When you think of startup founders, the people you picture may all be similar. Historically, the most prominent startup elites have been. Most have come from large tech hubs like San Francisco and New York, and many from wealthy backgrounds and prestigious universities.
That’s starting to change. While the world’s eyes may linger on Silicon Valley when watching for the next industry disruptors, they may not find them there. The next batch of startup leaders will likely come from more diverse, and perhaps unexpected, places.
The conditions that produce leading startup entrepreneurs are shifting, and with it, so will the entrepreneurs themselves. Here’s why.
Major Tech Hubs Are Shifting
In the past, startups have clustered around larger cities with more established tech cultures and opportunities for connection. COVID-19 has upended that trend by starting a remote work revolution. As of December 2020, 71% of American workers worked from home, compared to just 20% before the pandemic.
This shift to remote work led to a shift away from larger, more expensive cities. Over the past year, 82% of urban centers saw more people leave than move in, and 91% of suburban counties saw the opposite. This migration could help entrepreneurs from more rural areas find the success they might otherwise only find in the city.
Now that working remotely is more widespread, it gives people from these smaller areas an opportunity to get involved in tech. Rural entrepreneurs will also benefit from the lower cost of living in these towns. Since they have less overhead outside of large cities, it could be easier to get their businesses up and running.
Historical Barriers Are Fading
Another changing trend affecting where startup elites come from is the removal of historical barriers. In the past, implicit racial and gender biases have largely kept women and people of color from becoming successful startup leaders. These biases served as a barrier to the necessary funding or education to compete.
While there is still plenty of progress to be made, these barriers have started to fade. For example, funding for Black entrepreneurs quadrupled in H1 2021 compared to H1 2020. As these trends continue, more historically underrepresented demographics will be able to make an impact.
Despite this recent progress, there are still some headwinds that may slow this shift. Black startups only received 1.2% of the record $147 billion in venture capital invested this year. Still, initiatives and organizations like Black Girls Code, which provides STEM education to Black girls, can help move past these obstacles.
Funding Is Becoming More Democratized
While entrepreneurs had to find funding from wealthy investors or organizations in the past, that’s not necessarily the case anymore. Funding is more accessible than ever, thanks to services like crowdfunding apps. These apps make it easier for anyone, regardless of location or prior experience, to access funding for their startup.
Crowdfunding platforms raised $73.93 billion in 2019 in the U.S. and Canada alone. That level of investment can help entrepreneurs who may not have access to venture capital get the funding they need. This democratization of funding helps people who don’t come from traditional tech hubs or business backgrounds compete with those who do.
Other democratized funding methods have also grown. Employee stock ownership plans (ESOPs) are gaining widespread appeal, as they are highly profitable for business owners and promote employee dedication. These help entrepreneurs gain capital and power either as a business owner or employee in another company.
In some sectors, startup confidence is waning among investors, making funding more challenging. Consequently, these more democratized approaches to gaining capital are increasingly valuable.
Education Is More Attainable
Finally, education has become more accessible, helping people from more varied backgrounds acquire the tools they need to succeed. Just as remote work grew amid the pandemic, so too has distance learning. Many universities started to offer remote learning amid COVID-19, and 33% of post-secondary administrators say they will continue to do so.
Online learning makes quality education more accessible to people who face geographic or economic barriers. Online courses are often more affordable than in-person alternatives, helping remove historical economic challenges. Similarly, their flexibility lets students who may not be able to travel to a top university still access their courses.
These factors let people from more diverse backgrounds get the competitive education that investors may look for. It also gives people a chance at pursuing a career as a startup owner that they may not otherwise have.
The Next Generation of Startup Elites Will Be More Diverse Than Ever
The current generation of startup elites generally lacks diversity, but that’s changing. While significant challenges remain, long-standing cultural and economic trends are shifting. These changes are giving people who have historically faced significant obstacles a chance to succeed in competitive industries.
As these trends continue, startups will be a more inclusive field. The next generation of startup elites will come from more diverse geographic, cultural, and economic backgrounds.
About the Author: Devin Partida writes about startups, business and innovation. Her work has been featured on Entrepreneur, AOL and Yahoo! Finance. She is also the Editor-in-Chief of the tech publication ReHack.com.