The Coalition of Founders For Change, Diversifying the VC Industry
The Founders For Change movement began with a simple trend: as new tech developments enter the industry, and new startups form around them, venture capitalists pounce on the opportunity to line their pockets with money. Investing in these innovative startups gives VC’s the chance to get in on the latest trends early and make a huge profit when these companies either go public or are acquired. Entering the Venture Capital industry is very profitable, and many people are beginning to follow the money. So who are these venture capitalists? According to Trevor McFedries, this population is made up of “a ton of white guys.”
If you haven’t already heard, #foundersforchange is a new movement aiming to promote diversity in the venture capital space and the tech industry in general. It all started when McFedries, cofounder of the robotics and AI startup Brud, expressed his concern that every single venture capitalist he approached was a Caucasian male. More specifically, he was upset to see a lack of women and other minority groups within the Venture Capital Community. As a result, he made a public statement announcing that he would only accept money from venture firms that had a woman or person of color in a top position.
In a chain reaction, this started the movement that is now known as Founders For Change. In a similar fashion to movements like #MeToo and other sexual harassment scandals in Silicon Valley, the Founders For Change Movement caught on like wildfire. At first, CEO’s of small startups gradually joined the movement, but eventually, even big players joined the cause: Dropbox CEO Drew Houston and Airbnb CEO Brian Chesky. These companies have taken the pledge to only accept investments from diverse firms.
But why is there a sudden outcry for diversity in the VC and tech industry? To understand this situation, we can simply take a look at the raw statistics. According to the National Venture Capital Association, last year alone the American venture capital industry invested a whopping $84 billion across 8000 different companies. The surveys was conducted with 217 major firms that invested, each with more than 2500 employees. Within these 217 VC firms only a measly 11 percent of investment partners were female. On top of that, Latinos only made up 2 percent of investment partners, while there were 0 African American partners across all 217 VC firms. This statistic is truly frightening for members of the Founders For Change movement.
In order to stop the increasing dominance of white male investment power, more companies are taking the pledge. For example, MongoDB recently shared: “At MongoDB, we Embrace the Power of Differences because we recognize that a diverse workforce is the best way to broaden perspectives and foster innovation. We’re proud to stand with #FoundersForChange for a more inclusive tech industry.” Another rising software company known as Greenhouse Software tweeted, “It’s official: #FoundersforChange has launched and our Greenhouse co-founders @dhchait and Jon Stross are proud to be a part of this initiative to hold the VC community to task to become for diverse and inclusive.”
The coalition doesn’t stop with these two members as the Founders For Change movement is now over 400 members strong: consisting of tech experts and company founders. The group recently released a public statement expressing, “I believe in a more diverse and inclusive tech industry. I am dedicated to having a diverse team and board, and when I have a choice of investment partners, the diversity of their firms will be an important consideration.” Perhaps this new coalition has a chance to change the VC world after all.
Despite McFedries’ abnormal request (at the time) from venture capital firms, he was still able to raise several million dollars while kicking off a big movement for social justice at the same time. As McFedries puts it, “It was counterintuitive for us to raise money from a bunch of white guys who want to extract all the value from the world…we’re interested in reshaping the way that tech looks.”
At Slice Capital, we fully support the Founders For Change movement. As an equity crowdfunding platform, we also put our views into action. Currently raising on Slice Capital is QUINN Style, a luxury style marketplace run by, to put it lightly, two amazing founders who aren’t “white guys.” We are more than happy to have QUINN as the first company raising on our platform.
Disclaimer: This article does not intend to provide investment advice.
