2017 isn’t even over yet, and it’s already provided more than enough evidence that the tech world still needs to diversify–from the uproar over the so-called “Google memo” to the shakeup at Uber over the ride-sharing platform’s allegedly discriminatory work culture. And that’s not to mention the stuff that doesn’t always make headlines, like the fact that black women founders still get less than 1% of venture funding, or that tech employees overwhelmingly believe their employers are more diverse than they actually are.
So while some have grown impatient with Silicon Valley’s efforts to improve diversity and inclusion and are seeking new ways to expand economic opportunities, others in tech are trying to make change where they can–including investors themselves. Some venture-capital firms are devoted explicitly to supporting diverse founders, but even those that aren’t can still make a difference. Here’s how four VCs are working to identify and fund entrepreneurs who might otherwise go overlooked.
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Push For Diversity Early, Not Later
Anthemis is an investment and advisory firm that already walks the diversity walk more than many others. Eighteen nationalities are represented in the 48-person company, and 56% of its employees are women (of the 14 directors, eight are female). Jillian Williams, an African-American investment associate at the fund, says that’s because Anthemis was committed to diversity from day one, and the fund urges its portfolio companies to start early as well.
“As venture investors now for close to a decade, what we have realized is it is much harder to make these changes the larger and more established a company becomes,” Williams says. “As early-stage investors, we see it as our duty at Anthemis to push diversity early in the companies we invest in–not just for the sake of diversity, but in order to create sustainable and profitable businesses into the future.” One of Anthemis’s investments includes Backstage Capital, a venture fund led by first-time VC Arlan Hamilton, which is exclusively devoted to making early-stage investments in startups led by women, people of color, and LGBTQ founders.
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Provide Real Resources, Not Just Rewards For “Hustle”
Geri Kirilova, an associate at the New York City–based Laconia Capital Group, notes that founders usually need a financial safety net to launch a startup, which not every entrepreneur has. “Starting a business to begin with is a luxury, [and it’s] often out of reach for those without extensive personal runway,” she explains. Half of Laconia’s full-time team members and three-quarters of its interns are women or people of color, so the fund’s investors are more familiar with these issues than others might be.
“To expand the tech/venture club beyond those who have the means to take massive nominal risk with little downside, we need to broaden access to angels, advisers, and mentors early on.” As Kirilova sees it, that often means “providing resources in addition to capital that at least partially compensate for a lack of safety net.” That’s why Laconia holds workshops and office hours at coworking spaces and incubators–both generalist sessions as well as minority-focused meet-ups aimed at answering “every single email and LinkedIn message we receive,” Kirilova explains.
“Though traditionally the onus has been on founders to ‘hustle’ their way into intros to investors,” she says, “we are doing everything in our power to lower that barrier. We get out of the office as much as we possibly can.”
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Get Outside Your Own Ecosystem (And Not Just Sometimes)
Tracy D. Gray, founder and managing partner at Los Angeles–based fund 22 Capital Group, says that finding diverse founders is not rocket science. “I know, because I was once an engineer working on the Space Shuttle program,” she laughs.
“I actively market and recruit beyond the ‘mainstream’ tech ecosystem,” Gray says. Her hit list is long: “I reach out to ethnic chambers of commerce, women’s organizations, tech groups of color, and LGBTQ [organizations], historically black colleges, sororities and fraternities of color, attorneys of color, MBA clubs focused on diverse groups including vets, and the disabled. The list goes on.”
Because investors as a group aren’t as diverse as the entrepreneurs they’re hoping to identify, Gray says there’s no reason why this type of outreach shouldn’t be standard practice. “You have to get out of your comfort zone and meet people [who are] not like you,” she says. While 22 Capital Group is run by three female partners, Gray knows she and her team need to do more than just fund other women entrepreneurs.
Gray advises Avisare, a startup founded by an African-American woman founder that simplifies corporate and government RFP processes, and CarbonCap, a company created by a Latino entrepreneur for monitoring and capturing CO2 emissions across various industries.
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Look For Missed Opportunities
To be fair, that’s something every investor would claim to be part of their job description. But Anarghya Vardhana, an Indian-American senior associate at Maveron, considers it a mandate to find consumer groups that are being systematically overlooked. In seeking out those markets, she and her team find it easier to locate diverse founders who are interested in serving them.
Vardhana says this is a practice she’s developed with Rebecca Kaden, general partner at Maveron, whom Vardhana counts as a “primary factor” in her decision to join the firm. In identifying underserved consumers, she and Kaden ask themselves, “‘What are the products and services being built for them? And who is building it?’ We believe that the next set of iconic consumer brands will be built by people who come from every walk of life, and we’re excited to back them,” Vardhana says.
Maveron’s investor team of eight currently consists of three women, and Vardhana cites that relative diversity and the fund’s missed-opportunity philosophy for deciding to back Arivale, a data-driven wellness startup developed by an LGBT founder, as well as Dia&Co, a plus-size clothing business cofounded by two women.
These aren’t the only ways to diversify the startup world, of course, and many investors are using their own methods to close the investment gaps across gender, race, and ethnicity. The more VCs make this a top priority, the better off we’ll all be.
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