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DarkHorse and Affirmative Action in Entrepreneurship

By August 15, 2020November 23rd, 2020No Comments

“Adversity does not build character, it reveals it. – James Lane Allen

Affirmative action is a deceptively complex topic. The U.S. Supreme Court has ruled both in favor and against affirmative action cases, setting precedent for both outcomes to be plausible in the American justice system. Through this article, we hope to educate you about affirmative action and to show you how it’s inclusive effects are more positive. Using a handful of statistics, we will show that similar approaches are necessary within BIPOC entrepreneurship. Affirmative action does not disregard the content of one’s character, but rather allows people with strong character to achieve the success they wouldn’t have otherwise had the opportunity to due to societal barriers.

Affirmative action is the act of implementing a diversity status quo within an institution, whether public or private. The goal is to increase diversity in an organization while giving minorities and historically underprivileged people greater opportunities to succeed. The strongest objection to affirmative action is that under-represented individuals could be less qualified for a position compared to a white person and still obtain the position sought-after, which is discriminatory and unconstitutional. This, however, is not the reality when affirmative action is undertaken correctly and in an equitable manner.

This led to the heavy criticism of racial quotas. We equate affirmative action to quotas, a subsection of the collective designated for minorities. This method has been supported in court and is a convenient way of implementing affirmative action.  It is a strong way of quantifying diversity within an institution and offers a wider array of perspectives but, this isn’t the only viable way of implementing affirmative action. For example, the Bank of America has released information showing that 47% of their workforce are people of color. They have accomplished this by offering leadership, peer to peer, and mentor initiatives for workers of color to expand their career horizons, and create a more diverse workforce. 

The earliest case of affirmative action took place in 1978 at the UC Davis medical school where a white male applicant named Allan Bakke was rejected twice. He argued that his test scores were greater than other applicants accepted through affirmative action procedures. He won. Cases like this have shown themselves not only to be controversial throughout recent years, but also incredibly divisive, even if an individual believes in equal opportunity. The general idea solidified through this precedent was that merit should be the only deciding factor in the pursuit of any opportunity, not race or ethnicity.

So, what defines merit? Merit is defined as “the quality of being particularly good or worthy, especially so as to deserve praise or reward.” But what constitutes being ‘worthy’ or ‘good’? Worthiness should entail the obstacles overcome, the resilience built, and the character portrayed in a candidate. This form of merit can be quantified through affirmative action and placed within institutions accordingly, but that doesn’t always occur due to legacies.  

Legacy is the antithesis to merit-based candidacy and the real obstacle needed to be overcome in affirmative action, particularly in schools. Legacy involves holding a preference for individuals with successful connections, whether they be parents, school teachers, friends, or others. In some cases, it’s about who you know. Many schools have legacy protocols during admissions. A study done by the Students for Fair Admissions Inc found that legacy students were accepted at a rate of 34% between 2009-15, an acceptance rate 5 times higher than non-legacy applicants for schools with a legacy admissions process. The reason legacy contributes to systemic racism is because these legacies are entrenched in white superiority. The majority of these ‘legacy students’ are white, thus exacerbating the under-representation of the Black, Indigenous, People of Color (“BIPOC”) community in university education, and later in business and career successes.

When it comes to overcoming obstacles, an overwhelming amount of studies outline the hardships BIPOC entrepreneurs face in comparison to white entrepreneurs. This is not to say that white entrepreneurs don’t struggle as they do, building a business is an uphill struggle for all, but the hill is steeper for BIPOC individuals at times. Barriers to entry for BIPOC entrepreneurs are greater. In 2018, Black-owned businesses, on average, received the funding they applied for only 31% of the time compared to 49% for white-owned businesses. This is not necessarily due to outright discrimination, but also the types of businesses BIPOC are able to start compared to others, having, on average, lower education levels and fewer opportunities. Seeking funding is critical to achieving a sustainable business. The majority of Black-owned businesses are smaller local shops, restaurants, and boutiques, which require capital upfront.

These businesses are the ones that play close to the chest. Many continue their business month to month with less stability.

Source of graphic: The New York Times

The graph above from the JPMorgan Chase Institute shows that the capacity for businesses in Black and Hispanic neighborhoods to go through a slump in business or seasonal depression is less than the capacity of the same businesses in white neighbourhoods. This creates a volatile Black entrepreneurship community with lower chances of tenured success.

Ken Harris, the President of the National Business League in Washington stated that “Most (BIPOC businesses) lack the capacity, scale, and technical assistance needed to survive a pandemic.” The situation depicted above has most definitely been worsened by the current pandemic, fostering all the more reason and motivation for action.  

Source of graphic: The New York Times

Here at DarkHorse, we will be taking a different approach, one that does not involve quotas, legacy, or other means that could be perceived as counterintuitive. We will build a community. Our community will not hold superficial indicators of diversity, but will instead target low-income and less developed communities for entrepreneurs to learn and gain experience, with an emphasis on founders of color. 

Our affirmative action plan is based on playing a long-term game, including goals of raising $1 billion over the next decade and assisting in the development of these early-stage startups with an emphasis on continuous relationships well after the conclusion of the program. The statistics included above are part of the reason why we are on this mission. DarkHorse seeks to bridge these gaps and decrease the disparity. 

Entrepreneurs exist everywhere. For years, politicians have acknowledged their importance to the economy. Still, there will be entrepreneurs with valuable perspectives and innovative ideas that will go unheard. This is due to systemic barriers placed in front of them regarding funding, educational opportunities, and the overall lack of assistance directed at their communities. This is why affirmative action is needed. Affirmative action will equip underprivileged individuals with the tools they need to innovate, create jobs, and live a fulfilled life. DarkHorse, the accelerator program stewarded at Space Age and partners, will do exactly that.

For more information about how markets, education levels and access to capital hinder BIPOC entrepreneurs, check out this report done by the Ewing Marion Kauffman Foundation.

Get our accelerator program information on DarkHorse here.

~ Jack & Team

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