Silicon Valley Talks about Being the Land of Meritocracy. It’s Time for the Mythology to Become Reality.
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As a refugee immigrant who came to the U.S. as a young child, I was raised on the idea that America is the land of opportunity. And it proved to be true for my family. Soon after graduation from business school, I moved to Silicon Valley and immediately bought into its ideals of entrepreneurship and meritocracy. I believed as long as you are talented and willing to work hard, you will have the same opportunity as everyone else. For many years, it proved to be true for me: I led product at 5 startups, 3 of which were helmed by female CEOs with leadership teams that were half female.
Turns out, I was just fortunate. I’ll admit I had a myopic view of the valley. That has changed over the last few years, as brave women and people of color began to share their stories of harassment and discrimination, and tech giants were forced to publicly disclose their paltry diversity numbers.
Talent is equally distributed in Silicon Valley, but opportunity is not. Today, just 18% of VCs are women, 3% are black and 1% are latinx. And $9 out of every $10 in venture capital money still goes to startups led by men. Since I started working in venture capital, I see this disparity more now, too. At demo days and startup conferences, I’m surrounded in rooms that are mostly male, and still largely white.
It’s baffling to me that this is possible in a town that claims to love data and an investing edge. There are plenty of statistics that show imbalance is not a great investment strategy. Companies with diverse executive teams make more money. Women influence 83% of all consumer spending in the United States. Buyers are going to continue to get even more diverse: Estimates show that in 2025, the U.S. will be minority white.
I’m happy to say I work with a diverse team that understands this. At Spero Ventures, four of five of our investment team members are female; three of five are non-white, immigrant women.
We care deeply about backing founders from diverse backgrounds. We’re proud to have invested in Porter Braswell and Ryan Williams at Jopwell, where they empower underrepresented people to advance their careers. At Fathom AI, Ivonna Dumanyan and Gabby Levac have a mission to support every athlete to perform at their full potential, using sensors and AI to detect injury risk.
However, we still aren’t where we want to be in terms of supporting underrepresented founders. We recently analyzed our deal flow to figure out where the gaps are. We were surprised that our top-of-the-funnel deals were more diverse than we had originally hypothesized. Of the 1,000-or so deals we saw this past year, 30% were startups led by underrepresented founders. But when we broke down the investments at each stage of evaluation and diligence (1st meeting -> 2nd meeting -> diligence -> partner meeting -> term sheet), we found that the percent of underrepresented founders shrunk at each stage. At the stage where we primarily invest — series A — we didn’t see enough underrepresented founders with the traction we’re seeking.
We are planning to address this by investing earlier in underrepresented founders — at the seed stage where these founders, through anecdotal evidence, are finding it most difficult to raise capital.
We also want to provide the necessary resources and support for these founders to help them clear the Series A bar. Our team has extensive product experience from both startups and multi-billion-dollar behemoths, and we know how to scale businesses to hundreds of millions and even billions of users. We can also help founders with customer empathy and design sprints to achieve product-market fit; lean business canvas sessions to identify growth experiments and scalable customer acquisition channels; regular coaching through office hours; and introductions to our extensive network of early-stage experts across product, sales and marketing.
Diverse companies are more likely to have financial returns above their industry averages. We believe there is a high degree of value in backing these founders and doing so will yield great financial returns for our fund.
We strongly believe the next great tech founders will be female, LGBTQ and black/latinx.
The early progress we’ve witnessed over the past year in the venture and startup community make us incredibly hopeful for the future. There are great organizations working to train and educate underrepresented founders such as Founder Gym, Black & Brown Founders, AfroTech, Hillman Accelerator, Women Startup Lab and AllRaise. There are a number of successful early stage funds led by diverse investment teams investing in diverse founders, including Precursor Ventures, Gotham Gal, Backstage Capital, BBG Ventures, Cross Culture Ventures, Female Founders Fund and Ulu Ventures.
However, there still seems to be a wide series A funding gap, and we hope to change that. We know that venture capitalists are gatekeepers to funding, and we want to widen those gates and equalize access to opportunity.
If you’re an underrepresented founder working on a startup focused on well-being, work & purpose or human connection, or if you’re an investor or community organizer and would like to partner with us, I hope you’ll reach out to me through our website or at ha@spero.vc
Spero Ventures is an early stage venture capital firm that invests in the things that make life worth living: well-being, work & purpose, and human connection. If you’re a founder building a startup in these areas, we’d love to hear from you. We also love referrals — over 50% of our deal flow comes from referrals.
