Skip to navigationSkip to content
Close
Investors are still failing to back founders from diverse backgrounds

Investors are still failing to back founders from diverse backgrounds

Read more on TechCrunch

Contributions

  • Last July, I agreed to contribute a suggestion for this report. The report was published yesterday & the quote is still as necessary as ever. Quote: “VC's should make more of a deliberate effort to spend quality time with communities of color that are otherwise unfamiliar.”

    Systemic gaps won’t change

    Last July, I agreed to contribute a suggestion for this report. The report was published yesterday & the quote is still as necessary as ever. Quote: “VC's should make more of a deliberate effort to spend quality time with communities of color that are otherwise unfamiliar.”

    Systemic gaps won’t change overnight. They will take years if not decades or generations. Still, must continue building and persist forward.

  • There is obviously profit to be made in backing the underrepresented, in looking outside of SF, by finding the deals others aren’t. And yet year-after-year, we don’t see much change. Why not? We don’t need another report describing the state of the world - we know the problems. What I want are the root

    There is obviously profit to be made in backing the underrepresented, in looking outside of SF, by finding the deals others aren’t. And yet year-after-year, we don’t see much change. Why not? We don’t need another report describing the state of the world - we know the problems. What I want are the root causes. What is actually going on here, that VCs are so predictably irrational about ignoring sectors that are transparently profitable?

  • . “VCs and founders tend to back/hire people who are in their existing network who most likely share the same views as them, went to the same school as them, and shared similar life experiences as them.”

  • Imagine how many more interesting products/companies would exist, how many different ideas, how many new role models we’d have, how much less bigotry would be in workplaces, how much more wealth underserved communities would have, how many more jobs would exist AND INDEED HOW MORE MONEY THESE WHITE GUYS

    Imagine how many more interesting products/companies would exist, how many different ideas, how many new role models we’d have, how much less bigotry would be in workplaces, how much more wealth underserved communities would have, how many more jobs would exist AND INDEED HOW MORE MONEY THESE WHITE GUYS WOULD MAKE IF THEY COULD JUST PULL THEIR HEADS OUT OF THEIR ASSES!

  • It goes beyond this: “VCs and founders tend to back/hire people who are in their existing network who most likely share the same views as them, went to the same school as them, and shared similar life experiences as them.”

    VCs have a mindset and a playbook. They look for patterns and take great pride

    It goes beyond this: “VCs and founders tend to back/hire people who are in their existing network who most likely share the same views as them, went to the same school as them, and shared similar life experiences as them.”

    VCs have a mindset and a playbook. They look for patterns and take great pride in recognizing one pattern somewhere applies in a novel way somewhere else. Entrepreneurs looking for investment need to prepare so that they take advantage of this.

    But it is frustrating that lack of diversity is so entrenched and remains by far the most dominant VC model.

  • If this report is correct and only 3% of VC-backed founders identify as black or Latinx...the problem is honestly even worse than I thought.

  • Every woman founder I know has a story to tell about raising rounds. Some would even take on men as “cofounders” just to be taken seriously. Diversity initiatives are useless unless we’re putting money where our branding is.

  • I'm shocked, SHOCKED

  • Holy wow... Late to the comment thread, but has NOBODY read this with an enquiring eye? It says NOTHING about the pigment nor culture of the finding VCs! It leads from an implied assumption of some kind of nefarious bigotry due to the pigment/culture of those who were funded, but covers literally zero

    Holy wow... Late to the comment thread, but has NOBODY read this with an enquiring eye? It says NOTHING about the pigment nor culture of the finding VCs! It leads from an implied assumption of some kind of nefarious bigotry due to the pigment/culture of those who were funded, but covers literally zero ground on the makeup of the source money.

    FACT: numbers trump nose shape or good preferences. Sure, if you squint and look sideways hard enough you may find (like this author) ways to make things look like bigotry... But the VC and Angel playground its way WAYYY to competitively cutthroat to care. If Arab money can hit a home run on an Israeli startup, they will every day of the week (twice on the Sabbath!) Same for Chinese to Japanese (no love lost there outside the money world,) African vs European vs Latino etc ad frijoles!

    Profits are green, losses are red... The only 2 colors competitive investors look at.

  • Ones network is the single biggest asset (or impediment) to raising venture capital. That’s why people who are structurally and historically locked out of those networks are under represented in these studies. I think Kara Swisher put it best when she called it a “Mirror-tocracy” rather than a meritocracy

    Ones network is the single biggest asset (or impediment) to raising venture capital. That’s why people who are structurally and historically locked out of those networks are under represented in these studies. I think Kara Swisher put it best when she called it a “Mirror-tocracy” rather than a meritocracy. The other piece not mentioned in this article is the age bias at play. In short it seems like many VC’s are looking for younger versions of themselves. So I would not be surprised if the distribution of women and POC VC’s looked an awful lot like the distributions of women and POC founders.

    Finding ways to give a shot to “out of network” folks is the single biggest thing we can do towards creating diversity and broadening prosperity. I don’t believe that VC’s are, by in large, actively biased against women or POC as much as they are actively biased towards in-network “warm intros”. It takes intentionality on their part, and a willingness to be uncomfortable and take more risk on out of network folks. But it seems like there’s fruitful ground to be found by doing so. Because there’s no way the distribution of actual talent matches the distribution of investment described in this article.

  • Back in 2000, I co-founded the Network for African-American Tech Entreneurs with the goal of creating a support system for black tech entrepreneurs & helping them access capital. With the exception of Mario Rosati from Wilson Sonsini and Barry Williams of Williams Pacific Ventures (both of whom I'd taken

    Back in 2000, I co-founded the Network for African-American Tech Entreneurs with the goal of creating a support system for black tech entrepreneurs & helping them access capital. With the exception of Mario Rosati from Wilson Sonsini and Barry Williams of Williams Pacific Ventures (both of whom I'd taken classes with at Haas) the VC community was completely ambivalent about funding black entrepreneurs. Almost two decades later, and nothing has really changed.

  • This isn't surprising at all, given the backgrounds that most vc's come from. Telling people that they "should" interact with people who are different from themselves is very different from actually creating the spaces and culture to have that real interface. We don't do that naturally, and we don't

    This isn't surprising at all, given the backgrounds that most vc's come from. Telling people that they "should" interact with people who are different from themselves is very different from actually creating the spaces and culture to have that real interface. We don't do that naturally, and we don't do a very good job of doing that altruistically. Overcoming our tendencies to stick to people who look and sound like us requires both deep awareness of the blinds spots in our own world view, and cultural systems and structures that push us together in meaningful ways.

  • So predictable...

  • this is ridiculous. are we pretending that race isn’t an issue? why don’t we stop these useless studies and instead change all of these horrible outcomes for an entire category of #founders.

  • Whe root cause of the trends detailed in the article is fear. The fact is that a plurality, if not the vast majority, of those investors are white men themselves, predisposes them to invest in other white men, or in other words, their "in group." The mentality is clear, why invest in those outside one's

    Whe root cause of the trends detailed in the article is fear. The fact is that a plurality, if not the vast majority, of those investors are white men themselves, predisposes them to invest in other white men, or in other words, their "in group." The mentality is clear, why invest in those outside one's own circles when one can instead remain in lock step with someone familiar, someone just like you? That's one trend, the other being the overinvestment in existing markets such as New York and Silicon Valley. This is motivated by the need to reduce financial risk. Why invest in Louisville or Tallahassee or any other city when one can instead remain safe and insure your money goes to an area with established infrastructure? Since investment is built on risk and reward, unnecessary risks are always avoided. Even if they are imaginary.

  • This is where VCs show such hypocritical behaviour. They speak of the significant benefits of utilising diversity to drive creativity and innovation but they are not willing to put their money where their mouth is! The result is they are sacrificing on potential value because they do not have enough

    This is where VCs show such hypocritical behaviour. They speak of the significant benefits of utilising diversity to drive creativity and innovation but they are not willing to put their money where their mouth is! The result is they are sacrificing on potential value because they do not have enough risk appetite to break the mould of white male ivy league startups.

  • No more studies are needed. We need action. VC funds in general do not outperform the public market - in fact half don’t return the initial investment. Investors need to stop giving money to a badly performing, racist and sexist system.

  • It's a combination of laziness and internal comfort. And I'm not just saying that as opinion, it's from personal experience during my investor days. :-/

  • The mortgage crises 10 years ago provided good lessons on who to lend money to. Do you really think lenders will make those same mistakes again?

  • The subconscious mentality driving this is the same one driving events in society. Maybe it's time we stop acting like it doesn't exist.

  • Interesting.