Venture Capital, Entrepreneurial Ecosystems and Inclusion

Season 3, Episode 13

Join us for episode 13 of the CitySCOPE podcast.  We speak with Banu Ozkazanc-PanProfessor of Practice at the School of Engineering and Academic Director of the IE Brown University EMBA program. She is also the Founder and Director of the Venture Capital Inclusion Lab at the Nelson Center for Entrepreneurship.  In conversation with Kate Cooney, Senior Lecturer at Yale University School of Management, topics include: the role of entrepreneurial ecosystems in a regional economy, research on equity and inclusion in entrepreneurial ecosystems, gender bias in capitalization of start-ups, the role of racial and gender wealth gap in the entrepreneurship journey, practical steps we can take to build more equitable ecosystems, and what’s at stake if we do not do so.  


1. Banu Ozkazanc-Pan faculty website

2. Ozkazanc-Pan, Banu, and Susan Clark Muntean. Entrepreneurial Ecosystems: A Gender Perspective. Cambridge University Press, 2021. here

3. Kanze, Dana, Laura Huang, Mark A. Conley, and E. Tory Higgins. “We ask men to win and women not to lose: Closing the gender gap in startup funding.” Academy of Management Journal 61, no. 2 (2018): 586-614. here

4. Camille Busette and Fred Drews. How social networks impact economic mobility. Brookings Cafeteria Podcast. February 12, 2021. podcast

5. Goldin, Claudia, and Cecilia Rouse. “Orchestrating impartiality: The impact of” blind” auditions on female musicians.” American economic review 90, no. 4 (2000): 715-741. here

6. JPMC and ICIC. Creating Inclusive High-Tech Incubators and Accelerators: Strategies to Increase Participation Rates of Women and Minority Entrepreneurs, 2016. here

7. Organizations mentioned: Cambridge Innovation Center, Venture for AmericaEforALL, Village CapitalTampa Bay WAVE, SEED SPOT, Entrepreneurially Thinking podcast

Episode Transcript: 

Kate Cooney (00:00):  

This is CitySCOPE. 

Eun Sun Cho (00:01):  

A podcast on cities and inclusive economic development from the Yale School of Management. 

Kate Cooney (00:07):

Are we ready? 

Manuel Morales (00:08):

Let’s go.

Kate Cooney (00:24):

Welcome to episode 13 of season 3 of the CitySCOPE podcast. I’m Kate Cooney, senior lecturer at the Yale School of Management. Today, we continue our exploration of networks, access, and venture capital with Banu Ozkazanc-Pan.

Banu Ozkazanc-Pan (00:42):

My name is Banu Ozkazanc-Pan. I’m a professor in the practice of engineering at the School of Engineering at Brown University. I’m also the founder and director of the Venture Capital Inclusion Lab, which is part of the Nelson Entrepreneurship Center, also at Brown University.

Kate Cooney (00:59):

Hi Banu. It’s great to have you here. I’m really interested in talking with you about your work on entrepreneurship and entrepreneurial ecosystems. So just to start sort of big picture. We hear so much talk these days about ecosystems of entrepreneurship. What’s so important about ecosystems? Why do you think there’s so much focus on the ecosystem for entrepreneurship?

Banu Ozkazanc-Pan (01:23):

Yeah, thank you for having me, Kate. It’s such a pleasure to be here. And I would say that ecosystems are important because as city developers, as anyone who’s interested or supports entrepreneurship has realized, it’s not a solitary activity. There are a host of actors and structures that need to be in place, that need to be supportive, that need to share and create opportunities for access to resources in order for entrepreneurs to be successful. And so rather than only focusing on individuals and what they’ve done as entrepreneurs, I think a whole host of policymakers, ecosystem actors, and entrepreneurs themselves have realized that they’re part of a system. And so when we say ecosystems, we’re really trying to understand what are those structures in place that can support entrepreneurs and more generally, entrepreneurship activities.

Kate Cooney (02:19):

Yeah, it’s interesting when we think about city officials and the interest in thinking about entrepreneurial ecosystems as actually part of an economic development strategy. What are some of the hopes for these ecosystems from the perspective of a city economic development agency?

Banu Ozkazanc-Pan (02:39):

That’s a great question. This approach to economic development is more recent. In previous decades, I would say we had something like economic development by trying to woo anchor organizations and firms to come to the city with tax breaks, with some clawbacks that say, if you want this tax break, you need to create X number of jobs. And even those are newer. So in general, this is sort of grown from these approaches to economic development, where there’s an understanding that entrepreneurship is a driver of growth and to make sure that your city is the city that entrepreneurs want to come, start their companies, and scale. So it’s not just only bringing them here, it’s making sure they stay and then making sure they scale. So what we see around the country are different economic development agencies, whether they’re part of the state or whether they’re part of regional economic chambers or even at the local level of cities like mayors, putting together incentives and initiatives to really get entrepreneurs to choose their city. And more, I would say, importantly, they’re trying to get actual industries to choose their regions. So there’s sort of this individuals trying to make sure that entrepreneurship is associated with the city at the level of the local development agencies, but also more broadly, they’re really trying to create some regional synergies in saying, here’s the region where biotech can do really well, and we see some of those clustering of important industry niches happening across the US. 

Kate Cooney (04:22):

So an important dimension to these clusters would be an entrepreneurial spin off contingent related to some mature firms and then some spin offs in the cluster feeding into building the cluster and creating even more spinoff opportunities and so forth.

Banu Ozkazanc-Pan (04:44):

Yeah, ecosystems actually conceptually came from cluster analysis, which if you’re familiar with analysis, it says there is real, real advantages of scale and scope to clustering industries and organizations together. There’s competition, but there’s also cooperation. What ecosystem analysis and approach does is to say yes, those clusters are important, but what’s more important is how people connect to each other and resources. What’s happened at the regional development and city development is to understand that entrepreneurs are the engine of growth. So while you might have clusters of industries, they might eventually stagnate and so you need to really continue the whole lifecycle of opportunity. So not only do you need established firms, you need mid cycle firms, but you also need startups. And yes, there can be startups that come out of the cluster, but there can also be startups that come out of the university context in any other sort of educational institution that’s around, as well as more broadly from any other ecosystem actor where there is an identified market gap or need. And so you want to be able to support anyone who wants to become an entrepreneur to be able to do so. So as an economic developer, you’re really interested in understanding what are the target industries that are important for us to develop and support in our city and region? And do we have the human capital and the financial capital to support that?

Kate Cooney (06:14):

So let’s keep going along those lines in terms of what are some of the key elements of an ecosystem? You talked about human capital. One of the cases we teach in the classes that that I teach on economic development, we look at what’s happening in Pittsburgh, essentially taking some of the research activity that’s happening in Carnegie Mellon and some of the other big research universities and creating the space for the commercialization of some of that knowledge. And one of the stories that Richard Florida tells is seeing some of the firms that incubated move and how hard it is to keep firms in the region. And a colleague of mine was saying that one of the things that’s actually missing in a lot of Rust Belt cities are the human capital at the middle management level. One of the phenomenon of what happened in rust belts is that you had almost a whole generation leave. And so you don’t have that middle management skill foundation that can be really useful as startups get beyond a certain level of growth and start to need really talented marketers and you know, the kind of human capital you need at a certain phase of growth. I thought that was a really interesting insight into what can be missing. So human capital is important both at the beginning, but then at other phases of growth as well.

Banu Ozkazanc-Pan (07:42):

Absolutely. And generally in ecosystem language, you’ll hear that as being talent. We need talent, and it really is actually quite a little bit more nuanced because you need certain types of talent at different stages of your growth, of your scaling. And you’re absolutely right. Boston’s another city that’s known for growing but not keeping startups. They tend to move to other places, either for financing reasons or, most decidedly for talent. But going back to your question about sort of the elements of an ecosystem, there’s a few, and I start by sort of saying, “Well, what are ecosystems if we had to define them?” It’s really a series of actors and institutions and organizations who directly or indirectly support entrepreneurship and entrepreneurship activities. Now that’s a very large definition, and it could be almost anything, but really decidedly when we sort of speak about analysis or policymaking, we’re focusing on very specific things, and that includes the availability of finance. Mostly, we think of venture capital for the high growth, high scale opportunities that many startups represent, particularly if they’re in some manner or shape using technology. Second, we look at the ways in which social capital and networks can be either supported or engaged to make sure that there’s access to resources. So when we look at ecosystems, we want to make sure that networks are connecting people to resources and not just certain types of people, which I’m sure we’ll get into, but all entrepreneurs. You want to look at human capital and skilled labor, which generally falls under the auspices of sort of talent. And then lastly, you want to look at what are the ways in which entrepreneurs get supported in the ecosystem? What are those mentoring relationships? What are the co-working spaces and availabilities? What do the average rent of the city look like? Because it’s not simply you come and only do entrepreneurship. You’re just an entrepreneur. You live in the city. So does the city have sort of the amenities and sort of quality of life that you’re looking for? I think sometimes we forget that because we’re so focused on the business. But in reality, people choose cities not just because of the business, but because of the social dimensions.

Kate Cooney (10:05):

It’s interesting to think about all of these elements of the ecosystem, and I guess just like a biological ecosystem, it’s challenging to create the complex system that can produce at a level of a Silicon Valley, if we think about Silicon Valley is perhaps being as of source code for how these entrepreneurial ecosystems can work. In your work, consulting with cities and economic development groups, is there a place to start? Does the VC come at the end once you’ve got buzz about things that are happening? Is it a university actor that can trigger things? There’s probably multiple pathways, but what have you noted in your work about some of these levers and how they interact together?

Banu Ozkazanc-Pan (10:58):

So I would say there’s definitely a structural component of what are existing happenings or connections that eventually end up being really robust and formalized and scaled that may have gone either way. If you look at the history and story of Silicon Valley, there is quite a bit of luck associated with it, so chance, as well as the existence of higher ed institutions that have a specific focus on tech. It didn’t have to be, but simply they were, and they were individuals who were tinkering at the time. There is an element of chance that’s related to how people ended up connecting to each other and the opportunities that then came about. So when we look at the history of Silicon Valley, I would want to emphasize this. Yes, there were structures and opportunities in place, and people did recognize certain elements. There was also quite a bit of chance and luck. So when we try to, and I don’t think this is the case as much anymore. It used to be where we’re trying to replicate Silicon Valley in different parts of the world because we believe that’s a successful model. It also underscores the fact that we seem to think if we have the ingredients, that they would connect to each other in the same way in some other place and they don’t. We know that. And the other issue I would say is, there’s a real dark side to the Silicon Valley model, which is there are a lot of, I would say, negative externalities, negative impacts of the quote unquote success of Silicon Valley that’s related to inclusive economic development, the prices associated with living in Silicon Valley, as well as sort of the sustainability of that model. If we’re looking at what are we investing in and what are ideas and people that are getting left out, especially as we see a shift in both the priorities of the new generations of entrepreneurs, but also some of the climate and social issues that we’re facing.

Kate Cooney (13:02):

So let’s shift to this a little more directly. Maybe some people have this notion that these kind of ecosystems can be set up and then everybody can access them in a merit-based way. They’re sort of neutral conveyor belts that take anybody in the in the region who has an idea or a spark from idea to scaled firm. But of course, we know that that’s not how these systems operate, and that’s been really something that you focused on in your work is thinking about, for example, how do these ecosystems function differently for men or for women? Or what are some practices that can enhance inclusion or exacerbate exclusion? So I wanted to start by talking about your work in St. Louis unless there’s anything you wanted to say prior to that study about how you got interested in this topic and work that set up this work that you did in St. Louis.

Banu Ozkazanc-Pan (14:00):

That’s a great segway into thinking about why is it that if we build it, people don’t come, or only certain kinds of people come to access what’s available? And really, the work around St. Louis began when some of my colleagues and I were already interested in sort of the gender ways in which entrepreneurship gets done, the gendered outcomes of entrepreneurship practices and sort of the inequities that we saw in general in the field of entrepreneurship, both as scholars studying it and seeing that gender is often relegated as its own thing on the side, not central to how we think about entrepreneurship. Same thing with race. But at the same time, we were also seeing these gaps in the rates and outcomes associated with entrepreneurs by gender and race. And it happened that one of my co-authors at the time was living and working in St. Louis, and she was working on a grant and really wanted to delve deeper into some of the gender dynamics of what she was seeing. And at the time, so right around 2013, American Express was doing a state of women’s business across the U.S. and in that report, St. Louis came in dead last. And it was really fascinating from both a scholarly perspective, but also from having colleagues on the ground to understand why it’s so interesting. A city like St. Louis was on the verge of potentially reimagining itself after many of the industries that used to be its bread and butter left, and they were left with very few industries, including Anheuser-Busch, which employs a large number of people, but it’s not entrepreneurial per say or at least at the time. And so we were really interested in understanding how does a city come in last on this list? And at that time, my colleagues that were in the city were really interested in some of the real nascent activities that were taking shape, including some of the efforts by entrepreneurs who had individually done well but really wanted to give back to the community, and so they were creating networks by entrepreneurs for entrepreneurs, and so there was a real grassroots effort: entrepreneurs putting together panels, discussions, informal meetings, networks mentoring each other to support St. Louis becoming a better place for entrepreneurship. And as that was happening, I would say there was more interest on the university side to really support entrepreneurship. Much of this is due to the research and support that the Kauffman Foundation, supporting it through research and grants and really coming up with the ecosystems concept. It kind of diffused the concept across the US, so people started using ecosystem instead of any other language. And in our interest in looking at gender, we were really, really wondering what’s happening here as this ecosystem is really from the ground up trying to rebuild itself. And so we went in with an understanding that we’re seeing a gender gap. We want to understand why. And we started asking questions around that, both in terms of some of the emerging support resources that were coming to take shape there. And interestingly, over the years that we studied it, the Cambridge Innovation Center ended up setting up an outpost in St. Louis. The Cambridge Innovation Center is really well known in Boston, actually specifically in Cambridge of being a place for co-working, but also a place where companies come out with great innovations and become really successful. And over the course of our study, there was a lot more funding and money available so that you had not only the Cambridge Innovation Center, but their sister organization, Venture Café, which is a non-profit which hold Thursday nightly crowds of entrepreneurs and supporters to come together and talk across a variety of topics. And the person who was running it at the time used to run some of the programming in Boston. And so when you have that cross-pollination, you had all of a sudden the hub of activity around entrepreneurship. Entrepreneurship became important. You saw co-working spaces pop up and real buzz around the importance and relevance of entrepreneurship. You had universities supporting it. You had these informal networks that became formalized and at the same time, you had a real keen interest in inclusion, which is different than other ecosystems that have grown and scaled and said, “Oh, in hindsight, this should have been something we did.” It’s a lot more difficult to do inclusion once you’re established. So St. Louis is a good model for that. It’s not perfect, but it’s a good model for looking at grassroots, for looking at the relevance and intentionality around inclusion at the start of the coalescing of the ecosystem. And then as we look at it now, at is scaling, you know, how do you scale with inclusion?

Kate Cooney (19:06):

One of the things that the research points out that you highlight in in some of your work has to do with disparity just in the kind of capital on average that women versus men in the startup space might receive. So debt versus equity, you’ll see more debt for women entrepreneurs than men. In terms of the type of debt, you’ll see smaller loan sizes on average with higher interest rates, more collateral requirements. What might explain these statistics?

Banu Ozkazanc-Pan (19:40):

In terms of looking at the kinds of capital that even from the beginning, male and female entrepreneurs start with, it is quite distinct and different, both in terms of quantity and type. Women tend to take on more personal debt through credit cards or even smaller loans, whereas men off the bat tend to, even if they do have friends and family around, those tend to be bigger. Even Angel rounds, seed round series, so all the way through the scaling approach, male founded companies tend to have both more capital, but also more capital from sources that are equity based. And for women, when you take on a lot of debt, it’s actually quite difficult to grow because it’s harder to take on more debt. And if you don’t have a lot of revenue, it’s harder to hire. So we see that female led firms tend to not be employer firms as well. So that cycle of capitalization actually leads to stymied growth, as well as an inability to hire employees starting off from even the phase of, “Oh, I just created a business.” So it’s really important that we have a sense of those differences and to understand that when women apply for loans, that they’re getting equitable rates. But that also we’re investing in women led startups at the same rates as we are in male led startups, especially in industries where if they’re in the same industry with similar sort of growth in scale aspirations, it’s again, it doesn’t make sense to see these different ways in which they’re funded from the start. 

Kate Cooney (21:27):

There is this interesting study that came out a few years ago. Scholars from Columbia and Harvard looking at just the kind of questions in the same incubator. It was a tech related incubator in New York City that women and male founders were getting, and they found significantly different types of questions to male and to female founders, where the male founders were getting questions that were sort of about their aspirations and the potential of the business, whereas the women were on average getting significantly more questions related to how might they defend themselves against competition and more questions related to being on the defensive against potential threats. And that those kinds of questions made a difference in the funding levels that were given afterwards, and they did an intervention where they had women who were asked those kind of questions to answer as if the question was about their aspirations and their growth potential, and when they did that, when they answered that way, they ended up with the higher levels of funding. So it was a really interesting combination of analysis of that bias in the questioning and how, as a founder, you could get strategic about how you intervened in that kind of dynamic. But it’s exhausting to have to keep up with understanding those mechanisms around you and then being super proactive and very sophisticated in how you respond to them.

Banu Ozkazanc-Pan (23:06):

Yeah, thank you for bringing that up. We ask women not to lose and men to win. So women, as you mentioned, were asked questions that were preventative. So how will you prevent the next downturn and address it? How will you sort of address these impending risks on your business? While men were asked, there’s going to be a risk, how are you going to overcome it? You know, it’s an opportunity to showcase how smart you are and well you’re going to do, so you’re going to promote. So in the study, those are called the promotion questions. And what was interesting, as you mentioned, even in the intervention, if women somehow in the middle of pitching, figured out they were asked the prevention question but gave a promotion response, they still don’t get the same amount of money as the men, who were asked promotion questions and answered from a promotion perspective. So they just got a bump, but not an equal bump. And I think we have to think about pitching is absolutely a problem because it’s a framing. It’s you’re selling a narrative. You’re performing and there are certain norms and expectations that are invisible and silent until you break them. And then it becomes pretty apparent that the assumption was you weren’t supposed to behave in these ways, and there’s a sort of a punitive element too. Other studies have shown that men who behave stereotypically feminine also have a penalty associated with some of the funding opportunities that are available to them. The other quote unquote mismatch happens when investors have a sense of who you are and where, in what industry you’re going to do well in. And so we call this stereotype confirmation or, you know, you’re sort of defying a stereotype and you become sort of unknown. Right? This happens a lot when we have particularly minorities who are in tech, and the assumption is, well, this is an anomaly, right? This isn’t the norm. This is not the pattern that we’re used to. And oftentimes, it’s much more difficult for minorities in tech, particularly women of color in tech to get equitable funding, assuming they’ve even been given an opportunity to pitch. Right. So there are so many paths that need to be navigated to even get in front of a venture capitalist if you have a potentially high growth business to be able to pitch something and to get money for it. And when we talk about these issues, we often talk about what the entrepreneur can do or do differently, when in reality, I think we have to ask investors to listen differently and even sort of close their eyes because they’re seeing and it’s triggering assumptions about trust, about competence, about reliability. And I think there are quite significant gender and race based assumptions that are part of our assessment of trust and competency.

Kate Cooney (26:11):

Yeah, we’ve all read the study out of the orchestra, where if you have a curtain and people don’t know the gender of the musician trying out for the orchestra, the rates of women being hired were much higher, significantly higher, than when they were visible and performing in their gendered embodied-ness in front of that hiring committee. And there was an interesting study that JP Morgan Chase did where at the end they recommended doing away with the pitch and having the cohort of entrepreneurs who had gone through the incubator or the accelerator make some of the funding allocation decisions based on how well they knew their colleagues and their colleagues’ contributions and potential, rather than having this 15 minute showcase, that long, several weeks or months process being the way that entrepreneurs got to know each other and make those kind of recommendations about their colleagues as one way that these biases can be muted. But it’s something that you were looking to understand more fully the different range of mechanisms and processes that can exist in an ecosystem in your work in St. Louis. So let’s talk more about some of your findings. One of your questions had to do with, are there differences in entrepreneurial networks? We know that the way that these ecosystems function is in a relational way, and so that was animating question. Are these networks operating differently or what are the gender dynamics of these networks?

Banu Ozkazanc-Pan (28:00):

So network effects are quite important, and there’s a lot of research that says our networks tend to be like us. So we tend to circulate networks of same gender, same class, same race, same education. So it’s really important that we find people who can bridge different networks for us and bring us into contact with people whose networks look very different from us. Women’s networks tend to be filled with more women. Men’s tend to be filled with more men. So what we saw in St. Louis, and I would say this is not specific to St. Louis, but what was happening in St. Louis is that women were circulating in networks. Hence, they were getting information only from networks of other women around what opportunities and information and resources were available in the ecosystem. And it turns out that they were quite disconnected from the main set of resources and activities and supports that existed in St. Louis that were commonly known by the men who had in our interviews say, “You know, I had no trouble accessing them. Of course, it was, it was great. Everyone was so supportive.” And it’s almost like you’re hearing sort of an alternate reality of the same space and time with someone saying it was great. Everyone was supportive. I had no issues. Versus women who predominantly are like, “Oh, I had no idea this existed. And it took such effort for me to even know and learn about an event and then to show up to it” because of various different care responsibilities, the timing of the events, the location of the events and how knowledge about the events get circulated. Some entrepreneur support organizations, and that’s a broad term, I really mean, sort of those educational or program based organizations or accelerators and incubators are very proud of their word of mouth advertising. And in reality, what that does is keep a lot of people out from even gaining access. And this becomes an issue when there is public money funding some of these entities. For equity reasons, you’re essentially keeping out certain people from coming because of the marketing channels you’re using or sort of your strategy and how you want to keep small, but take, as they usually put it, the best of the best.

Kate Cooney (30:23):

There is a powerful quote that you had from this study, where a female entrepreneur remarked upon a networking event that she eventually found out about and made her way to. “You have no idea what I had to go through to get to this networking event.”

Banu Ozkazanc-Pan (30:41):

I think that quote is so powerful because it speaks about structures and networks and individuals, sort of really, really being outside of the resource structures of an organization, but also an ecosystem. And it was very moving to hear some of these women sort of speak about their experiences in a way that really resonated for us as researchers trying to understand, well, how is it that they can be in the same city and absolutely have very different experiences? And I think just that aha moment for us is, you know, if you’re going to be making recommendations to city planners, economic developers, simply saying we’ll have the resources isn’t enough. It’s you have to understand how different groups that you want to target your beneficiaries. How are they going to know about it? How are you going to work with them? How are you making sure these are even the things they need to do well, to succeed, to start businesses, to grow businesses and to scale them? So it really needs to be a much more shared and communal conversation around the resources of an ecosystem and where we need to grow and support it and where we see gaps. And I think city planners are important, but I think there’s a little bit of work that needs to be done. That just because you support one organization doesn’t mean that everyone benefits equally from it. 

Kate Cooney (32:13):

Right, and the other way that that quote resonates is in that, you know, there’s all of these potentially caregiving responsibility, as you mentioned earlier, and a lot of these networking opportunities are happening right in that happy hour, early evening timeframe. It can be quite challenging to arrange a set of supports in place to ensure that family obligations are met while you’re at this networking event. Then some of your research showed that even once you get there, you may not be made to feel welcome or kind of old boys’ network vibe in some of these events that can feel quite off-putting, even if you manage to find out and rearrange things so that you can be a part of these spaces.

Banu Ozkazanc-Pan (33:04):

And while St. Louis is important, I’ve also done work in other cities and one of the interesting ones was out of Providence as I was just starting some of this research and looking at sort of this incubator slash accelerator and sometimes people don’t differentiate them and that’s fine. But it was really a place that you had to apply to get into, so one, what were the mechanisms that they were using to give information out so people could apply? If they got in, they were real strict requirements on when you had to be in the office, when you had to meet with people, and I remember distinctly looking at the space and the space was so open and there was so much visibility in terms of almost being in fishbowls. And we have a lot of research that says those kinds of environments aren’t the most comfortable for women because there’s a lot of lack of privacy or surveillance that happens. And in the space, there was the biggest keg machine, the biggest beer machine, and there was a pool table. And I really thought, “Wow, the cultural norms of this space are really not designed with gender sensitive perspective.” It’s really towards a younger male who can spend unfettered hours in the office working on their start up, drinking beer, playing pool. And over time, this particular space changed and they realized that maybe those requirements around being in the office, being in the accelerator, were not necessary and that maybe having a coffee machine was more important than having a beer machine. Little things. And then maybe going to dive bars to do interviews with your potential candidates was also bad. So maybe that should be formalized. So many of these things are quite informal, and the more you formalize them, the more you can put in place checks and balances and metrics to see if what you’re intending is the outcome you’re seeing, particularly when it comes to women and minorities. Just because you got in doesn’t mean that you still feel a sense of belonging or that you even have access to the same mentors and networks just because you’re in the space. So there’s a lot of nuance associated with creating inclusion, beyond saying to someone, you know, “You’re in. Congratulations. Here you go.”

Kate Cooney (35:29):

So I just want to turn to some other work that you’ve done, which is so St. Louis, you were really looking at the whole ecosystem and you’ve also done some research looking at these ESOs, entrepreneurial support organizations, which, as you said, can cover everything from an accelerator incubator, something that’s university based, maybe an innovation lab in a corporate setting, networking groups, co-working spaces, sort of all of these things fall into this category of entrepreneurial support organization or ESOs. So you did more of a national study of ESO’s really, really focusing on minority founders and thinking about inclusion from the perspective of a minority founder. And in this study, you were interested in identifying some best practices and things that ESOs had figured out about how to really push on those, as you said, subtle practices that can make a big difference for inclusion. So let’s talk a little bit about some of the things that came out of that work.

Banu Ozkazanc-Pan (36:37):

At a broad level, there are those things that ESOs that tend to do better with minorities are doing, and that has to do with, one, leadership in the ESO. What does the leadership team look like so that folks that they want to reach, beneficiaries, understand that that place is a place that they are included, that their voices can be heard and that they can be included? Second, what is their curriculum and programming look like? What do their outreach mechanisms look like? What are they measuring as success? And then in terms of practices, there are real important practices related to community engagement that I think should be part of every accelerator, not just those focused on supporting minority entrepreneurs. And what I’ve seen in my research is there are accelerators who say, “We don’t discriminate. We are open to everyone. We would definitely not turn anyone away because of race.” And it’s like, well, that’s not the same as supporting them. So when you look at some of the ways in which those accelerators who have been successful in supporting minority entrepreneurs or incubators or co-working spaces, it’s really working with community leaders, working with community groups in tandem to come up with not only programming and curriculum, but even different languages. So one example is EforAll. They have a very successful program in some of the gateway cities in the New England area and are expanding to other parts of the nation. And they’ve done a fantastic job that I think can be replicated in terms of targeting communities, particularly immigrant or communities that are new Americans, as well as minorities to understand what their real needs are and to understand how they think about entrepreneurship so that it’s not something that’s reserved exclusively for young white males, so entrepreneurship has become much more broadly defined. And there’s also been, as you mentioned in our conversation, JPMorgan Chase did a study, but the model of peer to peer choosing is from Village Capital, where they’re really finding that peer entrepreneurs tend to do a much better job of funding companies that are sustainable than venture capitalists because they’re looking for these huge growth trajectories and then an exit. And is that the most sustainable way to think about the economy and to think about communities? And so there are different models of thinking about this. Other examples include Tampa Bay Wave. They’ve sort of worked on connecting the firms that come through there to the chamber so that there’s supplier diversity initiatives that they can be a part of. The Macomb Oakland University Incubator, while they discover that some of their networks and mentors were predominantly white male, this is not necessarily bad in that you can expand the ecosystem to serve everyone by having these, as I mentioned, networks that introduce each other to other networks. It doesn’t have to be only quote unquote someone like you to support you. You really actually need a diversity of networks to access the riches of the ecosystem, the resources, the opportunities, and the information that’s flowing.

Kate Cooney (40:02):

There was a study out of Brookings that we looked at for a class I taught. I can link it in the in the show notes. But it was a fascinating study of networks in four different cities, and they specifically chose the cities based on Raj Chetty’s work, so you had a high mobility city, a lower mobility city. And one of the things that was illustrated were that white male networks in particular were really homogenous and compared to everybody else, even in quite diverse cities. You know, so you have these cosmopolitan cities, these incredible diversity at the city level. And yet the white male networks were so homogenously white compared to every, you know, white women, women of color, males of color. And so it was striking. And so these things that get noticed where you have the mentors predominantly being white males, you know, one of the explanations from the researchers was, well, they don’t need anybody else in their network. And what you saw with women of color and particularly they often did have a white male in their network that was an important part of their network structure. And so just to your point that there’s room to diversify white male networks, quite a bit of room, and that can be an important in both directions. You have a better experience of the city that you’re living in.

Banu Ozkazanc-Pan (41:26):

Absolutely. And I think that is really important because networks are how information circulates and how opportunities circulate, particularly in the world of venture capital. Warm introductions. There’s some shift in that, with people saying, “Hey, tweet, and I’ll set up an office hour with you.” Those are still individual interactions. But the system isn’t changing. So when we see these kinds of issues being called out, I think it’s good to understand that diversifying networks is good for both sets of individuals, both in terms of gaining more perspective. And I would say there’s huge opportunity to invest in minority led ventures. So it’s what, there’s that business case for the white male investor, but also from the perspective of, you know, entrepreneurs who identify as Black or Latino or anyone who’s generally outside of those main networks, it’s a real opportunity to get connected to investors to be able to have an opportunity to pitch. So I agree with you, I think it’s beneficial for both sets of groups.

Kate Cooney (42:44):

You know, I have a note about the importance of role models and some of the things that stood out from your work, were the analysis of sort of dead ends in the ecosystem and the ways in which successful entrepreneurs can be recycled, I think was the term that you used, back into the system where there’s a way that they can serve a really important role. So as an actor involved in some of the architecture of these systems, thinking about where those dead end cul-de-sacs and, you know, how do you build those two way bridges throughout the ecosystem and then also thinking about the role of role models and entrepreneurs continuing to fertilize in that role model role, so I was wondering if you could speak a little bit about those concepts.

Banu Ozkazanc-Pan (43:33):

Yeah, it’s so interesting to think about ecosystems from this organism perspective because there are dead ends in that for some groups of entrepreneurs going through various different organizations, educational programs. It’s not sufficient because they still have not moved beyond their own networks, so they’re still not able to access any different set of resources or opportunities. And I would say ESO’s that don’t have that opportunity built in to connect outside existing networks really are a disservice to entrepreneurs because they end up sort of circulating them in the same sort of group of connections. And that ultimately is going to lead to a dead end because you’re not going to be able to grow or get connected to other resources or individuals. There are entrepreneurs who very specifically and strategically go from getting supported in one part of the ecosystem to another because they have made those connections, and so they’ll pivot, they’ll move through, and they’ll start really generating momentum and either growing and scaling or growing and scaling and leaving that ecosystem, which for cities that might sound terrible. But at the same time, having done some work with Venture for America, they have fellows who come into cities for two years, support startups, sometimes when they leave the city that they were working in, they can actually become ambassadors for that city in another location that would then prompt others to come and investigate the city or even come to it as an entrepreneur or with their startup. So while some leaving can be from the perspective of policymakers, bad because you didn’t get to keep these companies that stayed and scaled, you can also have returnees that come after having left to see that once the ecosystem is a different stage, that it does work out for them or you have people who left but who have championed the city and then that’s created an opportunity in the imagination of others to want to come and live in the city. So while ecosystems might seem bounded by cities, they’re actually quite fluid in that individuals from one ecosystem and city go to others and those connections start getting made. So the boundaries of ecosystems are actually really, really hard to pin down.

Kate Cooney (46:01):

That is something that I noticed in this ESO study was it seemed like there were a number of transregional actors in these spaces. What have you noted about that? In some of the conversations that I’ve had there’s replication strategies going on through partnering where you have an ESO that has developed quite a sophisticated curriculum and rather than their colleague in Philadelphia creating it all from scratch, they’ll sort of license the IP from the group in New Jersey and get some mentoring and some curricular materials. But in your work, I’ve noticed there seemed to be sort of national actors that are replicating through more of a strategic firm level approach to scaling. So are you seeing a real mix of local actors and national actors and what have you noticed about that? 

Banu Ozkazanc-Pan (46:59):

Yeah, that’s a really great question. So I would say there are sort of individuals who up and go from one ecosystem to another as entrepreneurs with maybe their small startup. And then you have actual established firms like the Cambridge Innovation Center, where they strategically set up in locations that have a buzz going on, like Miami, like St. Louis in the US, Rotterdam and Tokyo outside the U.S. And so then those start making connections amongst each other from both the CIC, but the ecosystem level. You also have at the national level, organizations like Venture for America, that place, on a national scale, graduates from schools who have done well and who are interested in supporting entrepreneurship and learning more and potentially at some point doing their own startup, being placed in cities that Venture for America works in for two years and then kind of some stay, some move. And so you have a mix and then you have, as you mentioned, almost this franchise model of like, here is a curriculum that we’ve developed and you can license it in your ecosystem with your organization and fill out the rest as you need to. I’m also seeing quite a bit of that happening where you’re sort of seeing curriculums being outsourced or purchased in sort of this franchise model. While that’s interesting, I would also be cautious because in many ways the curriculum should reflect the needs of the local entrepreneurial ecosystem and the needs of the entrepreneurs within that ecosystem, especially in terms of the communities you want to target. So you have to understand the community in which you’re working in, and this involves ecosystem mapping. Who are the various actors? How are they providing programs and services and resources? Are there gaps or overlaps in the ecosystem? And if you are going to be an ESO, where might you fit in and do you really need to exist, right? Are you going to do something that others aren’t doing or are you going to replicate, and potentially? In smaller ecosystem the problem becomes trying to get mentors because everyone’s reaching out to the same individuals. And so there needs to be some real intentionality in even the curriculum that’s adopted because it needs to meet the needs of the entrepreneurs within the local ecosystem usually. Now with the pandemic, everyone’s gone on Zoom. So things are a little bit different. And now there are sort of virtual and national and international programs that you can be a part of. And I think it’ll be interesting to think about whether or not the curriculum is so generic that it can benefit everyone or whether we end up seeing more targeted curriculums, depending on location.

Kate Cooney (49:48):

There are a couple of great examples you had in that national ESO study, highlighting some of these different approaches to connecting exactly what’s needed at the right moment that the entrepreneur is needing it, and one was almost like a triage model of an ESO in Baltimore where they would, every six months, talk to a company in their portfolio or on their client list and sort of see where they are, what might they need, and then match services at the right time. And there is another group, I think it’s SEED SPOT, that talked about having a goal oriented mentor program, so it wasn’t a mentor program without any guardrails. The mentors were chosen very specifically for certain points of engagement.

Banu Ozkazanc-Pan (50:44):

The mentorship that EforAll actually engages in, very similarly, is quite intense, and they interview the mentors. In some places because there’s such a dearth of mentors, it’s almost anyone can become one. But in programs that are more established and are very targeted communities that they’re trying to work with. There really is a much more stringent process for becoming a mentor to be able to support entrepreneurs. So different models for creating the support structure. And I think organizations that do well understand the companies and firms that they’re supporting, but also the local community needs.

Kate Cooney (51:25):

There’s a lot of talk about narrative and the role of narratives in interjecting into this space of implicit bias. So we have maybe these implicit ideas that we all carry around with us about who an entrepreneur is and maybe on some level we all expect that entrepreneur to be white and male. And this shows up in your work where you have some women and minority founders not quite fully identifying with the term entrepreneur. They might rather say they’re self-employed or they’re a business owner, but that entrepreneurship thing, that’s something over there for those guys with the keg and the ping pong table. So there are these sort of ways of narrative intervening and broadening the term and connecting the term. Beyond representation and role modeling, you highlighted a couple of interesting examples. One was this podcast called Entrepreneurially Thinking, another was a web series on Univision. Could you talk about some of those kind of narrative interventions into the space?

Banu Ozkazanc-Pan (52:31):

I think one of the ways in which we can change the social imaginary of how we think about entrepreneurs and entrepreneurship is to one, provide role models, but two to change the narrative around what entrepreneurship is. So when you say entrepreneur, a lot of people associate that with the tech bros, the hoodies, creating some app to geolocate organic kale or something else. Right. We’re using tech to solve human problems. And in reality, a lot of entrepreneurship innovation is happening in scales and places that are not becoming highlighted, including historically the ways in which many, many women and people of color have contributed to science in scientific breakthroughs. So one is creating different dialogues and conversation series that remind us of the history of science, tech, and innovation and the fact that it wasn’t built by white men. It was built by a lot of diverse people. And so there’s ownership there. It’s not just them, it’s all of us. And the second sort of ways in which I’m seeing some of the language around this change is to really expand the idea of entrepreneurship as being someone who has innovation, someone who can bring together resources to address some real needs that they’re seeing in their communities. And by that definition, a lot more people will say, “Yeah, that’s, I’m doing that.” So then entrepreneurship isn’t something out there that’s being done by technology only. It’s really something that has sort of local connection and meaning that can contribute back to the communities. And the third way I’m seeing it is in ESOs really being intentional and how they’re targeting what they’re doing and who it’s for. So it’s both the selection, the targeting of communities, the language is being offered, the ways in which pitching happens. We have unpitched events now because they replicate a particular way of telling the story of entrepreneurship. So I’m seeing sort of individuals really taking on for themselves to speak differently, put together podcasts and bring together the forgotten history, but also to exemplify role models and successful leaders in entrepreneurship. I’m seeing individuals sort of expand upon the definitions, and then I’m seeing entrepreneurs support organizations really trying to be intentional in how they talk about entrepreneurship as much more accessible in terms of the language being used.

Kate Cooney (55:15):

One of the things that sometimes comes up when we’re thinking about creating spaces for women entrepreneurs or minority entrepreneurs to come together and have some, some community that there can be a silo-ing that can occur within the ecosystem. I wonder if you can address that dilemma where you want to create spaces, where you can have some sense of a shared perspective and experience, and at the same time, you don’t want to create one of those cul-de-sacs that’s disconnected. 

Banu Ozkazanc-Pan (55:51):

Absolutely. So I think these kinds of connections need to be by choice rather than you getting trapped into them and not having a way out. And I’ve seen examples of both. I’ve seen examples of people opt into women only or minority dominant networks because it’s a sense of safety, of inclusion, of support, and their products and services are targeted to those communities, so it makes sense. On the other hand, I’ve seen people trapped into those networks and supports and organizations because of who they are, their identity. “Oh, you’re a woman. Why don’t you go to this women’s networking group? Or you’re a minority? Oh, they just put together this fund, you might want to look into that.” So then you get tracked away from the main sort of resources of the ecosystem, not by choice, but because you got tracked into it and then it’s very hard to gain access. Some examples of this kind of tracking include funds that are targeting women and minorities, but in comparison are teeny tiny compared to the opportunities that you have going through an accelerator or incubator or meeting with an investor to get an opportunity to pitch. The other thing that happens is a soft signaling where women and minorities who have gone through these targeted programs are seen as, “Oh, you couldn’t get into the other ones?” And there’s sort of a soft signaling that happens where women and minorities will actively say, “I actually don’t want to be tracked. I don’t want to go apply for these funds that are quote unquote more targeted because I feel that will be a soft signal.” And on the other hand, those who feel that money is important and they need it to scale will say, “It’s available. I’m going to go for it.” But at the end of the day, when you have separate resources and networks, you will continue to have separate resources and networks that don’t bring together everyone to the same opportunity structures. You continue with different opportunities for different groups of entrepreneurs.

Kate Cooney (58:00):

So you’ve talked about a number of really helpful practices to help us think about how to create more inclusive ecosystems for entrepreneurship. What would you say to the audience member who’s listening about why is it important to have inclusive ecosystem? What’s at stake?

Banu Ozkazanc-Pan (58:18):

Several things I would say are at stake. One, we’re having a huge demographic shift in the U.S. We’re seeing a lot more population growth in communities that are Latinx or Asian or Black. And so what we’re going to see are demands for products and services that are not yet available. And so a smart investor, a smart entrepreneur, knows that this is going to happen and starts investing and supporting women entrepreneurs, minority entrepreneurs now because it takes time to grow and scale companies. So one, there’s a demographic shift. Two, I believe inclusive economic growth is good for the nation in terms of creating opportunities where people don’t live below the living wage. Entrepreneurship has always been an engine of economic growth. So the more people that you have engaging in it and creating meaningful jobs and opportunities, the more strong you are as an economy. So there’s a real benefit, and with that comes growth in sort of the fabric of society so that you don’t have it being pulled apart into ultra-rich and those who are living in substance wages and the middle is getting gutted. So it’s a real important way to continue growing the economy in an inclusive fashion. The other third aspect is we are seeing tremendous changes in the environment. And I think sustainability requires that we involve everyone in all communities, particularly those that are going to be affected the most, including those in areas like Baton Rouge or Boston, where communities, particularly communities of minority neighborhoods, are going to feel the effects of some of the changes in sea levels much more imminently than others. And we need to make sure that they’re coming to the table to create co-solutions with different stakeholders, and there’s a lot of money being spent on environmental solutions. So environmental startups, the tech-environmental nexus is growing, and I think it’s really important that we are inclusive in how we address climate change through these solutions, especially when the people who are going to be feeling its effects first and foremost tend to be those communities in neighborhoods that are minority.

Kate Cooney (01:00:46):

So I wanted to end by asking a little bit more about your work at the Nelson Center for Entrepreneurship. You’ve worked with cities around the country. What are some of the typical requests that you get? You’re also working, you said, with inclusive VC initiatives. Are there common sense of challenges that you find you’re sort of responding to again and again?

Banu Ozkazanc-Pan (01:01:10):

Yeah. So one of the things we’ve done broadly under the Venture Capital Inclusion Lab is I’m working with the Capital Network, which is out of Boston, and we put together an investment and inclusion conversation series. There’s another one next week, which also includes one of the authors of that prevention and promotion study, Dana Kanze, and we’re going to speak about the problems associated with pitching. So one of the things we’ve done through the Venture Capital Inclusion Lab is to use research and data to try and educate, particularly investors who want to do things differently, but maybe don’t know where to start. So we’re seeing a lot more direct outreach, but also quiet outreach, where people don’t want to be embarrassed to say, “I actually don’t know where to have a conversation on race equity. I put out a nice statement, but now I don’t know what to do in my firm.” So we’ve seen a lot of people reaching out to say, “Can we have conversations around this? What does this look like? Is having open office hours enough?” And the answer’s no. That’s one part of it. So I’m seeing a lot of that. At the city level, what we’re seeing is real keen interest in growing entrepreneurship opportunities, looking at ecosystems to figure out what works where and which of those elements can we replicate, should we replicate, and which ones do we want to really stay away from because the impacts of it are not helpful? So both are sort of the city level. There is real keen interest in building ecosystems as part of economic development policy and trying to figure out what pieces need to be in place, what supports need to be in place. And then on the flip side, sort of investors saying, “What do we need to do? What do we need to do differently?” Either quietly, there’s still a stigma, I think, associated with not knowing what to do, but also directly to say, “We don’t know. Where should we start?” 

Kate Cooney (01:03:06):

So let’s do the fast forward 50 years question to end. One of the things that we like to ask people is to imagine that you could design 50 years into the future, a sort of ideal future state for entrepreneurial ecosystems. What would that look like? And what are three things that we would have done? You know that in the current moment to get us to that future state?

Banu Ozkazanc-Pan (01:03:37):

I thought about this question. I don’t know if I still have the answer, but I have some thoughts. I was thinking about the fact that in order to create real, equitable, inclusive economic growth for which entrepreneurship can be an important lever, it’s important that we build social structures, right, that we organize our institutions and normalize a new set of possibilities. And that means three different levels. I’m always thinking at levels. So at the micro level, I’m thinking of really changing our interactions. So, yeah, get your implicit bias training but also really think about the assumptions you have around who can we trust with our money. Whether you’re a bank, you’re an asset allocator, you’re a VC, real conversations that kind of dig deep into the assumptions that you have. So I hope by 50 years that we have created opportunities to have those conversations, to be able to change how people think about who they can trust. In order to do that, I think at the mezzo-level, we really need to diversify our networks and that happens at various different moments in our life. It happens through our education, our workplaces, the neighborhoods we can live in because we can afford them, and some of the ways in which we engage with social activities. Right. So, you know, at that level, I think just really trying to change the ways in which our interactions are happening. But I think at the top, at the macro level, I think for there to be inclusive economic growth, there really needs to be some impetus, some carrot and stick approach to changing the structure of the venture capital industry as it stands currently, to be able to move it towards seeing its biases, seeing its practices as leading to detrimental economic outcomes. So I don’t think it’s even just avoiding the bad. It’s really looking at some of the creation of the bad that’s happening. And I think in order for all of this to happen, we need some sort of intervention that looks at the state of education and equity, the state of the economy and what we’re investing in as infrastructure. And right now, for the first time, we’re looking at care and education as infrastructure rather than things that get done on the margins of the economy. So I think we’re on our way if we stay on a path that looks at infrastructure as including the invisible labor that many women, particularly women of color, have been putting their efforts into, so that we create the structures to be able to create opportunities for everyone, to be able to engage in entrepreneurship and really think about the sustainability of our current investment models, particularly in venture capital, where we’re hoping that high skill, high growth creates immense exits for a few people and whether that model is the model we want to pursue. I have a book coming out that speaks about some of these issues. One of my co-authors from the St. Louis study, Susan Clark Muntean and I have a book coming out on Entrepreneurial Ecosystems: A Gender Perspective with Cambridge University, and that focus is explicitly on Boston, with also some St. Louis and Asheville, North Carolina, where Susan’s located, really looking at the ways in which ecosystems get structured towards gender inclusion or away from it. And what we can possibly do differently if we want to create real inclusive ecosystems.

Kate Cooney (01:07:20):

We’ll look forward to that. We want to thank you so much for your time today and all the insights that come from the important work that you’re doing.

Banu Ozkazanc-Pan (01:07:29):

Thank you so much, Kate. It was a pleasure to speak today.

Kate Cooney (01:07:31):

Be sure to join us next time when we feature a conversation with Caron Gugssa-Howard and Dianna Tremblay from ICA about their work driving capital and good job strategies to women and minority founders in Oakland, California. See you then!

Manuel Morales (01:07:48):

This podcast was created by Kate Cooney in collaboration with James Johnson-Piett and the students of the Spring 2021 Lab.

Eun Sun Cho (01:07:56):

All engineering and production by Ryan McAvoy and Kate Cooney.

Kate Cooney (01:08:00):

Special thanks to Rhona Ceppos for administrative support and to Ryan Carpenter for assistance with Zoom.

Eun Sun Cho (01:08:07):

Music from the album City Trees, composed and performed by the artist K-Dub.

Manuel Morales (01:08:12):

For more information and show notes, visit our website at

Eun Sun Cho (01:08:18):

Thank you for listening.