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     The Tech Funding Gap 
     A Policy Problem That  Widens the Wealth Gap 
    Project By Mariah Lichtenstern, Aspen Tech Policy Hub Fellow

    "The funding gap" is a term to describe the lack of equitable funding to underrepresented startup founders (Black, Latinx, and/or female).  Venture capitalists bear the brunt of media criticism for demonstrated inequities in tech funding.  A closer look reveals that the limited partners who invest in venture capital funds, and regulators who constrain capital formation, are also part of the larger, systemic problem.

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    Currently, the Securities and Exchange Commission relegates the majority of Americans to second class status based on income and net-worth criteria, limiting participation in key private market opportunities - or restricting it all together. This puts under-represented founders at a disadvantage by constraining their access to capital and creating prejudicial barriers to entry.

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    This project recommends that the Securities and Exchange Commission dismantle discriminatory investor criteria. It also recommends that existing institutional investors pledge to create opportunities for diverse and emerging managers to establish investment track-records. These solutions can advance equitable tech startup funding while helping to close the widening wealth gap.

    View the Executive Summary

    Stop Startup  Redlining

    The Securities and Exchange Commission segregates investors by income and net worth, with separate and unequal investment opportunities which impact the vast majority of Americans. This constrains capital formation and wealth creation - especially for Black, Latinx, and female founders and funders. Ensuring that all Americans can attain accredited investor status through self-verification of independent or assisted sophistication is essential to closing the wealth and funding gaps.

    Sign the Petition
    Read the Policy Brief
    • Project Summary
    • Solution 1 - The SEC
    • Solution 2 - The Pledge
    • Infographics
    • Take Action
    Watch the Presentation
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    Next Steps:
    The Opportunity Pledge
    NEW! Startup DEI Pledge
    Sign the Petition +
    Solution 1: 
    Securities & Exchange Commission (SEC):
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    Give All Americans a Fast Track to "Accredited Investor" Status

    Dismantling systemic discrimination in startup fundraising and investing is the fastest way to start closing the funding gap. The first step is doing away with income and net-worth standards for who can invest in early-stage startups. Next, all investors should have a path to accreditation without the unreasonable time and cost barriers currently required. Finally, we must do away with provisions that advantage founders and funders with high income, high net-worth, and high net-worth networks, over those that don't.

    Read the Policy Brief +
    Letter to SEC Small Business Capital Formation Advisory
    Sign the Petition +
     
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    Income inequality makes it difficult for the majority of Americans to launch successful startups. This is especially true for underrepresented founders, particularly people of color, who are often less resourced due to systemic economic oppression and the resulting wealth gap.  When underrepresented founders of color do make it to a venture-backable position, they receive less than five percent of total venture capital, despite data showing that diverse teams have higher returns on positive exits than their all-White counterparts.

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    Black and Latinx representation is also lacking among investors. Only six percent of venture capitalists are Black or Latinx (two percent at firms that are ten years or older). Less than five percent of angel investors are Black or Latinx. Several studies have indicated that this lack of representation is caused by and contributes to discrimination within the tech industry at all levels. The Opportunity Pledge presents a framework for lasting change

    Make the Pledge
     
    Solution 2: 
    Opportunity Pledge​
    To Accelerate Equitable Startup Opportunities
    NEW! Startup DEI Pledge
     

    Infographics

    Access to Capital Infographic
    Pledge Goals
    Pledge Highlights
    Pledge Framework
    How You Can Help
    20.11.29 Tech Funding Offerings
    Tech Startup Funding Offerings 20.11

    Actions

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    Startup Founders:
    Take the Survey
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    Venture Capitalists & Limited Partners (VCs & LPs):
    Make The Opportunity Pledge
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    We the People:
    Sign Petition to Stop Startup Redlining
     

    © 2020 Mariah Lichtenstern, Aspen Tech Policy Hub Fellow, Winter 2020

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    This project was developed at the Aspen Tech Policy Hub