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Just More Evidence Women And Minorities Are Left Out Of VC Funding

A look at the last 12 months of funding announcements finds that it pays to be a white man with a degree from Stanford.

Just More Evidence Women And Minorities Are Left Out Of VC Funding
[Image: eugenesergeev/iStock]

If you want to start a new company and be really well-funded and successful, the best strategy is to be a white male who graduated from Stanford. That sounds horribly insensitive, but it’s sadly true. A new study–confirming many other studies–of entrepreneurs who received funding or an exit within the last 12 months, finds that only 4% were women and 13% were minorities. Stanford emerged as the top school for producing such value-creating alumni at a higher rate than even the second and third place institutions—Harvard and University of California, Berkeley—combined.

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The results are from a study entitled “Founders Funding & Exit Ranking USA,” which was compiled by GraphicSprings, a London-based branding and design firm that works with startups and entrepreneurs. The group sorted through 5,000 funding announcements, company press releases, media reports and data from Bloomberg and Crunchbase from the last 12 months. “First, we want to raise the alarm that not enough women entrepreneurs are getting funded,” says Carl Davis, the marketing manager at GraphicSprings, in an email to Fast Company. The same is obviously true of minorities. In addition, going to college in proximity to the Valley is a good predictor of future success.

[Image: eugenesergeev/iStock]
To be fair, GraphicSprings isn’t just sounding the alarm; it’s recruiting business. Any report that’s startling enough to drive traffic to its homepage is a great way to build that company’s own brand awareness–and maybe drum up more work among those feeling put off by the results.

Stanford leads the pack with 138 graduates receiving funding, followed by Harvard with 89, and University of California, Berkeley with 45. In terms of exits, that top three remains consistent: Stanford leads again with 7 former grads, while Harvard and Berkeley are tied at four apiece. What’s interesting is how well dropouts from all schools continue to do; that pack of non-alumni placed seventh overall on the funding list, with 29 people earning investment, and tied with several other schools for fourth on the exit list with two people based at a place that went public. In terms of attracting funding, dropouts appear to fare better than folks from Columbia, Yale, or Princeton.

Tracking just what has happened within the last 12 months creates a pretty small sample size, which might not be indicative of Silicon Valley’s overall behavior or the direction the tech industry is headed. But it does jibe well with the sector’s inability to address fair representation and gender-parity. As Fast Company has reported, less than a quarter the tech epicenter’s current workforce is female, with even lower numbers for Latinos and African Americans.

[Image: eugenesergeev/iStock]
Race and gender issues aside, Davis says there’s another lesson: “that entrepreneurs from any college”–or obviously nowhere at all–“can successfully raise funds.” For instance, University of Iowa, Washington University in St. Louis, and Florida State University are all on the list.

The researchers created an interactive list, which lets users sort colleges by alphabetical order, total graduates, and totals raised by highest or lowest values. They’ve also created a separate sortable list of businesses to tease out the highest and lowest recent founding rounds and IPOs, along with where those companies are located (Snap Inc. in Venice, California, is the top IPO, clearing $3.4 billion in March.)

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Davis points out that graduates from California schools appear to have a disproportional edge in attracting funding. Stanford, Berkeley, and UCLA all make the top 10 for total graduates in that category, along with University of Southern California, which is ranked 11th. Odds are those founders started companies in their backyards, meaning in and around the Valley. Given the concentration of venture capitalists in California, those stats might point out another trend–that those with deep pockets aren’t really looking elsewhere. Maybe they don’t like to travel.

About the author

Ben Paynter is a senior writer at Fast Company covering social impact, the future of philanthropy, and innovative food companies. His work has appeared in Wired, Bloomberg Businessweek, and the New York Times, among other places.

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