Blacks Just 1% of Financed Internet Start-ups So Far in 2010

Before presenting its charts, CB Insights reported, 'When we ask venture capitalists what gets them excited about the young, emerging and unproven companies in which they invest, we never hear about deals and dollars. Rather the first answer is frequently 'the team' or 'the founders.' '

African Americans are dramatically underrepresented among the founders of Internet start-up companies, according to an analysis of the founders of private, early-stage Internet companies that raised their first round of institutional venture capital funding in the first six months of 2010.

The private investment research firm CB Insights found that whites were 77 percent of population but 87 percent of the start-up founders; Asians were 4 percent of the population but 12 percent of the founders; and blacks were 11 percent of the population but 1 percent of the founders. Native Americans barely registered, and "other races" accounted for 7 percent of the population. Hispanics were not listed; they are not a race.

Other findings of the first-ever Human Capital Venture Capital report, as summarized by Sherri L. Smith for BlackWeb2.0:

*"The majority of the black founders were part of an all-black founding team. As far as mixed raced founding teams, New York led the pack with 14% with California and Massachusetts bringing up the rear with a close 13%.

*"The median amount of funding secured by an all-black founding team was $1.3 million, compared to $2.2M for a racially mixed team, and $2.3M for an all-white team.

*"Asian teams secured the most funding with a median range of $4 million."

The report said that "nationally, South Asian and East/South Asian founders are funded to a similar extent."

"So what does this mean for burgeoning black techpreneurs with the next great Web breakthrough?" Smith wrote. "If you’re a younger company, New York’s Silicon Alley might be the best place to start your business. With an increasing population of young start-ups setting up shop, NYC is the best place for a fresh-[faced] talent to catch the eye of a potential investor. Overall, African Americans are still underrepresented in both the tech and entrepreneurial sectors."

Raising venture capital for media start-ups was a focus of the Eighth Annual Access to Capital and Telecommunications Policy Conference last month in Washington.

At a standing-room-only question-and-answer session at the conference, sponsored by the Minority Media & Telecommunications Council, three members of the Federal Communications Commission said minority communications entrepreneurs should be focusing on opportunities in new media, according to a report from John Eggerton of Broadcasting & Cable.

"All three commissioners also said access to capital was the top barrier to boosting minority participation," Eggerton continued. "The other side of that equation is that the opportunities in traditional media are on the wane, they suggested."

The commissioners were Robert McDowell, Meredith Attwell Baker "and, via a sometimes hinky video link, Mignon Clyburn."

In the 17 years that the FCC's minority tax certificate policy was in effect — from 1978 to 1995 — the scant minority ownership of broadcast properties multiplied," Michael D. Berg, a veteran Washington communications lawyer, wrote Friday for TVNewsCheck, an online industry trade publication.

"The policy produced 364 tax certificates and 200 media transactions totaling more than $1 billion in value. That represented about two-thirds of all minority-owned stations.

"When the policy began, minorities owned about 40 of 8,500 broadcast stations. Over its lifetime, the policy helped raise that number to 333 — 290 radio stations and 43 TV stations. It also yielded 31 cable systems," wrote Berg, whose piece was titled, "Time to Revive Minority Tax Certificates."

"The policy encouraged the sale of broadcast and cable properties to minority-owned buyers by deferring sellers' capital gains taxes. Providers of capital to new minority companies also received tax incentives.

"But in 1995 Congress repealed the policy. . . . Since the repeal and passage the following year of the Telecommunications Act of 1996, which paved the way for further consolidation of station ownership and narrowed opportunities for new entrants to the broadcast business, minority ownership has decreased by about 14%. That is despite the rapid growth in the percentage of minorities in the population. According to a Free Press study, in 2006 minorities composed a third of the population and owned less than 4% of TV stations and 7% of commercial radio stations.

"As a result of these developments, right now in Congress, the FCC and the broadcast and cable industries there is new movement toward creating an updated tax incentive policy. . . . Late last month at the annual conference of the Minority Media and Telecommunications Council (MMTC), Sen. Robert Menendez (D-N.J.) announced his intent to introduce new tax incentive legislation that addresses and remedies concerns about the earlier policy."

Berg is also the co-author of "FCC Lobbying: A Handbook of Insider Tips and Practical Advice."

Sen. Robert Menendez, D-N.J., "has released a 'Corporate Diversity Report' with the results of a survey of 537 companies that appeared in the Fortune 500 in 2009 and 2010. At the five media/entertainment/marketing companies that responded, says the report, 13 of the 59 board seats are held by women and 11 by minorities. On those companies' executive teams, 11 of 58 positions are held by women and three by minorities," Radio Ink reported on Thursday.

"Menendez said the purpose of the survey, which also looked at, among other industries, energy, financial services, telecommunications, and technology, 'is very straightforward — to gain a better understanding of what minority and female representation looks like on corporate boards, in senior leadership and in the procurement of goods and services."

In Washington, President Obama told young African leaders such as this one, 'young people are more prone to ask questions, why shouldn’t we have a free press?' (Video)

"One out of 10 delegates participating this week in U.S. President Barack Obama's Young African Leaders Forum was a journalist," Mohamed Keita, Africa advocacy coordinator for the Committee to Protect Journalists, wrote Friday.

"The forum, a U.S. initiative meant to spark discussions on the future of Africa in a year when 17 countries on the continent are celebrating 50 years of nationhood, did not overlook freedom of the press, as I witnessed in its final event on Thursday at Washington's museum of news, the Newseum.

"The venue for Thursday’s event, a conference center named after the publisher John S. Knight, was perhaps fitting after the forum’s Tuesday town hall meeting at the White House featured significant references to press freedom. Addressing 115 of the brightest and most enterprising 20- to 30-something leaders in activism, business, health, innovation and media in Africa on Tuesday, Obama singled out, among others, a Botswana journalist (Itumeleng Ramsden) for inspiring young people with her popular radio show, and a journalist from Ivory Coast (Aminata Kane Epse Kone) for championing the cause of Muslim women on her radio station. In a Q&A session, the president mentioned press freedom while praising the ability of youth to challenge the status quo.

" 'In some of your countries, freedom of the press is still restricted,' Obama said. 'There’s no reason why that has to be the case. There’s nothing inevitable about that. And young people are more prone to ask questions, why shouldn’t we have a free press?' "

Meanwhile:

*In South Africa, Mzilikazi wa Afrika, who wrote a series for South Africa's Sunday Times on alleged corruption by senior officials, was arrested and detained for 48 hours, the Associated Press reported on Friday. The South African National Editors Forum said such an arrest has been rare since the end of the apartheid era in 1994.

*Rwanda's Media High Council suspended some 30 news media as the nation prepared for Monday's presidential election, Reporters Without Borders reported. "Press freedom violations, including the jailing of journalists, the closure of news media and the murder of a newspaper editor a month ago, have intensified in the run-up to the election."

*Senior Eritrean Advisor Yemani Gebreab told Swedish daily Aftonbladet that the government had decided to 'move forward,' leaving imprisoned journalists in the eternal oblivion of indefinite detentionMohamed Keita reported for the Committee to Protect Journalists. "Since a week after September 11, 2001, when the government of Eritrea threw into secret prisons journalists from its once-vibrant private press, the only certainty it has offered about the fate of the prisoners has been ambiguity."

*Alagi Yorrow Jallow, a 2007 Nieman Fellow who fled Gambia in 2005, wrote Wednesday for Nieman Watchdog, "Government actors regularly wage violence against private media outlets and journalists that publish articles deemed inaccurate or unfavorable to the junta. Such violence can take the form of harassment, detention at the hands of National Intelligence Agency officers, arson and destruction of property, arbitrary arrest, torture, and even murder. As a result, Gambian journalists have little choice but to practice self-censorship in their daily work." Jallow has been granted asylum in the United States.