PolicyBridge “The Fusion of Inclusion” Expanding Minorities’ Technology-Sector Presence Is Critical to Fueling Northeast Ohio’s Competitive Drive June 2012

The Fusion of Inclusion Overview ► Report was written to quantify African and Latino American participation in high-growth technology industries ► Economic development organizations, policymakers, business leaders, colleges and universities and philanthropists have recognized the urgent need for greater entrepreneurship in technology fields and have been working to build the region’s technology infrastructure ► The region’s economic development eco-system has identified emerging high growth industries for support and seeded entrepreneurial success by improving access to capital, encouraging a risk-taking culture, expanding networking opportunities, identifying markets and addressing workforce challenges ► Yet, there is a growing threat to regional competitiveness: underperformance of African and Latino American populations in the industries identified as emerging drivers of the regional economy

The Fusion of Inclusion Overview ► ► PolicyBridge received funding, support and subject matter expertise from regional economic development organizations: NorTech, The America21 Project, JumpStart, BioEnterprise, MAGNET, TeamNEO, and the Fund for Our Economic Future ► ► Cleveland State University’s Center for Economic Development provided the quantitative analysis ► ► PolicyBridge conducted qualitative research through focus group sessions held throughout the region with participants from the private, public and non-profit sectors from the African, Latino and Caucasian communities ► ► The quantitative and qualitative research and analysis are basis for the conclusions and recommendations contained in this report

The Fusion of Inclusion Overview Significant disparities are found in four critical areas - employment, entrepreneurship, engagement and education. Although minorities make up roughly 20% of the study region total population: African and Latino American workers combined account for less than 10% of the workers in selected high-tech industries in NEO. For the nation overall, they account for about 16% of workers. African and Latino Americans also only own about 2% of all business in technology-based growth industries throughout the region and state and 4% in the nation. African and Latino Americans report significant obstacles in accessing startup capital and business development support African and Latino Americans report significant obstacles in accessing startup capital and business development support African and Latino Americans lag behind their NEO non-minority counterparts in educational attainment overall and specifically in the fields of science, technology, engineering and mathematics

The Fusion of Inclusion - Employment The CSU analysis found that minorities were underrepresented in NEO high- tech industries compared to the region’s population distribution, but there is also a significant difference in the jobs minorities do in those industries, which include:  African and Latino Americans were less likely to hold management positions  African and Latino Americans were less likely to work in computer, mathematics, architecture and engineering fields  Only 22.2% of African and Latino Americans were working in NEO’s high-tech sector in 2010 held science and math occupations as compared to 34.9% for non-minorities

The Fusion of Inclusion - Entrepreneurship African Americans in the region own about 1% of high-tech industries, a rate similar to those owned at the state and national levels Latino Americans in the region and the state own 1% of the high-tech as compared to 3% across the country African and Latino American ownership rate of high-tech companies is disproportionately low compared to the relative size of the minority population in the geography African and Latino Americans face hurdles that hinder their entrepreneurial activity such as: lack of funding, lack of entrepreneurial role models and technology industry networks, lack of entrepreneurial capacity and business knowledge, and lack of entrepreneurial training programs

The Fusion of Inclusion - Engagement  African and Latino Americans have difficulty navigating the barriers and mastering the learning curve of the business development process  Disjointed advice can be worse than no advice  Relatively small amounts can seem like insurmountable hurdles  The balancing act: Do you invest limited funds toward prototype product development or spend money to market a product you do not have?  Support organizations and programs lack an understanding and accommodations for the particular funding and informational challenges faced by minority entrepreneurs  The lack of experienced minority mentors and champions

The Fusion of Inclusion - Education Of all minorities working in NEO high-tech industries, less than 1/3 had a bachelor’s degree of higher Minorities lag behind their non-minority counterparts in educational attainment Fewer African Americans students pursue degrees in STEM fields than students from other racial and ethnic backgrounds Latino American students earn STEM field degrees at a rate lower than their non-minority counterparts African and Latino American families and communities often do not have the awareness or skills to support students pursuing education in STEM classes African and Latino American families and communities often do not have the awareness or skills to support students pursuing education in STEM classes

Recommendations - Entrepreneurship Measure progress annually in minority business development in the region’s technology clusters Establish performance metrics for key staff at economic development organizations that align with minority entrepreneurship outcomes with compensation incentives Facilitate partnerships among existing businesses and organizations Expand and deepen mentoring programs for aspiring minority entrepreneurs Promote a unified one-stop shop for funding, technical, legal and marketing services

Recommendations - Engagement Reach out to minority entrepreneurs and minorities working in or studying STEM fields to invite them to participate in networking activities that connect them to the region’s identified emerging high-tech industry clusters Establish performance metrics at economic development organizations that tie outreach to minority entrepreneurs to performance reviews and other compensation incentives Develop an intermediary capacity specifically to help minorities connect with NEO’s existing innovation eco-system Include minority business leaders among regional task forces and advisory boards to bring their voices to the table

Recommendations - Employment Explore opportunities to help minorities with transferable skills move into higher-paying jobs in high-tech industries Employ “good corporate citizens” peer pressure to encourage businesses throughout the region to reach out to young people – minority and non- minority – to expose them to careers and opportunities available in NEO Create a blended venture philanthropy and enterprise development model to foster STEM education, mine regional talent and anticipate the workforce needs of cluster industries Commit to measuring progress annually in minority employment in the region’s technology clusters the region’s technology clusters

Recommendations - Education Measure progress in encouraging more minority students to pursue STEM degrees and careers in STEM fields Develop an informational campaign targeted towards minority students in high school and middle school to raise awareness of opportunities in STEM fields Partner with area manufacturers to develop apprenticeship programs, short-term certifications and other hands-on training options to address shortages in in-demand technical skills Reach out to schools districts serving high minority populations to alert counselors and teachers to in-demand technical skills and career pathways

Closing Thoughts ► What gets measured gets done ► All stakeholders need a seat at the table ► Workforce development must include innovate pathways to emerging industries ► S.T.E.M. education requires a long-term strategy and robust resources