Startup News Digest 8/28/15



Our weekly take on some of the biggest stories in startup and tech policy.


Diversity in Tech. According to a report of aggregated data from 63 coding bootcamps, 38 percent of 2014 bootcamp graduates were women. Many coding schools have made diverse student populations a goal from the start - and with a strong emphasis on job placement, this goal also makes sense to capitalize on efforts by big tech to be more inclusive in their hiring. But it’s not just about improving the pipeline. Women in the UK represent 38% of math graduates - and while they could naturally make the transition into technology-based industries, many of them don’t. The number of women in executive level roles within tech companies continues to drop . A breakdown of director-level employees in East London’s technology cluster, nicknamed the “Silicon Roundabout,” show only 18 percent are women - lower than most FTSE 100 companies. This makes the case for a closer look at the self-imposed diversity targets of many FTSE 100 companies.

Growth of Women-Owned Business. Recent reports show an increase in women founders and minority women-owned business. The 2015 Global Startup Ecosystem Ranking by found that 30% of startups in Chicago are launched by women founders. And we expect to see these numbers grow. According to data from the National Women’s Business Council, the number of women-owned firms is increasing at a faster rate than men-owned businesses. Minority women-owned businesses is the fastest growing segment: “the number of companies owned by Asian women has increased by 44.3%; black women-owned businesses have grown by 67.5%; and Hispanic women-owned operations have increased by a whopping 87.5%.”

Banana Peels, Cybersecurity, and the Federal Trade Commission. On Monday, a federal court ruled that the Federal Trade Commission (FTC) has the authority to sue Wyndham Hotels over a breach of its customers’ data in 2008 and 2009. The case is seen by many as a test of the FTC’s authority to police companies’ cybersecurity practices using its consumer-protection mandate, and the court’s decision is a win for the FTC. Some argue this may be the most consequential court action with regards to data-security this year, and with Congressional action on comprehensive cyber legislation unlikely in the near future, it represents an additional incentive for companies of all sizes to invest in the robust (though the question now may be, how robust?) security of their digital data.  

Ashley Madison Leak Prompts Data Breach Lawsuits. The FTC isn’t the only group looking to take companies to task for inadequate data protection practices. Avid Life Media—the parent company of the recently hacked infidelity website Ashley Madison—is facing multiple lawsuits from Ashley Madison users that had their personal information leaked online last week. Among other claims, the lawsuits allege that Ashley Madison failed to take adequate steps to safeguard consumer data and breached various state privacy laws. It’s entirely possible that different courts hearing these challenges will come to different conclusions about what data protections companies must implement to avoid negligence liability. Companies unsure of what data protection protocols will pass legal muster should closely follow the outcome of these suits.

Broadband Access and the 2016 Race. The 2016 presidential contenders are starting to lay out their policy proposals, and one of the issues they are talking about is broadband connectivity.  On Wednesday, Hillary Clinton outlined her plan for strengthening rural America, which includes an infrastructure bank with a special focus on “increasing access and adoption of high-speed broadband” in rural areas and closing the digital divide.  It is an embarrassment that over 55 million Americans still lack access to advanced broadband, and even worse that 53% of the rural population is unserved.  Broadband access is vital for innovation and entrepreneurship, and we are glad to see presidential candidates beginning to look at how we can better expand connectivity to the populations that need it most.   

New Numbers on the NYC Tech Economy. The Center for an Urban Future took a close look at New York City’s tech sector, using the Federal Reserve Bank of New York’s new definition of tech industries. Key findings include: The tech sector employed 117,147 people in 2014, a 71 percent increase from a decade earlier. 51 percent of the city’s tech employment is in the Computer Systems Design industry, which encompasses most of the tech startups in the city. 44 percent of tech sector employees are under the age of 35, 60 percent are male, and 62 percent are white. You may recall that New York was recently ranked number one in a global analysis of leading cities supporting start-ups through municipal policy, which we wrote about here.

Startups Snubbed in UK Government Contracting. Spend Network, a UK research organization that analyzes government data, published research this week that shows less than 3% of UK government spending goes to startups. For a government that makes innovation a "cornerstone" of its rhetoric on economic growth, the Spend Network explains, these figures are disappointing, but perhaps not surprising. The procurement process tends to be risk-averse, slow-moving, and favor large, incumbent companies with familiar solutions. The U.S. also has a long way to go in supporting startups through procurement (which accounts for over $200B in government spending a year.) And while it keeps tabs on the portion of small businesses receiving federal contracts, the percentage of these that represent emerging innovation companies is unknown, and would make for important research. (But if you’ve seen these numbers, let us know!)