Investing in an Equitable and Just Society

Photo: Doug Duran/Bay Area News Group. Mural on the right by Skyline High School students in downtown Oakland.

We stand in solidarity with our Black community here in Oakland and across the nation as we mourn the tragic death of George Floyd and the reopening of the raw wounds of broken race relations and police brutality. We share in your deep sadness, outrage, and immense frustration that despite the sacrifices made by so many in the name of progress, we still live in a society marred by inequality and injustice.

At this crucial moment, we are taking the opportunity for self-reflection and the examination of how we conduct our business to identify areas where we can be more intentional and proactive in building an equitable and just society and an equitable and just venture ecosystem. Our mission to back entrepreneurs building a better world remains the same, but the events of the last two weeks have highlighted the urgency with which we need to act to reduce inequalities in society.

The challenges run deep, and the solutions require innovative thinking around equal access to economic opportunity, healthcare, education, healthy food, financial services, and more to enable all people to thrive. We are active investors in many of these categories, and we are committed to working with founders of all backgrounds, non-profits focused on these areas, and our local communities of color to better understand these challenges and invest in the best solutions. We are hopeful that the collective outpouring of grief, outrage, and resolve that has come from these tragic events will bring about the lasting change we all seek.

(6/15/20 update) We have spent the last two weeks as a team reflecting on what more we can be doing as a venture capital firm to address these big challenges, and we are committing to the following to start:

1. Inspired by BLCK VC’s We Won’t Wait initiative, we’ve decided to publish our historical portfolio diversity stats and goals going forward, as publishing them sets a higher bar for achievement. Drawing on Project Include’s guidelines for setting diversity and inclusion targets, we have adopted the goal that our portfolio founders will reflect the rich diversity of our society, including 20% underrepresented ethnic/racial diversity (10% Black and 10% Latinx) and 50% gender diversity (45% women and 5% non-binary), while also tracking intersectionality. These goals build on our work in Fund II, which made great progress in gender diversity, with 44% female founder representation, but fell short on underrepresented ethnic/racial diversity, achieving about half the target above. We have a number of initiatives in the works to expand our networks, increase diversity at the top of our deal sourcing funnel, and improve our due diligence process to increase the diversity of deals we invest in. We believe building a diverse portfolio that is more representative of the population is not only a moral imperative but is good for business as it represents a multi-trillion-dollar opportunity. We will be tracking our founder diversity targets closely for Fund III and will publish our results periodically.
2. We are committing our team to unconscious bias and inclusive culture training. Our brains are hardwired to take cognitive judgement shortcuts, often sizing up the people sitting in front of us based upon someone we know who they remind us of (as well documented in Michael Lewis’ book, The Undoing Project and Biased by Jennifer Eberhardt). With these shortcuts, we may find ourselves rejecting talented founders simply because they don’t “look” or “sound’ the part of successful founders we’ve worked with in the past. It is our hope that ongoing unconscious bias training, although not a panacea, will help us become more aware of our cognitive judgement shortcuts and enable us to combat them to be more fair in assessing founders. We also recognize the culture of the venture ecosystem is not inherently inclusive to underrepresented founders or investors. We plan to do this work internally at our firm and externally in our industry to foster a more inclusive culture for people of all backgrounds.
3. We recognize the same disparities that plague the venture ecosystem are also reflected in the broader tech industry. To help address this, we are stepping up efforts to work more closely with our portfolio companies in setting and achieving their own diversity and inclusion goals. Inspired by our good friends at Bee Partners, we are adding diversity, equity, and inclusion language to our term sheets, encouraging practices that aim to recruit, hire, and retain diverse candidates and employees. While the language is non-binding, we believe it communicates and elevates the significance of these issues to Better Ventures while also highlighting our eagerness to support their efforts in this area. Additionally, we plan to involve our portfolio company founders in our unconscious bias and inclusive culture training to help lay the groundwork for them to hire and retain more diverse talent. Lastly, we are working to identify external recruiters who have demonstrated experience in finding diverse talent to increase diversity at the top of our portfolio companies’ hiring funnels.
4. Finally, we plan to step up our efforts to work more closely with and support some of the many great organizations here in our hometown of Oakland that are building a more diverse and inclusive tech ecosystem. Better Ventures has called Oakland home since early 2014, while both Wes and Rick have each lived here for well over a decade. Part of the reason we moved our firm across the Bay to Oakland six years ago was because it presented an attractive opportunity to build a diverse portfolio that reflects the rich ethnic and racial makeup of the city. Oakland is one of the most diverse cities in the US with a mix of 27% Latinx, 23% Black, 15% Asian, and 29% White residents. We will continue to partner with organizations we’ve worked with in the past such as the Kapor Center, Evolve Oakland, and ICA/Fund Good Jobs, and we look forward to creating new relationships to advance a more diverse and inclusive tech ecosystem here in Oakland. We are on the lookout, so please don’t hesitate to reach out if you have partnership ideas on this front.

As mentioned above, these commitments represent a start (and in some cases, a continuation of existing efforts) for us, and we know there is more to do. We look forward to a lot of learning ahead, and we plan to publish periodic updates as our efforts evolve. We welcome your thoughts and feedback and the opportunity to partner with like-minded investors, entrepreneurs, and other members of the community to work together to solve these big and important challenges, as we know it will require the efforts of many to build a more equitable and just society.