Unused opportunity: minority founders are still overlooked

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Perhaps the VC community is tired of hearing about it; Certainly, there are plenty of people who have had enough to deal with it. And yet the funding landscape for startups of minority groups and women is retained.

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In fact, most venture-supported startups are still overwhelmingly white, male, Ivy League-trained and based in Silicon Valley & # 39 ;, according to a recent study jointly conducted by RateMyInvestor and DiversityVC.

Other important findings from the report that examined publicly available VC-supported deals over the past five years and asked more than 10,000 founders:

  • Half of all founders are white, regardless of gender and education.
  • Only one percent of the founders supported by the founders is black.
  • Women-funded startups received only 9 percent of the investments.
  • Many VCs have publicly stated that they are working on diversity initiatives, but that dialogue is "just lip service", said Anthony Zhang, Chief Growth Officer of RateMyInvestor.

    Those in the VC-seeking trenches are consistent with the findings of the report. Some lawyers from the sector claim that responsibility comes very hard to women to deal with the problem.

    "Much of the pressure is on women to solve this very deep-rooted problem, and it will not work, and we alone can not solve the problem of this sector, where, frankly, the gatekeepers are dominated by men," said Allyson Kapin. , founder of Washington, DC-based Women Who Tech, a non-profit organization dedicated to promoting women in technology. Kapin is also the founder of Rad Campaign, a web design agency that works with non-profit organizations and socially responsible & # 39; businesses.

    What we see is that there is a lot of talking, but that there is very little action

    "It's up to the investment community to deliberately build relationships and eventually finance more female-led startups …", she told Crunchbase News. "We have had diversity commitments and a lot of media attention, but what we see is that there is a lot of talking, but very little action is taken."

    In an effort to give women a technological boost, Kapin – in addition to Craig Newmark (founder of Craigslist and Craig Newmark Philanthropies) – launched the annual "Women Startup Challenge" to address the inequalities in VC funding for female-led innovation.

    There, but overlooked

    The lack of several founders is not a pipeline problem. In fact, there are many women and people with a color who start viable, high-potential companies, said Brittany Davis, director deal flow at Backstage Capital, a VC company with a mission to invest in women, people of color and LGBT founders .

    Brittany Davis, Photo credit: Conor McCabe Photography

    "About the investment team here we see thousands of promising under-represented start-up founders who seek capital every year, and the opportunity to tap a more diverse group of founders is real," she told Crunchbase News.

    For its part, Backstage Capital has so far invested in 100 companies, launched an accelerator and set up the About Damn Time & # 39; fund, a $ 36 million seed investment vehicle that supports underrepresented founders who were said to have been initially overlooked by many virtual currencies.

    "So the founders are there, but most VCs simply do not look," said Davis. "And even when funds come across more different founders, they often do not see the possibility because either the founder or their company will not fit in their box of what they predict will be successful."

    The human costs

    The report reflects more than just a lack of cash flow to this segment of founders, but it also highlights what some founders also experience on a personal level.

    "I have been conditioned to know that my gender will be a problem," former VC Farah Papaioannou said. "I expect it with customers in male-dominated sectors such as oil and gas, but where I have seen the most challenges is with VCs."

    Farah Papaioannou, Photo Credit: Edgeworx

    Papaioannou is also co-founder of Edgeworx, a Silicon Valley-based edge computing startup, reminding herself of VC & # 39; s in her meetings & # 39; past & # 39; had been or only her male co-founder, Kilton Hopkins, speeches.

    "At a certain point someone immediately asked me why I was at the meeting," she told Crunchbase News. "Fortunately, I have the best co-founder when it comes to these problems, and where I am used to it, he would become furious and refuse to take money from VCs."

    I am conditioned to know that my gender will be a problem

    Although most startups want to score whenever they can, Giga said that principles played a bigger role for her team than dollar signs. Example: during her pregnancy she found it necessary to conceal the fact that she expected before she and her co-founder decided they did not want investors who would have a problem with it.

    "I delivered my son and closed our first client on the same day, so my pregnancy was not a problem at all," she said. "In fact, my son has added motivation."

    Reality Check, Diversity Fatigue

    Some VCs may be tired of reading stories about the lack of diversity and integration in technology, according to Joah Spearman, co-founder and CEO of the Austin based online travel guide Localeur.

    "No VC will publicly say that they are tired of this story, but their actions confirm that this is not something they treat with the kind of urgency they would require their portfolio companies to apply to revenue generation, adopting or entering into growth strategies, "Spearman told Crunchbase News.

    This story will only disappear, he said, when the people who are able to change the story take action and when risk capital as an institution makes it a priority to add general and venture partners of color to their new funds along with attacks – not only addressing – the subconscious bias that continues the negative cycle.

    Until then, reports like this will continue to emphasize the continuing discrepancies.