August 19, 2022

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— Diversity and inclusion are concepts that have made inroads in the business world, but...

Diversity and inclusion are concepts that have made inroads in the business world, but the fact remains that many companies in the startup phase are homogenous. Gender and racial diversity are frequently overlooked when setting up startup firms. However, a diverse slate of C-suite employees can help attract attention and ensure that the company is run with many complementary skills.

Suraj Kumar Rajwani, venture capitalist and the CEO of DoubleRock, shares why diversity and inclusion are so important for startup companies.

Diversity Statistics Among Startup Companies

The diversity gap plagues the global business world. In the United States, 77 percent of company founders are white. In Europe, this figure shoots up to 84 percent. Most venture capital funders are from North America, so only a small fraction is invested in international emerging markets. This reinforces the stereotype that only foreign-owned companies can make it in developing countries.

Suraj Rajwani reports that only 3 percent of venture capital funding in 2019 went to female-owned startup companies. However, by the end of 2019, 20 percent of startups had a female CEO in their first round of funding. This doubles the figure set in 2009.

Most Startup Companies are Not Interested in Increasing Diversity

Silicon Valley Bank released a report in 2020 detailing the inner workings of startup companies. According to the report, only 26 percent of startup companies are interested in boosting diversity in their leadership teams. Under half of these companies stated that they had goals related to promoting and hiring women and people of color. Only one in five companies were interested in promoting diverse hiring practices in the C-suite.

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Advantages of Diversity and Inclusion

When startup companies neglect diversity and inclusion, they miss out on a wide range of advantages. Companies with diverse executives and employees are less likely to fall into the trap of tunnel vision, where their perspectives are overly similar to those of the company founder.

Homogenous teams are less likely to formulate innovative solutions to problems. Since diverse teams have different types of education, thought patterns, and fewer biases, they are less likely to fixate on unproductive ideas.

Creativity flourishes among diverse teams. Diverse teams can come together and debate each method’s merits, coming to the best conclusion. Differences in education and background can lead to new pathways for ideas.

Paying attention to underrepresented voices can highlight issues that other companies ignore. This means that diverse startups have a better foundation for creating opportunities. They may see ways to make products more profitable.

Companies without a diverse and inclusive perspective may miss risks that others spot right away. These insights are only available to companies willing to look past a homogenous view of how a startup company should be led.

How to Encourage Diversity in Hiring

Workplace diversity centers around the concept that a company should reflect the makeup of the society around it. Teams should hire various employees based on socio-economic levels, race, gender, sexual orientation, religion, and more qualities.

Companies need to let go of their biases for or against any employee to encourage diversity in hiring. Diversity recruiting is a merit-based recruiting system, but it strives to give all applicants equal opportunities.

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One of the best ways to encourage diversity in hiring practices is to ensure that your recruitment ads speak to a broad range of candidates. Some of the languages you use may be targeted toward a particular demographic. Broaden your language and make sure that it is more diversity-friendly.

It is a good idea to target the areas where diverse candidates can be found. Referrals from current employees can be valuable, as can advertising in online and offline communities where people from different backgrounds congregate.

Targeting specific demographics with social media advertising is easy, effective, and relatively inexpensive. By targeting the groups you want to hire, you will find more qualified candidates.

Branding is one of the most crucial ways to help your startup attract diverse job candidates. Building diversity into your company culture can be a vital part of encouraging diverse candidates to apply to work in your startup company.

Diversity Works for Startups

Diverse teams bring new voices and ideas to the conversation, especially in the C-suite. Understanding how diversity works in the startup company may take some research and thinking. Still, this enterprise is entirely worth it when it comes to strengthening the underpinnings of your company.

Suraj Kumar Rajwani understands that encouraging diversity in your startup company can be difficult. Still, he maintains that it is a worthwhile enterprise for companies to approach their work with an unbiased perspective.

This content is brought to you by Amanda Maladay.

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The post Suraj Kumar Rajwani, CEO of DoubleRock, Discusses The Importance Of Diversity and Inclusions When It Comes To Startups appeared first on The Good Men Project.

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