Why Black and Latinx Founders Will Represent 50% of the Meetings I Take This Year.
Horrific scenes continue to unfold that are difficult to explain to our children. There is so much work to do to fix and heal our society, and at home I am teaching my loving toddler and kindergartner in an age-appropriate way about historical racial injustice and the need to be active allies for change.
Professionally, I am a VC. My job is to find and fund valuable companies and return a healthy multiple of my investors’ money back to them. What should VCs be doing right now? The answer is simple and clear: we need to be much more intentional about meeting with Black and Latinx founders and taking their pitches. My experience with women-led tech companies is instructive for me.
A few years into my investment career, a funny thing happened when a friend of mine asked if I had ever backed a female-led company. “No,” I said, “because hardly any women pitch me.” I heard myself and cringed — I had just given the “the problem is with the pipeline, not with me” excuse. But the reason few women pitched me was the fault of my own passivity.
Most of the companies I met with were referred to me by my largely male tech network: male VCs, investment bankers, and CEOs. The founders they sent my way were also largely male.
I decided to be intentional about seeking out introductions to female CEOs, quizzing folks in my network if they had heard of any female CEOs tackling really hard problems in tech. Soon I was meeting with a flood of female founders who were building great technology companies.
As a result of these introductions, I led my former fund’s first investment in a female-led company, and two of the four portfolio companies in my new fund are run by women. And to be clear, I did not invest due to the identity of the founders. I invested in these companies because they have built breakthrough tech, developed a killer “need to have product,” and are building valuable businesses with admirable capital efficiency. But I never would have found them if I hadn’t decided to be intentional.
Just as there is no real “pipeline” problem with exceptional women-led companies, so too there is no “pipeline” problem with exceptional Black and Latinx-led companies if we as investors are just willing to expand our networks to find them.
Something tells me that these companies are of higher caliber, on average, than those whose CEOs match the “white male in a hoodie” VCs are still looking for. After all, why would an underrepresented founder who is told over and over how hard it is going to be to raise money persevere unless they have conviction their breakthrough tech is valuable, unique, and marketable?
Del Johnson has long criticized the “warm introduction” that so many VCs rely on for their deal flow as a barrier to underrepresented founders. He is right. Fewer than 1.5% of VCs identify as Latinx and 1.0% as Black. And as anyone who attends the social events frequented by VCs knows, most of the attendees are white. If CEOs need to rely on their social networks for access to capital due to the prevalence of the “warm intro,” should we really be surprised at the abysmally low percentage of VC funding that is going into underrepresented founders’ companies?
Of course, there are great investors who have already shown tremendous leadership in this area. Arlan Hamilton at Backstage Capital, Lolita Taub, Felicia Horowitz, Black Girl Ventures, Jewel Burks Solomon, Harlem Capital, Naithan Jones, Sarah Kunst, Del Johnson, Plexo Capital, and Kapor Capital are just a few that leap to mind. The rest of us need to join them.
My job is to find excellence and fund it. Black and Latinx founders are building amazing tech companies, but VCs like myself will continue to not see or fund the majority of them unless we expand our networks and get intentional.
So my pledge for 2020 is that I am going to be intentional about filling my pipeline of meetings with underrepresented founders. I pledge that a minimum of 50% of my founder meetings this year will be with companies with at least one Black or Latinx founder. And if you are an underrepresented founder building breakthrough technology, I encourage you to contact me through the email address on my fund’s website, Anathem Ventures.
It’s my job as a VC to find excellence. I haven’t been looking in all the right places. That ends now. Who will join me?
