Intel Corporation, the Silicon Valley chip maker and tech giant, launched today the Intel Capital Diversity Fund, which over the next five years will invest $125 million in businesses led by women and underrepresented minorities.
The fund, which will be run by Intel Capital, the company’s investment arm, will vet applicants based on the demographics of their executive team, as well as their overall diversity efforts and their product’s strategic fit with Intel.
“Intel Capital invests tens of millions of capital per year into strategic small startups,” Intel president Reneé James told Fast Company. “We said, if we’re going to make these investments anyway, we should use our money for good, and put a portion of that into businesses led by minorities [that focus on] technology areas we want to invest in. People aren’t doing that.”
According to the latest available data, just 1% of venture-backed startups are led by a black founder, while companies with a woman CEO receive 3% of VC dollars.
While it did not specify investment amounts, Intel also unveiled the fund’s first four portfolio companies: Venafi, a female-led cyber-security startup; Mark One, best known for its biometric Vessyl cup, whose executive leadership includes an Asian-American CEO and three African-American VP’s; CareCloud, a developer of cloud-based health care software founded by a Hispanic male; and Brit + Co., the female-focused DIY blog and platform founded by Google alum Brit Morin.
The new fund comes on the heels of Intel’s $300 million diversity initiative announced earlier this year, in which the company pledged to bring its U.S. workforce to “full representation” of the available pool of minority and female talent by 2020. Intel has made strides toward that goal: It reported last month that 41% of its hires this year were of “diverse” backgrounds compared to last year’s 32%. Of Intel’s senior hires in the first quarter of 2015, 17% were underrepresented minorities and 33% were women (up from 6% and 19% last year, respectively).
Intel also seems to have gone beyond its immediate company-specific goals–as a recent Fast Company feature had hoped it would–to also focus on building a pipeline of minority and female tech talent, in order to have a more expansive impact on the social ecosystem of Silicon Valley. In May, for example, it announced a partnership with the Oakland Unified School District in California, which is 38.5% Latino and 30.8% African-American, through which Intel will invest $5 million over the next five years to develop the computer science curriculum for high school students, with the goal of sending 600 graduates to college to take on STEM-related majors.
Ideally, the diversity fund will have a similar effect: ensuring that women and minorities have access to the same resources and opportunities as the rest of the tech industry, which is well-networked and overwhelmingly white and male. “We’re not forcing diverse-led companies to vie with non-diverse led companies for the same dollars for investment,” says James. “So not only are we going out and looking for [diverse entrepreneurs] … we’ve actually said, that $125 million is earmarked for investments in companies that are led in a diverse way.”
Lisa Lambert, vice president at Intel Capital and who will also oversee the new fund, believes it represents a new paradigm for the venture-capital industry and how tech investments are made. Lambert’s team of investors, for example, is primarily comprised of women and minorities.
“The VC firms that are doing investments today come from a demographic group [in which] their networks look like them, and reflect their values,” Lambert says. “That model works for them, so they keep repeating it. The problem is that the model doesn’t incorporate the broader society.”