How VCs can Update Anti-Harassment and Discrimination Policies for Remote Fundraising
After six months in an unprecedented pandemic, the startup community is finding its footing in a “new normal.” COVID-19 restrictions have shifted fundraising and investing to online platforms, transforming the deal-making process and relational dynamics between entrepreneurs and VCs. Since “business as usual” is experiencing fundamental changes, the tactics and policies investors use should adapt to meet the circumstances.
The economic and social landscape of COVID-19 has exacerbated existing power dynamics in VC fundraising by (1) amplifying bias, and (2) affecting willingness to report. This “new normal” in venture fundraising should be matched with updates to VC firms’ harassment and discrimination policies so that entrepreneurs and investors remain well-protected whether the raise is remote or in-person.
Amplified Bias, Reduced Willingness to Report
Research indicates that stressful situations, such as a global pandemic, worsen decision-making by amplifying bias, which in turn affects who gets funded. Bias, commonly manifested in bullying, exclusion, and harassment, can single out and harm women and minority groups if left unchecked.
While race and gender disparities in fundraising are already evident, the COVID-19 pandemic has engendered new and seemingly rational justifications for biased decision-making. According to VCs and founders, a key change in COVID-19 deal-making is evaluation. Since in-person meetings are not prudent during a pandemic, an entrepreneur’s pre-existing relationships and experience can translate to priority and even preference. For example, previous encounters with a VC in person may “significantly increase [an entrepreneur’s] odds in today’s climate.” Although this may appear sensible due to the advent of remote work, undue preference for social capital perpetuates disadvantage for statistically under-represented founders who may not have prior relationships to rely upon. Moreover, when “pre-existing experience” is amorphously defined, its interpretation leaves space for bias.
If a founder is able to land a remote meeting, remoteness itself is a breeding ground for bias. It is without question that video calls in living rooms vastly differ from traditional, in-person meetings. Yet, entrepreneurs can be disproportionately impacted when they do not have childcare, reliable internet connection, or a visually professional background for the virtual meeting. Environment aside, remote work can have pernicious effects because in-person interactions are not fully transferable to video calls. Psychologists have found that video communication produces feelings of isolation, anxiousness, and disconnection — making a high-stress pitch even more nerve-wracking.
In addition to amplifying bias, the circumstances of the pandemic and remote work mean less oversight in meetings, which emboldens predators and undermines victims’ confidence that they will be believed. Isolation should be a red flag for investors, especially if they are recommending that entrepreneurs limit the number of participants present during video calls. The EEOC has affirmed that isolation is a risk factor for sexual harassment, among other characteristics that are present in fundraising such as decentralization, power disparities, and client satisfaction. Although remote work is conducive for exploitative behavior, some firms are deprioritizing harassment complaints by postponing investigations during the pandemic. These pressures can discourage reporting and whistleblowing.
How To Update Your Policy
Since interactions between VCs and entrepreneurs are devoid of sufficient legal protection, it is incumbent upon diversity and harassment policies to provide safeguards. The conditions for exploitation created by the pandemic are worsened when policies do not cover online misconduct.
#MovingForward has collected over 170 diversity and anti-harassment policies from our member VC firms around the world. One quarter of our members’ policies addressed remote or virtual work environments prior to the pandemic. Of the 43 firms whose policies do cover remote work, 23 of them clearly indicated that remote work is within the scope of their policy and/or provided concrete examples of online harassment and discrimination.¹ By drafting policies that are robust for the changing times, these firms have served their portfolio companies and entrepreneurs in their community well.
For firms looking to update their policies with remote work provisions and firms looking to improve the provisions they already have in place, we recommend the following:
Review Policies, Trainings, and Investigation Procedures
- Enumerate specific examples of remote misconduct. Online harassment can take a variety of forms, including: Inappropriate or sexual comments, distribution of offensive content, sexual or racial innuendo, obvious exclusion and ridicule, and unwelcome communications under the pretense of work. Firms can list these examples and others in their policy as concrete examples that are included beneath the definition of “harassment.” Policies by Blackbird Ventures, Kapor Capital, and Bessemer Venture Partners do this particularly well and are great examples to follow.
- Review diversity and anti-harassment training to ensure ability for remote access, with remote-specific examples and use cases.
- When a report is made, do not delay on the firm’s response nor investigation. We advise firms to send a confirmation email when the report is received and to guarantee a timely response within 48–72 hours.
- Maintain a professional work culture using environmental cues to help promote respectful behavior. For example, VC firms can enforce a work-appropriate dress code for their employees during all video calls.
- Communicate with employees and applicable third parties that professional decorum and adherence to anti-harassment and discrimination policies is expected while working from home.
- Limit the effects of isolation by removing caps on attendees during video calls.
- As a general rule, practice empathy and flexibility. There are many ways to do this: First Round Capital and Sequoia Capital published blog posts recognizing pandemic challenges for founders, and many other investors have shared pandemic-related resources and guides with founders in their communities. Some VC firms are now providing mental health services to portfolio companies. During fundraising, VCs can easily assist founders by acknowledging the unpredictability of virtual meetings and accommodating when circumstances arise beyond either party’s control.
Diversity and anti-harassment policies are living documents that can positively shape interactions between VCs and entrepreneurs. The COVID-19 pandemic’s “new normal” of remote work demands that policies get updated to meet the times. Relevant policies can and will substantially improve the pandemic-era fundraising process.
What has your firm done to support diverse founders in remote fundraising? Let us know in the comments.
Special thanks to Ginny Fahs and Eitan Wolf for their contributions to this blog post. The #MovingForward team is here to help with policy updates. Contact email@example.com if your firm needs assistance.
¹Firms who clearly indicated that remote work is within the scope of their policy and/or provided concrete examples are: Kapor Capital, Bessemer Venture Partners, Bloomberg Beta, Chicago Ventures, DFJ, Greylock Partners, Khosla Ventures, SoftBank Investment Advisers, Obvious Ventures, Foundry Group, Greycroft, Firebrand Ventures, Union Square Ventures, Emergence, Eniac Ventures, InterWest Partners, AirTree Ventures, Sierra Ventures, MMC Ventures, Blackbird Ventures, Blue Bear Ventures, Berkeley Skydeck Fund, and Bee Partners.