In Silicon Valley, Black founders and tech workers are severely underrepresented.

The federal government sets aside $2.5 billion each year in grants and projects for small businesses engaged in research and development that have commercial potential #SBIR/STTR/@sbirgov.

Black-owned businesses, women-owned businesses and economically and socially disadvantaged groups need to claim more of this money, said Spencer Hamilton, a business advisor for the Small Business Development Center in San Mateo County, which covers most of the San Francisco Peninsula.

“A lot of startup companies in the Valley or elsewhere are not aware that a lot of companies such as Qualcomm, 23 and Me, and in fact even Google got their start from non-dilutive funding from the federal government,” Hamilton told Moguldom.

How Google got its start with federal funding is a little-known story.

In 1995, the U.S. intelligence community was looking for ways to track individuals and groups online, seeking control over the vast amounts of data that were getting out of hand.

The research arms of the Central Intelligence Agency (CIA) and the National Security Agency (NSA) started funding computer scientists.

The hope was that these brainiacs could take non-classified information and user data, combine it with what would become known as the internet, and begin to create for-profit, commercial enterprises to suit the needs of both the intelligence community and the public, according to Jeff Nesbit, former director of legislative and public affairs at the National Science Foundation. 

Listen to GHOGH with Jamarlin Martin | Episode 47: Diishan Imira Jamarlin talks to Diishan Imira, founder and CEO of Mayvenn, a platform that empowers hair stylists to take back ownership of the beauty market.

Some of the earliest grants went to future Google co-founders Sergey Brin and Larry Page — then grad students at Stanford University who were making strides in web-page ranking, tracking, and making sense of user queries.

These grants helped fund research by Brin and Page that became the heart of Google — people using search functions to find exactly what they wanted inside a very large data set — Nesbit wrote in a guest post for Quartz.

Google has denied in the past being funded or created by the CIA. However
more than a dozen grants of several million dollars each were earmarked to advance this research concept. The grants were directed mainly through the National Science Foundation (NSF), Nesbit wrote, so that the most successful efforts could be captured as intellectual property and form the basis of companies attracting investments from Silicon Valley. These public-to-private grants helped launch companies including Qualcomm, Symantec and Netscape, and funded research in Doppler radar and fiber optics. Today, the NSF provides nearly 90 percent of all federal funding for university-based computer-science research.

Historically, Black founders have not claimed their fair share of this funding source. “It’s a great source of capital that many of the tech companies in Silicon Valley — that’s how they got started,” Hamilton said.

Hamilton spoke to Moguldom on the sidelines of the Tech ConneXt Summit in San Francisco in 2017.