as a business leader, an assumption of the possibility of success.”
Advocacy and Planning for Success
How, then, to make a case for capital investment in minority-led startups? How can entrepreneurs from these communities invite and sustain access to funding and support?
It helps to have advocates who can see minorities as viable business leaders. If minority leaders are in the room when funding decisions are being made, it can increase visibility and opportunities for other minority entrepreneurs.
“Exposure and access to Black entrepreneurs is crucial,” David said.
“I would not have known about the NYC startup founder’s panel if I weren't introduced to Khalid through MIT Delta V," Fernandez-Cull recalled. "It was a privilege to receive his support as he sought to include both women and Black and brown founders.”
Diverse leaders, Fernandez-Cull and David both agree, may help create business environments that mirror demographic shifts. Success, David also argued, is determined by access to startup capital. “Capital validates belonging,” he noted.
Fernandez-Cull agreed, adding, “Studying at places like MIT Sloan can open doors but it feels like industry and finance need more convincing for a minority-held idea before deciding to fund it.”