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INVESTING IN EQUALITY

How the venture capital community can better support Black founders

ctor Will Smith shakes hands with a startup representative who won a $10,000 investment from Smith’s new VC firm Dreamers Fund at the TechCrunch Disrupt forum in San Francisco
REUTERS/Kate Munsch
Dreamers VC, a venture capital firm run in which the actor Will Smith is involved, invested $10,000 in Socionado.com in 2019.
  • Anthony Oni
By Anthony Oni

Managing Partner and CEO, Elevate Future Fund at Energy Impact Partners

Published

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For startup founders looking to make their dream business a reality, there’s never been a better time to look for funding. Venture capital spending soared to a record $131 billion in 2018, according to PitchBook and the National Venture Capital Association. The year saw blockbuster IPOs for Spotify, Dropbox and ADT. In the years since, the funds have continued to flow.

Yet amid all this wealth creation, the breathless headlines, the monumental achievements of American innovation, a Deloitte study reports that just 3% of venture capitalists identified as Black or Latino in 2018, the most recent year for which data are available. Barely 1% of VC funding that year went toward Black or brown entrepreneurs.

This has to change. And finally, at long last, it seems it might be—but only if the venture capital community has the will, the courage, and the determination to make this overdue shift a lasting reality.

Sparked by the Movement for Black Lives, and the intense focus on equity and social justice unleashed by the murder last year of George Floyd, venture capital firms are finally bringing new attention on the lack of diversity among venture capitalists. Though still too recent for hard data, the number of Black and brown venture capitalists—anecdotally, at least—appears to be on the rise.

If indeed this is a trend, it will take far more than money to make it stick—to ensure that our nation at last taps into the brilliance of the vastly underrepresented investors and founders too long ignored. Nowhere is this more vital than clean energy and climate tech: the very sectors working to make our communities resilient, sustainable, healthy, and equitable.

As a Black venture capitalist in the clean-energy sector, and previously a Black founder, I see my investments in Black entrepreneurs as a promise: that the innovators we invest in will be able to grow and be successful not simply because of their access to capital, but because of the holistic and programmatic support that goes beyond a balance sheet.

Here’s what this means for the way VCs approach opportunities to fund Black founders and their innovations:

Provide space for ideation and access to world-class technology   

For even the most brilliant practitioners, the right environment matters. Venture capitalists have an opportunity to creatively use their resources to provide Black entrepreneurs with thoughtfully appointed space to collaborate and innovate.

Provide access to mentors and a supportive community  

Mentors, cheerleaders, and advocates are always powerful sources of inspiration. Providing Black entrepreneurs with access to accomplished mentors and advocates will go a long way to inspire the next generation of Black founders.

Hear and empathize with Black founders’ stories, demonstrating success against all odds

As different as Black founders are, they share one attribute: They have had to overcome enormous odds to succeed. When venture capitalists listen to the stories of resilience that are all too common for Black founders and consider these perspectives in their review for deploying capital, they can forge a powerful connection that encourages even more powerful returns.

Access to financial resources is necessary. But it is not the only thing Black founders need in order to scale their innovations. Just as a solar array or wind turbine can’t exist in isolation — each depends on the wires, the monitoring, the smart devices, and much else needed to support it — building a more equitable VC ecosystem depends on more than just the cash flow or talent pipeline; it requires infrastructure and support systems built to retain talent from underrepresented groups, raise-up leaders, and incorporate the systems of accountability to ensure our workplaces become and remain safe, supportive, and truly equitable.

Black VCs are helping to make this shift a reality. In response to chronic inequities in the VC space concerning access to capital for Black founders, a fresh, new crop of Black investors are rising up—and they are relentlessly pursuing investment in diverse founders in all sectors. We are proud to have the likes of Jarrid Tingle and Henri Pierre-Jacques of Harlem Capital, Jewel Burks, Justine Dawkins and Barry Givens of Collab Capital and Arian Simone, Keshia Knight Pullium,  and Ayana Parsons of Fearless Fund in the arena, as well as Neil Wright of Bronze Valley. And I tip my hat to other funders with specific pillars of focus such as Taj Ahmad Eldridge within Clean Energy at Include Venture Partners, Simeon Iheagwam within Fintech/Marketplaces/AI at Noemis Ventures and Mac Conwell, who is writing the first check for founders outside of tech ecosystems through RareBreed Ventures. And I can say with pride that this is not an exhaustive list as the tide has truly turned in the industry.

Together these figures have helped demonstrate the unprecedented power of Black- and brown-owned founders and venture capitalists. They—and we—are harnessing our access to resources to advance, promote, and financially back Black and brown innovations. But we can’t do it alone. With collective action from the entire venture capitalist community, this movement can change lives, advance innovations, and build a more prosperous, just, and sustainable world.