Yesterday, the trusty Wall Street Journal published an article called, “Funds Flow to Venture Firms” , detailing that venture capital firms are “raising money at the highest rate in more than 15 years”.
15 years? Wow!
Apparently, it’s up towards the 13 billion dollar amount, and they haven’t seen this type of funds since the boom in the early 2000s.
Well, isn’t this just great! (Before you continue, it is great, check out the WSJ article on your spare time, continue on)
Maybe not, if you’re a minority or a woman.
Back in 2015, it was reported that “from 2010 on VC investments in the U.S., only 1 percent of VC-funded startup founders are black, whereas black people make up over 11 percent of the U.S. population. Meanwhile, 87 percent of VC backed founders are white and 83 percent of all founding teams of these companies are all white.”
Well, isn’t that just grand. You might be asking why that matters.
Well, I will let the Chief Technology Officer, Megan Smith, of the, um, United States (yeah, no big deal, right) tell you what she had to say about the of lack of funding for diverse candidates:
“In venture capital, three percent of venture funding is going to women and less than one percent to people of color. People across the country have extraordinary ideas for startups. We need to leverage that talent on behalf of our economic future. We need to support VCs to overcome their biases.”
Biases that they might not recognize. Having an unknown bias doesn’t make you racist, but it does mean you might prefer your race over another and you don’t even know it (or maybe you do). It means you are more likely to give money to people who look like you, because you trust them more. Get it?
It is America, we are a capitalistic democracy. I get the idea that the money should go with the best ideas and whoever has the best ability to be successful. But let’s cut the fat, it is also about who you know, so access to the money needs to be tweaked, does it not?
Luckily, there are people who are trying to make a difference, and we want to highlight an initiative going on in Portland, Oregon.
Featured in Next City here , the article highlights the actions by the Portland Development Commission creating the Inclusive Startup Fund last year which will be managed by Elevate Capital, a venture capital firm.
Do I hear public-private partnership? (Woot, woot — Those are my kind of partnerships)
The idea is to get more funding, but also mentors, for minority and women entrepreneurs. The access involves money, but it also involves knowledge. Sometimes you can have a great idea, but you’re not surrounded by the people who can best help to bring the idea to fruition. It’s a two-part need.
This is just one example. There are examples all across the country. A lot of people are talking about how we should go about increasing diversity in the tech sector and venture capital funding on both ends, the people giving the money and the people receiving the money. And like any other problem, it cannot be solved over night. But with more money coming into the venture capital scene, how many investors are stopping and thinking about how to increase diversity?
We get it, creating a return on investment and making a profit, is at the top of the list of priorities. But investing in more diverse start-ups and having more diverse persons involved is not about the immediate ROI. It’s about the return on investment that you’re making in a community for years to come.
To sound cheesy, it’s about reaching the next big thinker or person with a good idea, who might not have access. They don’t know anyone who looks like him or her to help them connect the dots. We have to create more opportunities along the way for our future. Yes, OUR Future. We have to think about the future always. The money is important, but a diversity of people will only help it. You just wait and see.
Dare to be different and send a message with your money.
Silicon Jungle Editoral Staff – siliconjungle.co
Silicon Jungle is a part of the Alibix.co family
Also published on Medium.