As the conversation surrounding diversity in the startup scene continues, Texas, and DFW in particular, is getting some accolades.
According to a recent report by fintech company Self ranked North Texas as one of the regions with the largest number of minority-owned startups. And that comes on the heels of a study by Merchant Maverick, which ranked Texas as one of the 10 best states for women-led startups.
“In addition to being a critical driver of growth in the economy overall, entrepreneurship is one of the many ways that individuals can build wealth in America,” the Self report said. “But as 2020 has illustrated, opportunities to participate and succeed in the entrepreneurial economy are not equally distributed by race and ethnicity.”
The Self report, which broadly defines a startup as a business that is less than two years old and looks at companies that had owners who self identify as non-Hispanic white to the U.S. Census Bureau, gave DFW the No. 9 spot of its “Cities with the Most Minority-Owned Startups” list, among metro areas with more than 1 million people.
According to Self, about 24 percent of the region's more than 5,000 new businesses are owned by a person of color. Collectively, those businesses employ nearly 26,000 people and totaled nearly $3.4 billion in annual sales, the report states. It also notes that the largest industries for founders of color were accommodation and food services, followed by retail trade.
Two other Texas cities landed in the Self report’s top 10, with the San Antonio region coming in the No. 4 spot, followed by Houston which came in at No. 5. In both cities, the percentage of minority-owned companies was more than 30 percent.
“While areas with large minority populations also tend to have higher concentrations of minority-owned startups, minorities remain underrepresented in small business ownership relative to their population levels,” the Self report said.
At the beginning of the month, a Merchant Maverick report, which used Census data and information from PitchBook, ranks Texas as the sixth-best state in the country for women-led startups. Overall, the report says about 20 percent of the state’s employees are working at women-owned startups. It also notes that those businesses have landed $365 billion in VC funding over the past five years. However, the report also notes that the nearly $56,000 average salary for self-employed women business owners in the state is lower than 30 other states.
“As an economic powerhouse, it’s not a shock to see the Lone Star State high up in these rankings,” the Merchant Maverick report said.
Colorado took the No. 1 spot, with Washington coming in at No. 2. The lowest-ranked state was Mississippi.
Those two reports add to the recent recognition North Texas’ startup ecosystem has garnered. Towards the end of last year, the region took the No. 2 spot on CompTIA’s Tech Town Index, which looks at a number of tech positions, cost of living and percentage-job growth. That marked a jump from the No. 7 spot on the index the year before.
That recognition can be seen in the venture-related investing numbers from 2020. According to the PwC/CB Insights Q4 2020 MoneyTree Report, the region reached more than $1.1 billion in investment funding – the highest it has been in nearly two decades.
“Hopefully, the rest of the country can… make entrepreneurship a more inclusive sector of the economy — especially during the rebuilding process post-COVID,” the Merchant Maverick report said.
