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September 10, 2021

Where is the $35B Going?

To kick off the FounderTribes Black History Month Speaker Series, we invited senior leaders from banks and tech giants that have pledged to financially support Black founders and Black-owned businesses.

Our panel had speakers from companies representing a collective $7.2 trillion, and whose companies have made a collective commitment of over $35 billion to address racial inequities in entrepreneurship. Moderated by Bindi Karia, venture partner at Draper Espirit, the panel also featured Rachael Palmer of Google, Amali de Alwis of Microsoft for Startups, Heather von Zuben of Goldman Sachs, Rashmi Pendse of CitiBank, Alex-Handrah Aimé of Facebook, and S. Omar Eissa of Bank of America.

After George Floyd’s murder at the hands of police unveiled a summer of protests and conversation regarding systemic racism in the United States and around the world, companies looked to ways they could support minority entrepreneurs and support diversity initiatives.

Palmer, who is head of VC and startup partnerships at Google, said the company decided to reexamine their practices following Floyd’s death to hire and retain more underrepresented groups. Part of this, she said, was recruiting talent from new hubs, like Atlanta or London.

“The world — or tech — might be coming to the realization that Black people don’t necessarily want to live in California,” Palmer explained.

Google has also pledged $100 million to startups as part of their broader $175 million commitment.

Pendse, who works on the Citi Impact Fund, similarly expressed the importance of reaching underrepresented groups when they may normally be overlooked. “People just need to be a little more thoughtful about where we’re looking for entrepreneurs and how we find them and how we evaluate them,” she said. “But there’s a ton of qualified talent out there with great business ideas.”

As for Microsoft, de Alwis, who is a managing director, said “there has been a deep commitment made as far as diversity.” In order to support minorities, the company has been giving grants, offering money to organizations supporting Black-owned small businesses, and supporting intensive education programs.

“We’re to both put money where our mouth is, but also just from a practical and growth perspective, just make sure that we are enabling people to grow and get the best out of them,” de Alwis said.

And at Facebook, a new product called Lift Black Voices has helped different Black-owned content creators and small businesses to easily highlight their activities and find community on the app.

“It’s great to do grants. It’s great to support nonprofits, which we’ve done as well,” Aimé said. “But we really want to integrate black voices and these initiatives for underrepresented founders, etc, into the main business of whatever it is we’re doing because that’s how it becomes sustainable.”

Goldman Sachs won’t be taking a company public unless it has at least one diverse board member. “Ultimately, until you have diversity at all these organizations at the top level, you’re not going to have sustainable change trickling down,” said von Zuben, who is global head of client portfolio solutions and alternative investment manager selection (AIMS) at the firm.

Not only is it important to have diverse teams from an equity standpoint, but these teams are also a winning investment proposition. According to von Zuben, diverse teams outperform others by 33% in the investment context.

This may be because underrepresented founders can take the perspective of their users to spot business opportunities and create effective products. “Having the perspective of someone who is a customer or a potential customer is critical to be able to identify and solve the problem,” Aimé opined.

Ultimately, only time will tell whether or not these initiatives will create meaningful change in the abysmally low allocation of funding going toward minority and especially Black founders. With the recent initiatives formed at Google, Microsoft, CitiBank, Facebook, and Bank of America, perhaps we’ll see these troubling trends start to reverse.

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