While tech companies with black founders are still few and far between in the white-dominated startup world, three such firms from the Twin Cities have found some recent success in landing highly coveted spots in a prominent accelerator program.
It’s a milepost that the three leaders — Tyrre Burks of Player’s Health, James Jones of Spark DJ and Clarence Bethea of Upsie — hope will inspire more black entrepreneurs to launch businesses as well as encourage more venture capital firms to invest in companies with leaders who look like them.
“It’s awesome for three black founders to come from the same place and show the potential and the ability that might be untapped,” said Jones, who left a job at Target Corp. in 2016 to create an app that acts as a personalized, electronic DJ that mixes music and takes requests. “This is a step in the right direction, but there’s still a lot of progress that needs to be made.”
Fundraising is often the biggest hurdle for any startup. It is often an even bigger challenge for startups with black founders. A report from CB Insights in 2010 found that only 1 percent of startups receiving funding had black founders.
“In Minnesota, it feels like there’s a more conservative investor pool,” Jones said. “But there are a lot of things happening to improve that and to try to open it up.”
All three of these startups have either recently completed or are in the midst of one of Techstar’s three-month-long boot camps. The well-respected accelerators, which have made increasing diversity a goal, are highly competitive with hundreds of startups vying for a handful of spots in each of the programs.
While most startups fail, the success rate of startups that go through Techstars is much higher, with graduates crediting the mentorship they receive and help connecting with investors.
Many people focus on the pipeline issue when it comes to diversity in the tech space. But another big issue is keeping people in the field, said Sharon Kennedy Vickers, chief information officer for the city of St. Paul and co-founder of Twin Cities chapter of Blacks in Technology.
“A lot of black founders are starting from zero,” she said. “They don’t have those networks to help them push forward.”
The Blacks in Technology group meets once a month and is a place where people of color can network and share advice and support. There has been a lot of buzz in that community about these three startups’ recent success that Kennedy Vickers hopes will encourage others to stay in the field and perhaps follow through on launching some of their own ideas.
Bethea, of Upsie, struggled with fundraising until he was selected to be part of Techstars’ retail accelerator at Target Corp. last year.
“It’s definitely challenging being an African-American founder in tech,” he said. “Probably the biggest reason is there aren’t many of us.”
In January, a few months after completing the program, Upsie closed a $1.7 million round of seed funding. With the infusion of capital, the company, which focuses in the warranty space, is looking to nearly double its workforce of eight employees. For now, it’s working out of Target’s Minneapolis headquarters.
Going through Techstars helped Bethea not only focus his business strategy but also to gain more faith from investors.
“Techstars validated us, and it validated me,” he said. “It changed the whole perspective on our company.”
Burks, founder of Player’s Health, an app that keeps track of young athletes’ injuries, has already raised $1.7 million and won a top award at a Google Demo Day in 2016. It moved into an office in the North Loop late last year and now has about 13 employees.
Player’s Health is in the middle of Techstars’ accelerator in Boulder, Colo., which Burks is hoping to leverage to figure out how to best scale his business and launch a second related insurance company. He’s also aiming to finish a Series A round of funding.
Being a former professional football player in Canada has helped him get an audience before investors. But he said he still has to battle preconceived notions.
“There are things I have to combat when I walk into a room as an African-American founder,” he said.
Jones’ Spark DJ is taking part in Techstars’ music-focused accelerator in Los Angeles. He got in after applying for the second time.
His small company of four people has been working out of the Fueled Collective (formerly CoCo) co-working space in northeast Minneapolis. He hopes to come out of the accelerator with a more fine-tuned business strategy as well as make progress on the fundraising front.
“I think people are beginning to realize the opportunity with minority founders,” he said.