Starting a new business is never easy. For underrepresented entrepreneurs such as women and people of color, however, the challenges can be especially daunting.
In 2018, SAP’s network of no-equity-ask external startup accelerators SAP.iO Foundries was embarking on a journey: exponentially scale its global ecosystem of innovative startup partners to help SAP customers extend their SAP software landscape. At that time, the team was shocked to learn that despite the fact diversity yields better innovation, the majority of venture funding primarily goes to invest in startups founded or led by a very narrow demographic. For example, only 2.3% of global venture capital (VC) funding went to startups with only female founders, and Black women in the U.S. had raised just .0006% of all tech venture funding since 2006.
As a steward of purpose-driven innovation, SAP recognized its duty to be intentional about how it invested in and scaled its ecosystem of software startup partners. It recognized that driving inclusive entrepreneurship in the enterprise software and VC industries could accelerate innovation, reduce bias, and drive better outcomes.
In 2019, SAP launched SAP.iO No Boundaries, the first comprehensive inclusive entrepreneurship initiative for underrepresented and underestimated entrepreneurs in the business software industry. SAP pledged to scale SAP.iO Foundries with a focus on inclusive entrepreneurship and set an ambitious target of supporting at least 200 startups founded or led by underrepresented entrepreneurs by 2023.
The SAP.iO team crafted a clear and effective strategy to achieve this commitment:
- People: Scaled a diverse team and mentor community of leaders with connections to different communities around the world. The SAP.iO Foundries team is currently 63.3% female and represents more than 15 nationalities, compared to SAP’s overall 34.3% women in the workforce.
- Processes: Committed to investing the time to empower more entrepreneurs to start up with SAP, review every application for the program, set transparent criteria for selecting startups to participate in programs, and regularly measuring progress.
- Participation: Attended, sponsored, and hosted events such as Culture Shifting Weekend, StartOut Equity Summit, HBCU National Braintrust, and more to expose underrepresented founders and their investors to the opportunity of partnering with SAP.
- Partnerships: Created partnerships with organizations including the United Nations Foundation, World Economic Forum, Les Déterminés, Latino Startup Alliance, Gentry, Chatham House, StartOut, and more.
Great Impact
Implementing this strategy has been so successful that by July 2022, SAP.iO achieved its goal of supporting 200 startups founded or led by a female or underrepresented entrepreneur six months ahead of schedule. The 200 startups make up 44% of the SAP.iO portfolio of 450 startups and tie or surpass their counterparts in benchmarks used to measure success. They represent:
- 51% of the exits in the portfolio (18 of 35)
- 50% of the unicorns in the portfolio (two of four)
- 42% in cumulative VC raised by startups within the SAP.iO portfolio (US$2.7 billion of $6.6 billion)
- A greater likelihood to progress in their partnership with SAP
One of the most successful startups in the SAP.iO portfolio is female-founded Censia Inc. It recently joined the SAP Endorsed Apps, a designation achieved by less than one percent of SAP Store partner solutions. Censia augments HR management software provided by SAP with AI-powered resume review, passive sourcing, and candidate evaluation software. Censia has successfully closed 14 go-to-market opportunities with SAP and major brands such as Tapestry Inc., TJ Maxx, and PepsiCo Inc.
Censia CEO Joanna Riley reflects: “Entrepreneurship is about continuous learning and to be able to be part of SAP.iO, I feel like I’m cheating. I’m learning from lessons that have been learned through years of experience that SAP has acquired and taking those and applying them to my business so that we have a head start. I would recommend any company, especially [those] focused on enterprise, to look at SAP.iO as a real solution to build a produce that is great for enterprise.”
Just the Beginning
While the SAP ecosystem is thriving and 2021 was an exceptional year for underrepresented founders, that demographic still receives a sliver of VC funding. Data shows there is still much work to be done, especially with regards to intersectional diversity. For example, Latinx founders in the U.S. received 2.1% of VC funding in 2021, while Black founders received only 1.3%.
SAP.iO Foundries plans to build on its momentum and is clear on its objective: prioritize startups founded or led by people whose share of VC funding in the technology industry is proportionally less than their share of the population. Up from 40% in 2018, 45% of the portfolio will represent the SAP.iO No Boundaries commitment by 2028.
SAP.iO Foundries will work to achieve this goal by continuing with the same execution strategy, but will add geographical representation as a sourcing focus. This is possible because programming has transitioned from fully in person to virtual/hybrid and allows the teams to source outside of the locations of the established SAP.iO Foundries. For example, in 2022, SAP.iO expanded to Latin America and the Caribbean. It will also target other countries in existing SAP.iO Foundries regions such as Nigeria, Pakistan, and more.
Kange Kaneene is vice president of SAP.iO Foundries North and Latin America and Caribbean.
Max Kahn is director of SAP.iO Foundries.