Salt Lake City played host to two out of town billionaires on Friday. Steve Case, the co-founder of internet service provider America Online made a stop to promote entrepreneurship and his new book at an event presented by Village Capital and the Kauffman Foundation. Unlike his counterpoint, Donald Trump, who was making a campaign stop in his bid to become President, Case was here to make the argument more women and minorities need to be involved with business, especially startups.
The investment numbers are clear. There is a disproportionate investment in businesses across geographic, gender and racial lines. 75% of venture capital investment goes to three states; California, New York and Massachusetts. Of that, less than five percent goes towards women owned companies and a paltry three percent towards minority owned businesses. Mr. Case commented, “Startup funding isn’t a level playing field unless you’re a white guy who went to Stanford.”
Utah has the eyes of the nation on it this weekend as every presidential candidate, save Hillary Clinton, will make a stop prior to Tuesday’s primary. Chelsea Clinton visited Salt Lake earlier in the week. The country’s business eyes are on Utah as well. Its pro-business environment, lower cost of living and educated workforce are making Utah companies a favorite for investors. Behind the top three states previously mentioned, Utah is next in line for later stage growth investment.
Many parties are interested in leveraging lower cost of living states to develop and grow startup businesses including Case’s Revolution LLC. It’s not just the lower cost of living that has people like Case interested in Utah, it’s the contribution of new ideas. America is a very diverse country and some of the things that are problems in urban cities aren’t as relevant to the rest of the country. As an example, Case pointed to the proliferation of education technology companies in New Orleans that grew from the tragedy of Hurricane Katrina. The education system in New Orleans was a mess and Katrina provided an opportunity to start with new ideas that are now being utilized in other parts of the country.
Education technology is an example of the “third wave” of the internet which is the subject of Case’s book, The Third Wave. The first wave was building the internet and getting people to use it. People used to only use the internet an hour a day! Now they spend that much time on Facebook alone. The second wave was building on top of the internet. Applications like Facebook and mobile platforms have transformed the internet from what it began as. The third wave is making the internet seamless in our lives with applications in education and healthcare. Think Fitbit as an example.
The democratization of investment funding, legalized in 2015 through the JOBS Act, will provide more opportunities for entrepreneurs, especially women and minorities. Case explained women entrepreneurs tend to ask for funding less than men and when they do, it’s for less money. Equity crowdfunding can change that. He believes it will level the playing field. Citing funded Kickstarter campaigns as a metric, he said successful campaigns end up 50/50 between men and women owned companies. The nature of Kickstarter benefits women Case believes because they are better story tellers.
As I write this article, Donald Trump is speaking at a rally five blocks away from where Steve Case spent the afternoon. That billionaire’s plan for minorities is to deport or bar them entry. Hispanics in America make up the largest growing segment of minority business owners. Mr. Trump doesn’t care that much for women either. The differences between billionaire Case and billionaire Trump couldn’t be greater.