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The Venture Equity Project Podcast is a storytelling platform where we bring on the world’s most incredible entrepreneurs, forward thinking academic, nonprofits, and venture partners to talk about how we can take steps to fix the complex problem of inequity in venture. Host Weilyn Chong will help us gain insight on everything from how we can increase access to capital for underrepresented entrepreneurs and tips on getting in front of VCs and angels.
In our second episode, we are joined by Jill Johnson, Co-Founder of the Institute for Entrepreneurial Leadership (IFEL), one of our partners in the Venture Equity Project, to explore the current state of capital flow. From tangible steps investors can take to build a more inclusive environment to why educational programs are not enough to solve the lack of capital to entrepreneurs of color, Jill engages with each of these topics through personal stories and her journey building IFEL.
More about the Venture Equity Project Podcast: The Venture Equity Project Podcast is a storytelling platform where we bring on the world’s most incredible entrepreneurs, forward thinking academic, nonprofits, and venture partners to talk about how we can take steps to fix the complex problem of inequity in venture.
The Nasdaq Entrepreneurial Center is proudly hosting and producing this podcast. The Center is a non-profit that is building a better path for entrepreneurs worldwide by improving inclusion, access, and knowledge in entrepreneurship.
Weilyn Chong: Hello and welcome back to the Venture Equity Project Podcast! Today we’re joined [by] Jill Johnson. So excited to have you on the podcast today.
Jill Johnson: Thanks so much for having me.
WC: To get started, I’d like for you to tell the audience who you are but also something not many people know about you.
JJ: I’ll start with introducing myself first – I’m Jill Johnson, and I’m the co-founder and CEO of the Institute for Entrepreneurial Leadership. We are a nonprofit organization based in Newark, New Jersey. This is our 20th year.
JJ: My father and I co-founded the organization together. We have three program focus areas. The first is relationship capital connections – that’s our Women of Color Connecting initiative; investor inclusion, and that is the Making Black Angels [program] and the one where we’re partnered with the Venture Equity Project; and then community small business capacity building, and that’s our Small Businesses Need Us initiative. So really exciting work, and all of those projects are really centered in the concept of eradicating the barriers at a systemic level that keep entrepreneurs who have been historically excluded from being able to access the knowledge, networks, and capital that make success even possible. What we say at our organization is that success is not guaranteed. In fact, most entrepreneurs do not succeed. They fail in their original concept. But you’re at a significant disadvantage if you do not have access to certain resources.
So then you ask, what are some things that people don’t know? I was born in Iowa. So I will share that – in Cedar Falls, Iowa. So I have Midwestern roots. My parents were born in Kansas and Missouri and my mother would say, “Be sure to let ‘em know it’s ‘Kansas City, Missouri.’” That’s a Missouri/Kansas type of thing.
WC: Absolutely love the work you’re doing at the Institute. I’d love to hear you paint a picture [of] the current problems that face entrepreneurs of color and women entrepreneurs.
JJ: I think something that we have to recognize is that being a business owner; being an entrepreneur; being a founder – and I do think there is a different between the three – it’s hard. Period. No matter who you are. I know people with lots and lots and lots of resources who have tried to lay out their own shingle and not been so successful in doing it. So it’s not for the faint of heart. It’s really tough. And there’s some element of right place and the right time and being prepared and taking advantage of opportunity but for certain groups, there are barriers that have nothing to do with their skill, their expertise, their knowledge, their know-how, their persistence, or anything – it is simply not having the opportunity. And what we see is that’s where the real barrier is for a lot of folks. It’s not having the opportunity. So when we look at Black entrepreneurs, Latinx entrepreneurs, women of every shade and hue, nationality and race, but especially Black women – we see barriers that just shouldn’t exist. If you think about economic principles and the theory that money finds great projects and money is gonna find its highest and best use, we just don’t see that holding up when it comes to these entrepreneurs and business owners and founders who have been historically excluded. And it’s the exclusion that creates the barrier.
WC: I’ve seen a couple of articles where you mention this, but do you feel that there’s not enough discussion? Or perhaps too much discussion and not enough action?
JJ: [Laughs] I definitely think that there’s a lot of discussion and not enough action. I recently had a conversation with James Ree of Red Helicopter and formerly CEO of Ashley Stewart and he was pointing out, “Just too much talk, not enough action. Talk less, do more.” And I think that the talking’s good, don’t get me wrong. Because you can’t even solve the problems if you don’t bring them to the forefront and acknowledge they exist, so talking’s good. But we have to move beyond that. I think that one of the things that I have observed – and even, in a sense, a trap that we were in when we founded [IFEL] – is saying that “This group is having difficulty accessing capital, so let’s work with this group to help them to be better, to learn more, to improve their skills so that they can gain access.” The reality is, that is not the problem. It’s by getting access that you’re even able to get the skills and learn. You have people from top institutions, top universities with all these degrees who happen to be male and white – they get access. It’s not that they had all the skills that it takes to be amazing entrepreneurs. They had key elements, sure, were smart, and had some attributes and characteristics that were really important, but they learned as they went along because doors were opened and they were able to learn and grow as they went along. Unfortunately there are others for whom those doors just never get opened. So you’re not going to learn if you’re never exposed to what it takes to be successful, and if you don’t have people around you who know what it is and are willing to guide and support you through that journey, then you just don’t know. So it doesn’t have to do with these particular groups of entrepreneurs, founders, and business owners being deficient and not knowing. So we feel that that’s really an essential component of the discussion about barriers.
WC: I think that hones in onto this point that it’s not the entrepreneurs that need to be fixed; it’s the system that’s currently in place and I think a lot of other players that are in this discussion as a whole. Can you expand a little bit more on the quote of how entrepreneurs of color and women entrepreneurs do not need to be fixed, and who needs to stop trying to fix these entrepreneurs?
JJ: [Laughs] I look at it a little bit like victim blaming. I don’t like talking about these groups that have been historically excluded as victims. I don’t think the victim mentality is a good one from a personal standpoint, right. Because you have to take control, take ownership, and not give that power away to someone else. From a systemic level, the people that have been wronged – it’s not their fault that these injustices happened to them. It was a system, a society that was in place that kept Black people, at a point, enslaved. We did not enslave ourselves. That was a system, a way of being. Women were not allowed to keep property and their husbands had to give them permission and essentially women were owned by their husbands, more or less. And so when you look at these systemic barriers and how the world has operated, to then say, “Well, you don’t have wealth and therefore because you don’t have wealth, that translates into issues around credit, collateral, all the things that go into getting a loan. It goes into friends and family money, which if you don’t get friends and family money, it’s hard to get angel money. If you don’t get that, it’s hard to get VC money. So we talk about all of the challenges that these groups have, but then we say, “Well, to fix this, let’s give you some training.” And so that’s why we have seen this proliferation of training programs and systems of support – and we’re gonna mentor, and we’re gonna provide technical assistance, all of these things – but that all then really is suggesting that the problem is with these entrepreneurs. Again, do not get me wrong, learning is always good. People can always benefit from knowledge and information. But to suggest that on a wide scale, that some deficiency with these particular groups of entrepreneurs and founders and business owners is what leads to the vast majority of venture capital going to white men – again, it just really doesn’t make sense. It doesn’t even add up. To say that all of the innovation naturally just sits with white men? That just doesn’t even make any sense.
WC: Something interesting that you pointed out was, like, “Don’t get us wrong, these programs that are in place to educate and to train entrepreneurs of color about the space or about how to raise capital are important as always. But that’s not where the problem is and that’s not where our focus should be.” I think it’s a really interesting point.
JJ: Well, let me add to that, because – if you even think about these training programs that are for entrepreneurs of color… Why does that particular group even need a separate program? Right? It’s because these are groups that have been excluded. And I think sometimes when people think ‘excluded,’ they’re like, “Oh, no, we’re not excluding anyone.” But if you’re not intentionally including, then it often has the effect of excluding. And that’s the challenge, is that oftentimes, the programs that exist for training and supporting any entrepreneur, business owner, or founder – they are not intentional about inclusion. And so we get the exclusion, and that creates the need for these programs in which people actually often feel othered. And I think that’s a real problem; this othering. It’s, “We’re gonna have this over here for these people.” Which can have the effect of, again, making them feel, these groups feel like, “We have to have this over here, special, because we are deficient in some way.” Now again, I certainly believe people who have certain commonalities can find support in that. So groups who are supporting women, groups that are supporting veterans – those are all good things, and there’s nothing at all wrong with that. But it’s when there is an othering of these groups. It’s not that “Hey, I’m finding my tribe. I’m finding my community of support.” It’s when, “I feel othered because I cannot get into these existing programs and resources.” And somehow the people that are in certain high profile incubator programs, or accelerators, or who receive capital and then become part of the networks and people take them under their wing – nobody is saying, “Hey, you didn’t know.” Everyone is saying, “We believe in you and we’ll invest not only our money, but we’ll invest our time, our resources, our energy, we’ll open doors.” And that is how it happens. And that is how it should be happening for Black and brown entrepreneurs, for women, again, across the board. That is when we will actually see inclusion.
WC: It seems like there’s a lot of these programs for entrepreneurs of color-
JJ: All these things, and they’re still not getting access to capital. That’s the problem. You know? So then it’s like, “What do I have to do to actually get the money?” And so again, that’s how we know – that’s just not the actual problem. Because it’s not that they’re just taking these different programs and then getting capital. They’re still not getting capital. So it’s a broken system. And back to the point about the false narrative about risk or tradeoff between investing in a more inclusive and investing more narrowly, again which suggests that only white men are worthy of investment. The example that I use very often is what happened with the Negro Baseball League. Major League Baseball thought that they had all the best players, and their players were very good. It’s not to take anything away from the players that existed. But once the Negro Baseball League players were able to play in the MLB, once they were no longer excluded, we saw that some of them rose to the top. Not all of them. But some of them rose to the top. So it was actually a false narrative that the MLB had all of the best players. Some of them were good, but we saw others rise to the top. And so if you put that lens on the community of innovators – by not looking at a more inclusive group of innovators, potentially we’re not even getting the best returns on the dollars that are being invested.
WC: Something that kinda reminded me of is that there’s a lot of data that shows that investing in diverse founders actually leads to higher returns. I’ve talked to a couple entrepreneurs and they say that this puts them under a lot of pressure because they now find that when they talk to investors, they feel they need to give this promise of high returns. Even though if you look at entrepreneurs, just as what you said, there’s a proportion that’s inevitably going to fail and a proportion that’s inevitably going to succeed. Having a level playing field at the start is important, but also recognizing that not every single founder, no matter what color, no matter whether they’re male or female, there’s a chance that there’s going to be a failure and there’s going to be a success is something that’s important to recognize as well.
JJ: Absolutely. And the way that I look at that is that really what we should be saying is, “We need to be more inclusive about the opportunity.” Because most are going to fail. That’s how it is. And you’re then looking in the VC world – it’s, “OK, out of that, do we have that one big huge win?” Maybe someone who you have previously excluded could’ve been one of those winners. How do you know that they wouldn’t have been one of the winners? And I think we do have to understand that everyone should have the same right to fail. The success? That’s gonna be few and far between. But everyone should have the same opportunity to fail. We see all the time, this sentiment, “Well, we invested in one Black founder and it didn’t work out. We invested in that one and it didn’t work out. See what happens.” But no one stops to say, “We invested in a hundred white men, and eighty of them failed.” It’s because there is a presumption of what should happen. “Well, not all entrepreneurs succeed, but if we pick this Black one, surely they will succeed.” And I also think that we have to be a little bit careful with how we talk about that diversity narrative. We hear it tossed around a lot, “diverse teams perform better.” And I just had this conversation with two good friends recently, that often when you look at diverse teams that are in certain circles, what it took for those founders – or even if you’re looking at anything, across the board in any profession and there are few women, or there are few people of color – when you look at those individuals, oftentimes they are exceptional. They’re not just good. They’re not average. They’re exceptional individuals who are top performers. Regardless of anyone, they are top performers in their field. And that’s why you’re getting outsized return – it’s not simply because the teams are made up of random people from all these different backgrounds. It’s because for these people to even be in the room, they had to be superior.
WC: So switching gears slightly, I’d love to talk about the work IFEL is doing to increase access to capital and how investors and venture capitalists can actually work in actionable steps to solve this problem.
JJ: Yeah, thanks for asking that, because – the direction which we’re really trying to go is one about changing mindset, and changing the narrative around the problem of access to capital. It’s not that capital doesn’t exist. Capital in the United States of America is plentiful. It’s all around us. The issue is that it’s concentrated in the hands of a few. And it’s a clubby environment, do not get me wrong. It’s individuals’ money, money that people have now – institutions, that’s a whole ‘nother story – but even when you talk about how people make decisions, we all tend to gravitate to people we know who have similar interests, etc. So in and of itself, that’s not a problem. It’s human nature. But what we all have to do is recognize the biases that we have, and how we’re making decisions. And what we need to do is be open to even taking meetings and building relationships with people who are outside of our comfort zone. When I say, “outside of our comfort zone,” what we have to understand is that the fact we even think they’re outside of our comfort zone may not be a rational thought. It may be based on some bias that we have, right? So what we’re really trying to do is change mindset, we’re trying to change the dynamic – especially in the investor community – that it’s, “Hey, expand your universe of relationships.” Because it does start there. We’re not saying to willy-nilly go out there and just start throwing dollars at people who you don’t even know who are not in networks with which you’re familiar. We’re saying, start changing your network. Be more inclusive about your network. The things that we often focus on are really actually not the things that make us different. And so we have to think about our networks and being, again, inclusive in a very intentional way, and once we get to know other people, that’s when things start to open up. That’s when access to capital and resources and all of that will open up. Because I will no longer then be looking at someone and saying, “I’m just shutting them out because I don’t see a possibility that that person can produce a return if I invest in them.” I don’t have that same bias. I will look at them differently. That’s what we’re trying to do, is get people to widen their aperture.
I’ll give just a quick illustration of this. Growing up – and I said I grew up in the Midwest, and my parents are pretty conservative in their way of being. And I grew up at a time when people didn’t really get tattoos so much; people who got tattoos were kinda laborers, or people who were not going on a college track or a professional track or all that. And people who had a tattoo, it was kind of like, “Oh, that’s a little naughty,” and you certainly don’t get it in a place that is visible. Well, fast-forward, I have four sons, and my oldest two have tattoos. Is that my choice? No. [Laughs] And people who know me are like, “Oh my gosh, Jill. I can’t believe you allowed that.” Well one, they were at the age – it wasn’t me “allowing” them, per se. But my oldest son graduated from the University of Michigan with a degree in economics. My second son is pursuing a degree in economics at Rutgers. They’re both super smart, great kids, have all the potential in front of them. And thinking about this tattoo thing – because of my children, and again, many of their friends even, it’s more common. And people who I’ve hired at our organization, people have tattoos. I no longer look at people who have tattoos in the same way. So someone showing up for an interview – it might not have been a conscious thing, but subconsciously, like, in my mind, going, “Oh, they’re not going to work the same way.” And because I have had people in my family with tattoos and overcome this bias that I had, or being able to recognize that I had a bias that didn’t even play out, I have been able to look at that different. Now, that’s a minor, very silly example, but it illustrates the point that we all have our biases that we bring to any conversation, to any interaction, and we have to think about it. We have to be able to check that at the door and open ourselves to getting to know people, who they are. And in a selfish way, the return that they may be able to produce for us as an investor. That’s what it means to be an economic being in a capitalist society. And I think if more of us get to that point, many, many of us will be better off.
WC: Wow. First of all, I love the way that you broke down the solution to breaking the bias. Even that first step of, “OK, we know we have to change mindsets, and one of the things that we can do that’s tangible to change mindsets is that we can help people expand their networks and connect on things that they might have that are shared experiences.” And I love that because it’s something that’s tangible that you can actually implement. But I feel like oftentimes, like we said at the beginning of this podcast, a lot of things that are talked about are often just lip service. There’s no real way to implement or think about changing mindsets unless you actually think about, “How does this actually look for an investor day by day, what parts can we intersect and what parts can we change about the way that they interact.”
JJ: And it’s what we can each do as individuals. So it’s not waiting for the system to change, the government to change, some institution to change – it’s, “What is it we can each do in our day-to-day lives?” Just meeting people and talking to people about their experiences, getting to know them, and always looking for a way to include. You attend a networking event and you’re a member of a country club. Invite someone new who hasn’t had that experience, who hasn’t been a part of that. Invite folks to attend an event with you. Now, when you do that, you do need to go an extra step in helping them to feel comfortable and signaling to everyone else, “Hey, this person’s with me. I think they’re OK, so you need to think they’re OK.” Everyone’s not going to be receptive to doing that, but those are the things that we can each do in our own personal lives that, if enough of us do it and we do it enough over time, that’s how thinking becomes different, that’s how actions are different, and that’s how systems change.
WC: I would love to ask you, where do you find hope in the space of investment and where do you feel like we’re shifting toward a positive future?
JJ: I think that there’s a lot of hope. I mean, I’m an eternal optimist. You have to be doing this work. And my father would always say, “Think about the possibilities.” I think that there’s a lot greater awareness now. I think back to the earlier point of talking – just the fact that people are talking about these issues, you know, I think that is good. People talking about this, and saying, “Well, if people are going to talk about it, then I’m going to talk about it in an honest and authentic way.” That is positive change. Where we’re going is really doubling down on this work, seeking more partners that get it, that think in a similar fashion, that want to address issues at a systemic level. My parents had a publishing business and I was hearing back then about issues of access to capital and challenges; I don’t want this to be the same conversation that my children have if they decide to start a business. I want things to be different twenty years from now. I don’t want to be having these same conversations twenty years from now. There might be other [laughs] conversations that are being had, but these issues of being excluded should just not be happening in the same way. And so I think what we have to do is to be intentional. We want to engage individuals to act, and act in a way that will open doors and that ultimately will lead to systems change.
WC: I cannot wait to see the future – the positive future, but also the work that IFEL is going to do. There is so much positive impact that’s happening now, but down the road for sure. Thank you so so much for joining us on the Venture Equity Project Podcast today. For the audience who want to keep following you your journey and to continue to follow IFEL’s journey, where and how can they do that?
JJ: You can follow us on social media, and we are @wocconnecting on all the platforms. That’s the best way to follow us. And you can also go to our general website, which is weareifel.org.