Recently, Case Foundation CEO Jean Case published a very insightful blog post as part of Medium’s “You Tell Me” conversation series. Her piece addressed the venture capital industry’s lack of diversity and also announced the launch of the #FacesofFounders initiative — which is designed to give voice to entrepreneurs of different races, places and gender.
Jean’s post jumped out at me immediately, because it illustrated an essential, and often under-emphasized, point about diversifying the venture capital ecosystem — it really is good for everybody!
Whenever we talk about this issue, it’s important to remember that overlooking entire segments of society doesn’t just hurt women entrepreneurs or minority entrepreneurs or Midwestern entrepreneurs. It hurts the entire venture capital economy because it’s leaving so much potential innovation on the table. Likewise, initiatives that help lead to a more diverse mix of people and perspectives don’t just help those groups — they make the entire venture space more competitive and more innovative.
Here a few additional thoughts I took away from Jean’s excellent piece:
Sameness is the Enemy of Innovation
According to Jean’s post, only 10 percent of venture-backed companies had a female founder; only 1 percent had an African American founder and 78 percent of all venture capital went to either California, New York or Massachusetts. Any industry that is this dominated by one race, place or gender is going to be susceptible to sameness. And nothing stifles innovative thinking quite like rooms full of people who are all thinking the same thing.
The Numbers Don’t Lie
If you need proof that diversity can impact the bottom line, there is plenty to choose from. After all, women represent the fastest-growing group of entrepreneurs in America and their firms grow 1.5x faster than average. Meanwhile, as Jean pointed out, African American businesses are growing at a 34 percent clip while non-minority firms are going the opposite direction, and the number of Hispanic entrepreneurs is skyrocketing.
Unconscious Bias is Tricky
Human beings seem almost hard-wired to seek out others that look, act and think like they do. Most of the time we barely notice, but this unconscious bias can grow to cloud our decision making unless we train ourselves to recognize it and actively step outside of our comfort zones to overcome it. There is no shame in admitting this — in fact, it’s the key to finding a better path forward.
Every Step Matters
At JumpStart, we operate a $10M Focus Fund, dedicated specifically to backing female/minority tech entrepreneurs. This fund, which the Case Foundation has helped support, is just a drop in a very large bucket. But like the foundation’s own #FacesofFounders initiative, it sends a powerful and deliberate message to diverse entrepreneurs that we see them, value them and want them to be a part of our future. No one organization can hope to solve our diversity issues alone, but work that inspires others to see the value — including the financial value — of thinking more inclusively is incredibly important.
Our Problems are Solvable
There are plenty of disappointing statistics and survey results that might lead you to believe the current lack of diversity in the venture capital world is somehow the natural order of things — that it won’t, or can’t change. But this would fly in the face of the very ethos of the entrepreneur, who sees problems and immediately asks, “how can I solve that problem and make money in the process.”
Intel Capital’s Diversity Fund, UBS Group’s recently announced $110M fund for Women-led firms — these are just a few of the bright neon signs signaling that our industry is starting to see the massive economic opportunity here.
And if there is one thing the venture capital ecosystem understands — it’s how to make the most of a good opportunity.