Diversity in Venture Capital - A National Conversation
The lack of diversity in our industry has become a national conversation. It's being actively covered in the media from venture press to the national publications. Large tech companies from Intel to Apple are setting public goals to aggressively increase the diversity of their employee base, in part to get their share of the best employees, but also because it better reflects their customer base. Policymakers from both sides of the aisle are focused on economic equality across all populations. And of course, there was the Pao/Kleiner case. The verdict may have been a Rorschach test for some observers, but it is a benefit to everyone in the industry that both parties walked out of the courtroom reaffirming the importance of and their commitment to improving diversity.
Before a public conversation at last year's NVCA annual VentureScape conference with Kara Swisher and Vivek Wadhwa about our lack of diversity, a number of us joined a "Deep Dive" session to develop ongoing efforts that lead to real, measurable results. That room was filled to capacity—"and importantly, not just with women and minorities. We all began asking ourselves"—what can we do to change? Deep Dive panelist Jeff Bussgang of Flybridge Capital Partners outlined some of the key challenges and potential answers to that question on his blog after the event.
When I joined the industry in 1996, these questions were asked in small rooms with equally small groups of women and minorities. Today, these conversations have expanded. We ve been joined by the traditional leaders in our industry: white men. Furthermore, the leading venture firms are taking a role and have a stake in the outcome.
Diversity & Why It Matters
I m encouraged that this issue is front and center. Diversity plays right to the core goals of venture firms since it is not only good for the venture industry, it is the smartest approach to investing. Studies have shown that having a diverse team encourages different perspectives, creates better decision making, and is correlated with better performance. Most recently a Scientific American article noted that "in the presence of diversity, [people] were more diligent and open-minded." Having a broader circle from which to draw for deals, contacts and business experience makes us more effective as investors. Our objective is to work with the best and brightest innovators so we will succeed only when we cast our net for talent as wide as possible.
Gender is only one variable of diversity, but the one I can speak to best. During my career, I ve evolved from not wanting to talk about being a woman in business, to today, when I feel it is my responsibility to do so.
It might be an awkward conversation to have but now is the time to have it … and to be prepared to talk about different aspects of diversity including: What it is like to be African American or Latino in our business? What would I encounter as a military veteran wanting to find a place in this ecosystem? What is the experience of being LGBT, and deciding to build a career in the innovation economy? It isn't easy, so let's figure out how to change that.
The Work of the NVCA Diversity Task Force
I jumped in with both feet when I was asked to return to the NVCA board last Fall and then later asked to co-chair the NVCA Diversity Task Force alongside Ashton Newhall of Greenspring Associates. In our first meeting early this year, we signaled to the NVCA Board that we wanted to expand the Task Force. We felt strongly that our work would be incomplete without the insights and expertise of people of diverse races and ethnicities. The board was supportive and they took our goal one step further, suggesting that diverse candidates for the Task Force should also be considered for the NVCA Board of Directors itself.
The slate of 10 board candidates, the most diverse ever, being proposed to the membership includes women and people of color who will be inducted on the anniversary of last year's conversation on diversity. A Catalyst study showed that having diverse leaders at the top of an organization is one of the critical factors for increasing diversity in the overall workforce. While we are gratified by this development right out of the gate, we also know it is only the first of many necessary steps to demonstrable progress.
The task force meets regularly and has set three goals:
- To increase the ratio of women and minorities in venture firms and startups, particularly in the key roles of investing partner or senior line leadership.
- To increase the connections between experienced investors and women and minorities.
- To share and advocate for best practices that will foster a more diverse ecosystem at all levels and across the industry.
We acknowledge that it will take time to change the ratio of investing partners since the career path is a long one, but we won't achieve it if we don't start now. The venture ecosystem is based on the value of innovation and change. This is the perfect opportunity to be innovative inside our organizations and our boardrooms.
In January, we started on a "listening tour." The Task Force itself is only the nucleus of our activity since the power and great ideas come from a much larger community, from whom we have a lot to learn. We are meeting with NVCA members, non-profits, educators, incubators and limited partners on a weekly basis. Borrowing from the software playbook, we are building this effort on an "open source" model. Rather than creating yet another initiative that dilutes the efforts of the many excellent ones that exist, we are connecting and leveraging the best of what already exists.
The NVCA is partnering with Dow Jones on a research study that will be distributed widely this spring to VCs and their portfolio companies asking for data on their current levels of diversity across a number of dimensions. We know that the ratio of diverse employees in venture is too low, and well below that of corporate America. What we need is a deeper understanding of where we are today so we can build an effective roadmap that addresses the key issues identified by the research. We will be sharing our results publicly.
This summer, we will begin to develop the first set of initiatives to roll out in the fall. This is just the beginning of a long-term commitment. We are planning a public event to discuss our initiatives and to introduce the connections we are establishing with the broader community. Since venture is a business that is spread across the country, we will offer solutions and conversations that are "virtual," so everyone can access them easily.
How can you help? The focus for the Task Force is to generate solutions and expand our network. What we need are ideas that have worked for you. We are interested in the connections or resources that you find valuable and that can help us develop the first set of recommendations.
Please join us in the conversation and in this effort to change our industry for the better.
Originally published May 5, 2015.