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Delaware Emerges as Best State for Black Tech Businesses

New research sought to discover which of the U.S. states had the most influential tech companies founded by African Americans. And it found that Delaware stood out, due mainly to one influential Black tech firm. This pushed the state to have the “highest influence score.”

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The study was conducted by the media/research company That Sister, which reviewed 500 technology companies founded and led by Black people over the past five years, according to the Times Weekly. Two principal attributes researchers considered on the study’s rubric were where the companies’ headquarters were located and the businesses’ funding model. The highest score each state could receive is a 20.

Why Delaware

Delaware, known as “The First State” because it was the first state to ratify the United States Constitution, ranks No. 1 in influence score of 16.1 out of 20. Over the past five years, six companies have raised a total funding of $22.1 million. This is equivalent to one African American tech company for every 168,000 persons in the state or $22 for each Delawarean of any race currently living in the state. This is the best ratio out of any state in the entire country.

The study is skewed by one company, Stack Diagnostics. A provider of genetic diagnostic tests and services, the business has received $18.8 million in total funding, over 85 percent of the funding criteria of the study.

The second of the top five influential states for African-Americans is California. The Golden State has a total of one African-American tech business for every 496,020 residents, $35.9 million of funding per capita, and an influence score of 13.4 out of 20.

New York follows up in a third place with an influence score of 8.7, Illinois is fourth with an influence score of 7.8 and Massachusetts rounds up the list with 5.8 as its influence score.

A spokesperson from That Sister said, “We are excited to see the progress of African Americans in the tech space – founding and building companies which are attracting hundreds of millions of dollars in funding and investment. It’s fascinating to see which states are home to the most successful new African American-led tech businesses, and hopefully, in future, they will be joined by many more start-ups across the US.”

Those who are rising to the top in tech in those states, statistically, have overcome a great deal of obstacles. Mostly because Black and brown communities are anemic when it comes to STEM education and exposure to the tech industry, Philanthropy News Digest reports.

“In an increasingly tech-driven economy, careers in IT and tech can offer pathways to economic advancement and prosperity. However, too many Black Americans—particularly Black women—face systemic barriers that leave the economic opportunity of the tech industry out of reach,” Michael Collins, a vice president at Jobs for the Future, a racial economic equity initiative, said.

He continued, “We need to better understand these barriers, which begin in K-12 education and higher education only to be reinforced in the workplace.”

The Downside of Tech

On the flip side of the coin, many African-Americans immersed in tech education are not getting jobs.

A Conference Board report released in 2021 said Blacks face large challenges not only in getting tech jobs but being paid well for their work.

A discouraging snapshot of one career in the industry says, “among software developers — who have seen the highest income growth of all — Black representation stands at just 3.3%,” the report notes.

The study gave the following recommendations to recruit more Blacks and possibly change the disadvantages Blacks face in the space, suggesting companies “open offices in cities with large Black populations, to help counterbalance the existing tech centers in cities with low Black populations such as San Francisco (2%), San Jose (0.8%), Seattle (1.6%), and Austin, Texas (2.3%).”

Research according to the board shows tech employment of Black people jumps in cities with large Black populations, giving Atlanta (12%) and Washington D.C. (13%) as examples.

While technological doors are slowly opening, Black businesses by the state are popping up in regions one might not expect. Only one of the top Black tech states from That Sister’s list made the top five on a different survey that looked at the best states for Black entrepreneurs, as a whole: Delaware.

A study by Merchant Maverick, that considered data from The Federal Reserve’s 2021 Small Business Credit Survey, Census Bureau data, the Kauffman Foundation, and more, looked at Black-owned employer businesses per capita, the percentage of the workforce employed by Black-owned businesses, the Black-owned company’s average annual payroll of Black-owned businesses and its average annual income to formulate this list.

At the top of this list is Virginia, where Black-run businesses employ 2.18% of the state’s workforce. Old Dominion is one of the top two states in the country that has businesses owned and/or run by Black people that hire Black people. These African-American-owned businesses are thriving. For every 1 million people, there are 755 Black-owned employer businesses. It is also a state where businesses started by women (particularly Black) are flourishing.

Maryland, Texas, and Nevada fill up the list, with Delaware serving as the anchor for the best state for African Americans to start a business.

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