As the Silicon Valley Bank postmortem continues, it’s worth sparing a thought for the startup founders of color who lost a valuable resource.
Yes, it’s partly about the cash.
“Less than 1% [of tech sector investment capital] goes to Black female founders,” says Tiffany Dufu, founder and CEO of The Cru, a startup to help women achieve their goals. When SVB failed, she found herself temporarily unable to make payroll. Dufu explained to NPR that she is emblematic of the kind of entrepreneurs who have to fight for both investment and access to expertise. “There are a lot of underrepresented founders and leaders in this community who were grossly impacted by this. There’s not a lot of liquidity. We don’t have large assets to draw on. And so this really created a crisis for us.”
But it’s also about the connections.
The baseless charges of wokeness leveled at SVB are particularly maddening given that the bank did an unusually good job identifying promising Black founders and connecting them to other entrepreneurs, experts, discounted technology tools, and specialized banking services to help them grow. SVB’s sudden collapse sent a ripple of existential dread through the tightknit tech community in Atlanta, for example, which relied on the bank for everything from credit cards to business intelligence to key relationships.
“When our economy catches a cold, the Black community catches the flu,” Kelly Burton, the CEO of the Black Innovation Alliance, told Atlanta World Daily. “There will likely be retrenchment in the space with investors becoming more skittish. That can’t be good for Black founders, especially [considering] there’s all this conservative blowback.”
The loss of SVB means a vital window has closed for immigrants of color, too. The bank had developed unusual expertise in helping entrepreneurs from around the world build their enterprises in the U.S. Shortly after the run on the bank began, more than 1,000 of these founders flooded into a WhatsApp group frantically looking for information.
“All these folks that have very special circumstances based on their identity, it’s not something that they can just change about themselves, and that makes them unbankable by the top four (large banks),” says Asya Bradley, a startup advisor.
It’s the American dream on hold.
Going forward, it will be more challenging for “people who don’t fit the traditional credit box, including minorities,” says banking expert Aaron Klein, a senior fellow in Economic Studies at the Brookings Institution. “A financial system that prefers the existing holders of wealth will perpetuate the legacy of past discrimination.”
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
This edition of raceAhead was edited by Ruth Umoh.
On Point
Another survey shows a decline in diversity jobs
This one, from an analysis conducted by LinkedIn, finds that after record growth during the prior two years, hiring for C-suite DEI positions declined in 2022. It’s the only C-suite role experiencing a slump. "When some companies need to find places to be cut, unfortunately, they tend to cut areas like DE&I and talent acquisition,” says Kara Yarnot, vice president of strategic consulting services at recruitment agency HireClix.
SHRM
Employees say companies are doing DEI wrong
In new research from Gallup, most HR chiefs report increasing investments in DEI. But other Gallup research finds the vast majority of employees aren’t feeling the impact. Only 31% of employees say their organization is committed to improving racial justice, and 25% say issues of race and equity are openly discussed where they work. What gives? Here’s a hint: Leaders need to get very comfortable talking about race and equity—and fast.
HBR
Jaylen Brown gets real
The superstar guard for the Boston Celtics is using his fame to draw attention to issues of race and inequality. There have been headwinds: He’s been asked to explain his business association with Kanye “Ye” West, for example. But his work runs deep. “There’s different forms of bigotry or racism or inequalities,” he says, talking first about the personal kind that includes name-calling and discrimination. “There’s other forms of hegemonic racism that are subliminal, such as the inequalities in the education system,” that broadly shut down opportunity. “I’ll forever fight for those kids because I’m one of them.”
New York Times
The Oscars thrill fades for some Asian Americans
The gain in representation and cultural heft is a bittersweet counterpoint to the ongoing threats to Asian Americans in the U.S., says documentary film producer Gina Kim. “I was just watching Asian excellence at the Oscars,” she says. “But at the same time, the hate crimes numbers coming out show attacks against Asian Americans are at the highest level ever…It’s a very complicated moment.” Her recent film, Rising Against Asian Hate: One Day in March, is about the mass shooting at three Atlanta-area spas in March 2021.
Washington Post
On Background
Kurt Lewin, the founder of social psychology, was an immigrant and refugee
A columnist for Psychology Today asks a poignant question: What if the U.S. had refused to welcome Kurt Lewin when he needed refuge?
Lewin was the only member of his immediate family to escape death in Nazi concentration camps and went on to create an influential theory of psychology called “the interactionist perspective." It's a more inclusive alternative to the “nature vs. nurture” theory of personality development.
The magazine traces Lewin’s influence through a professional genealogy that describes his now wide-reaching impact on the field of human understanding, one that informs the work of many growth-minded leaders. “One refugee and another and many others set in motion critical influences that made you who you are,” says Travis Langley, an author, professor, and Batman expert. (Not kidding.) “The you that you now know would not exist without them.”
Psychology Today
Parting Words
“This is a west coast bank that operates at the heart of innovation and is...empathetic and dependent on relationships. It is not cutthroat like Goldman Sachs.”
