A tale of two investors

It’s time for venture investors to dig deeper on diversity, starting with the right metrics.

Ellen K. Pao
Apr 25 · 6 min read

Would we measure the diversity of a college faculty by counting only the number of departments with at least one woman faculty member? Or one professor of color?

That metric encourages tokenism and enables startups and firms to manipulate the numbers — just add a cofounder to game the stats to “include” groups and check the boxes.


It sounds like a whole different investor. And it points to a need for change.

Instead, let’s push the conversation forward by adding some more straightforward and importantly more meaningful metrics — ones that better measure the impact of our time and dollars. Kudos to YC for being first (to my knowledge) to share numbers that look at percentages of founders instead of startups as early as 2017. The most recent numbers from YC’s W19 batch use both methods:

Measuring dollars is critical because of what we already know.

At the end of the day, though, the most important measure is the investment amount, not the number of teams or people. Research shows a woman founder receives less than half the dollars of funding on average that a male founder gets. And consider the impact of intersectionality, which shows how biases against people in more than one underrepresented category are more than additive, on funding. Black women receive only $36,000 in average funding compared to the overall average of $1.3 million. Latinx women receive only 0.4% of total VC funding.

Divide dollars invested in a startup by the number of founders before allocating by gender and race of each founder.

  1. Show me the money. Count dollars to all founders of a specific gender or racial/ethnic identity, specifically to these categories: women and nonbinary founders, Black and Latinx, and then by Black and Latinx women or NB founders. Use the right denominator: Look at dollars per founder, not per startup. Intersectionality matters: Look at each category across multiple groups, most importantly race x gender. Start at the top: Calculate the same percentages for CEOs. We need to see progress in both founders and CEOs or we aren’t addressing the systemic problems. And CEOs are the only ones who can drive diversity and inclusion at companies — or not.
  2. Measure significance. Calculate % of $s to founders of underrepresented groups divided by total $s invested. Take dollars invested in women and Black and Latinx founders as calculated above (don’t double count) and divide by the total dollars invested in the same time period.

When you look in the mirror, do you want to see the investor you actually are or only the investor you want people to think you are? Do you want true diversity and change or performative diversity and stagnation?

We’re sharing the metrics that will help you be the investor you want to be and the best investor you can be.

Project Include

Give everyone a fair chance to succeed in tech.

Ellen K. Pao

Written by

Co-Founder and CEO of Project Include. Author of Reset. Angel investor.

Project Include

Give everyone a fair chance to succeed in tech.