We need to develop meaningful metrics to evaluate entrepreneurial ecosystems
When Kathryn Finney, fashion blogger, tech entrepreneur and founder of digitalundivided, set out to help women of color become entrepreneurs, she faced a challenge. No one was measuring anything about entrepreneurship among women of color, so it was going to be very difficult to measure the impact of her company.
So in 2015 she started working on what would become a biennial demographic study on the state of Black and Latina women founders of high-growth, tech-enabled companies called ProjectDiane.
The report has been published twice, once in 2016 and once in 2018, and sheds light on where Black and Latina women founders are located in the U.S. and how much funding they receive. Because Kathryn is putting a focus on these metrics, we can get a better sense of the progress digitalundivided and the broader community is having, and the challenges these women still face as entrepreneurs.
One challenge in building equitable entrepreneurial ecosystems is that we have very few tools available to measure our progress and impact. Doyenne’s mission is to build communities where women entrepreneurs of all backgrounds thrive. When we started Doyenne, we said we wanted to get Madison recognized as one of the best cities in the country for women entrepreneurs. Many people asked how we would measure that. It’s a great question.
We knew from the beginning that it wouldn’t be by landing on a Top 10 list put out by a national magazine like Forbes. These lists can be fun to share on social media if your city unexpectedly lands in the Top 10. It was certainly exciting to see Madison ranked #1 for cities with the most successful women per capita by a SmartAssets analysis.
The problem is that these lists don’t actually provide much (if any) useful information for ecosystem builders to help them evaluate their progress toward building a thriving, inclusive entrepreneurial ecosystem.
For one, the rankings are often calculated very poorly. A quick google search of “Top Cities for Women Entrepreneurs” brings up two lists that don’t even bother to factor in the population of the city when making the rankings. So the lists show that New York has the most women-led ventures, followed by Los Angeles — the U.S.’s two biggest cities. How does that list help the ecosystem builder in Tulsa?
Other rankings use obscure metrics, like “Number of National Association of Women Business Owners (NAWBO) chapters,” or numbers that have an unclear or indirect link to entrepreneurship, like the unemployment rate.
These lists tell you very little about what it feels like to be a woman entrepreneur and/or an entrepreneur of color in those cities. Just because New York has the most women entrepreneurs does not mean women entrepreneurs in that city are supported and have access to the same resources that White men do.
Plus, these lists reinforce the storyline that in order to succeed, you need to move to one of the nation’s biggest cities. For anyone not already living in those cities, this puts up another barrier to entrepreneurship that disproportionately affects women. Women tend to start ventures later in life, have more family obligations, and fewer resources in general — all barriers to making a major relocation. Plus, not everyone wants to live in those cities!
Communities and organizations shouldn’t pay much attention to lists that are calculated out of expediency (data we can get quickly and easily), rather than efficacy (the information that really has impact). What they need are tools and processes to audit their entrepreneurial ecosystems, paying particular attention to equity and inclusion — because an entrepreneurial community that focuses only on White men (intentionally or unintentionally) is NOT a thriving ecosystem.
With accurate numbers in hand, cities can begin the necessary conversations across the community about the changes needed to make their ecosystems more equitable, and then move to actually DOING something about it. With more robust metrics around processes and outcomes, cities can continue to perform the audit at regular intervals and measure their own improvement year after year.
So, how can we build an ecosystem where women and people of color can thrive, AND how do we measure our progress and impact?
Ideally, an audit would be a combination of qualitative and quantitative data, involving boots-on-the-ground surveying of actual entrepreneurs as well as those building the resources for them.
Some of the key components of the ecosystem to explore are the following:
Concentrations of Power
Many cities that are trying to build their entrepreneurial community are constrained by a few dominant players who want to be THE most critical organization or THE most powerful set of people in the ecosystem. Sometimes it is a chamber of commerce, a municipal office, a university, a particular investor, or just a group of bros who think they’re the shit.
Often, these people wield their power in dysfunctional and destructive ways that prevent innovation, inclusion and entrepreneurial vibrancy. They hijack the community, forcing it to dance around their egos. For an entrepreneurial ecosystem to thrive, resources need to be distributed across organizations and people. When there are multiple players, there are multiple perspectives and a variety of entry points for entrepreneurs.
Communities are more equitable when they have a spider web of different organizations, offering a range of programming, that are knitted together through collaborations. The community can thrive because it leverages the wisdom of the collective.
To evaluate the concentration of power in your city, ask the following questions:
- How decentralized is the control and delivery of resources (money, space, coaching) in your community?
- How different are the organizations and their offerings? Do they provide similar resources using similar models for similar people, or is there innovation in how the work is done?
- How diverse are the investment vehicles and investment priorities? Are there multiple sources of dollars going to different types of businesses for different purposes?
- Are there collaborations among organizations to better engage and support diverse entrepreneurs?
Communities that have numerous women and people of color in visible, influential, and decision-making roles are much more likely to be places where diverse entrepreneurs can thrive. And, I mean across the ecosystem, not just in organizations dedicated to a specific identity group. These voices need to be influential in the design of programs, deployment of dollars, and communication with the community. Additionally, we need to stop putting women behind the scenes to do all the work, and putting men on the stage to take the credit.
Simple demographic data can hide the real story, so here are some questions to ask when measuring the real diversity of leadership in your city:
- How diverse are the leaders of organizations in the community with the mission of fostering entrepreneurial activity? How diverse are the boards of those organizations?
- How diverse are the investor pools, specifically those making the decisions about which entrepreneurs/ideas/companies get funding?
- How diverse are the entrepreneurs engaging with those organizations? If the organization is focused on a particular identity group, is the diversity within that group being recognized and supported?
Community Conversation & Culture
The entrepreneurial communities that we have across the U.S. are NOT equitable and inclusive. This is just the reality of the world we live in. While we have made slow progress over decades, we still have a long, long way to go. One significant barrier to progress is that the narrative about who entrepreneurs are and how they behave is controlled by white men. And, it is based more in myth than reality.
Until women and people of color have equal power to define the narrative, communities will be stalled in their entrepreneurial success. It is incredibly valuable for communities to have organizations that are specifically dedicated to growing and advocating for diverse entrepreneurs. These organizations can be powerful voices that impact the public conversation, partner with other entities to help them improve practices, and become a pipeline into the broader ecosystem for diverse entrepreneurs.
- Who controls/influences the narrative around entrepreneurship in your community?
- How diverse are the “thought leaders” who speak at events?
- How inclusive is the media coverage of the entrepreneurs in the community? Do the articles consistently highlight diverse entrepreneurs and quote diverse experts? Again, is the media seeking their opinions as experts about entrepreneurship in general? Or just their expertise on being a Black entrepreneur?
- Are there organizations whose primary mission is to grow diverse entrepreneurs? How provocative and persistent are their voices?
- How do women and people of color experience the community? Do they feel supported, respected, valued? Can they celebrate their unique identities or do they feel they have to suppress them?
Pipeline of Talent
Cities across the country are working to grow and retain young talent. One vehicle for doing that is through compelling entrepreneurial programs for youth. The goal of these programs is to expose young people to entrepreneurship as a potential career pathway at some point in their lives. These programs can build confidence, skills and networks that are useful regardless of how many go on to actually build ventures.
Unfortunately, many of these programs are filled with boys. And, the more boys you have the less likely you are to get girls engaged. It may be important to offer programs specifically for girls. Additionally, women and girls are more likely to see entrepreneurship as a means rather than an end — they are passionate about solving problems and will consider entrepreneurship if it is the most effective way to solve the problem. They typically don’t see building a business as a meaningful goal in and of itself. So, programs need to draw girls with the language, goals, and curricula that better fit their world view.
- Do the K12 schools and higher education institutions in your community offer entrepreneurial (not just business) programs? Do they have specific offerings for girls?
- How diverse are the educators/staff/students in their entrepreneurial programs?
- What narrative are these programs using to define entrepreneurs and entrepreneurship? Is it inclusive?
What you measure is a reflection of what you value
Let’s move away from lists, and move toward audits that cities can use to mobilize the community and focus their efforts on building inclusive ecosystems. Let’s reward transparency and real change, instead of rewarding window dressing.
Data collection is time-consuming and can be resource-intensive. That’s why Doyenne is building out technology tools to better incorporate and automate data collection into our work with entrepreneurs, so that data collection doesn’t have to be a separate, secondary effort. (Think about how many surveys you’ve sent out with little or no response.)
As we scale, we will be developing auditing tools and processes that every Doyenne city will use to assess the ecosystem and progress their community is making over time. Our goal is to design these tools so they trigger conversations, collaborations, and long-lasting cultural change across the whole community.
There is an old saying in the business community: “What gets measured, gets done.”
Recently, Kathryn Finney visited Madison and spoke at the Chamber of Commerce’s annual Icebreaker event. In her keynote address, she closed with this reminder: “Everyone wants to live a life that they can control. Entrepreneurship and technology are just tools.” Our end goal as ecosystem builders is NOT to turn everyone in a city into an entrepreneur — not even a funded entrepreneur. Our goal is to create economies where everyone can thrive, and that starts with better tools for measuring our startup ecosystems.