We Need More Anti-Racist VCs

A group of people standing on a small bag of money, looking up at a single person standing on a large bag of money. Inequity.
A group of people standing on a small bag of money, looking up at a single person standing on a large bag of money. Inequity.
Illustration by Kathleen M.G. Howlett

A Society in the Crucible

We are in a confluence of moments. After a series of high-profile, video-documented murders of unarmed Black people by police, the broader American public is once again paying attention to police brutality. Simultaneously, shutdowns due to the COVID pandemic and the resulting unemployment rates have created intensified scrutiny of our systems from a public becoming more engaged with world events and events in their own communities.

Anti-Racism and the Myth of Racial Neutrality

In the context of striving for racial equity, it is important to understand the difference between being “non-racist” and being “anti-racist”. Those who claim to be “non-racist” may say things like “I don’t see color” or “I view everyone as the same.” Being “non-racist” implies a passive approach to racial justice, and creates a “safe intellectual distance” between the individual and the systems in which they participate, the issues of endemic racial disparity within these systems, and how they, as an individual, benefit from these systemic inequities.

Performative Solutions: The Answers to Questions Nobody Asked

Performing Versus Solving: Police Brutality

Let’s examine the issue of police brutality in good faith through a simple lens any entrepreneur or VC can understand: problem statement, market need, proposed solution.

Source: Collaborative study between Rutgers, Washington and Michigan Universities
Source: Collaborative study between Rutgers, Washington and Michigan Universities
  • Demilitarize the police.
  • Change local, state and Federal policy, including ending qualified immunity for police and removing mandatory sentencing for non-violent crimes.
  • Arrest and charge police officers who murder people of color.
  • Remove Confederate monuments and censor old sitcoms.
  • Initiate police strikes / “Blue Flu”⁷ and increase violence by police against protestors.
  • Increase police funding.

Performing Versus Solving: Venture Capital

Now, let’s take the same approach and review the issues around the major racial disparities in venture capital — starting with the problem statement, then examining the needs that have been identified in the market, and the solutions being proposed by incumbents in venture capital and the entrepreneurial ecosystems they support.

Representation of Black and Latinx Startup Executives Versus U.S. Population (Kauffman)
Source: (Harvard Business School¹⁰)
  • Close the mentorship gap by seeding BIPOC-led companies who have already gone through mentorship programs and providing studio and ecosystem support to improve the chances of their success.
  • Create more opportunities for people of color to become investors with real authority (i.e. they can write checks and participate in decision-making as an equal partner).
  • Create opportunities for influence to traditionally marginalized communities by paying BIPOC for their time to sit on boards, councils, think tanks and collaborate in building new systems based on equity.
  • Branded “Councils” and other thought projects that ask people of color to work for free to fix problems they didn’t create
  • “Exclusive” funds — which turn out to be separate, but nowhere near equal². For example: SoftBank created a $100 million fund for Black founders while its Vision Fund (which invests in companies like Uber and WeWork) sits at $100 BILLION.
  • The usual performative branding and marketing exercises. Andreessen Horowitz has $14 BILLION under management, and seeded its Talent x Opportunity Fund¹² with only $2.2 MILLION while using Marvin Gaye lyrics as a backdrop.

Yeah, There’s a Business Case for That

If I need to make a business case for why VCs should be anti-racist, then I will.

Source: McKinsey & Company¹⁸

Becoming an Anti-Racist VC

This isn’t charity work, but rest assured that anti-racism will feel like an altruistic stance if you are someone who benefits from the system as it exists today. Perhaps we can agree that altruism is not the most highly-prized attribute in the venture capital world.

1. COMMIT FOR LIFE

Accept this mission as a life-long effort, not a short-term endeavor or marketing campaign, and commit to doing the work required to make a difference starting today and follow through when the media stops watching. This includes building new and sustainable anti-racist systems to ensure your work and influence lives beyond your expiration date.

2. COMMIT TO RADICAL GENEROSITY

Accept that making real change for future generations will require relinquishing some privilege²⁰ (giving up space, passing the microphone, creating and providing platforms for others in addition to giving your money and time). Ask for help when needed, but commit to paying people of color for their time.

3. COMMIT TO DOING THE WORK WHERE YOU ARE

This requires identifying and wrestling with bias through sincere curiosity and desire to improve yourself, your peers, and the systems in which you participate.

4. COMMIT TO INCLUSION AND EQUITY

Special funds or projects will not solve the root problems within the systems that are currently at work today and which dominate and pervade our lives. People of color not only need separate spaces and funds (specifically at the pre-seed level), but also access to influential seats at the shared table within the funds that currently exist.

Additional Resources

The Black Founder List (US-Based, Venture-Backed)

Bibliography

  1. Venture firms rush to find ways to support Black founders and investors. Techcrunch. June 2 2020.
  2. Black tech founders say venture capital needs to move past ‘diversity theater’. Washington Post. June 10 2020.
  3. NC IDEA to Establish North Carolina Black Entrepreneurship Council. NC IDEA. July 1 2020.
  4. How to be an Antiracist. Ibram X. Kendi. August 13 2019.
  5. Performative Allyship Is Deadly (Here’s What to Do Instead). Holiday Phillips via Medium. May 9 2020.
  6. Risk of being killed by police use of force in the United States by age, race–ethnicity, and sex. Proceedings of the National Academy of Sciences of the United States of America. PNAS August 20, 2019 116 (34) 16793–16798; first published August 5, 2019. https://doi.org/10.1073/pnas.1821204116. Edited by John Hagan, Northwestern University, Evanston, IL, and approved July 3, 2019 (received for review December 12, 2018).
  7. A closer look at the “Blue Flu”: More than half of Atlanta’s beat cops missed work after ex-officer charged with murder of Rayshard Brooks. Saporta Report. July 6 2020.
  8. Black start-up founders say venture capitalists are racist, but the law protects them. Washington Post. July 22 2020.
  9. Deconstructing the Pipeline Myth and the Case for More Diverse Fund Managers. Kauffman Fellows. February 4 2020.
  10. Diversity in Innovation. Harvard Business School. January 2017.
  11. The Conversation And The Data: A Look At Funding To Black Founders. Crunchbase. June 5 2020.
  12. Introducing the Talent x Opportunity Fund. Andreessen Horowitz. June 3 2020.
  13. Minority Markets Have $3.9 Trillion Buying Power. University of Georgia. March 21 2019.
  14. When Jack Daniel’s Failed to Honor a Slave, an Author Rewrote History. New York Times. August 15 2017.
  15. Meet Lewis Latimer, the African American who enlightened Thomas Edison. Brenton Mock via Grist. Feb 11 2015.
  16. Nigerian economy: Why Lagos works. Financial Times. March 25 2018.
  17. The 21st century belongs to China — but the 22nd will be Africa’s. Quartz. February 21 2019.
  18. The closest look yet at Chinese economic engagement in Africa. McKinsey & Company. June 28 2017.
  19. A Rising Tide Raises All Ships? Ayinde Alakoye via Medium. July 28 2020.
  20. The Word That Murdered George Floyd. Ayinde Alakoye via Medium. June 3 2020.
  21. This is what reparations could actually look like in America. Quartz. June 23 2017.
  22. Memo to the Silicon Valley boys’ club: Arlan Hamilton has no time for your BS. Fast Company. September 13 2018.
  23. Backstage Capital launches $36M fund to boost black female founders. Techcrunch. May 7 2018.

Startup Grind

Stories, tips, and learnings from and for startups around…

Kasem Rodriguez Mohsen

Written by

Serial entrepreneur, ethical disruptor and impact investor. Committed to creating equitable and sustainable funding models for underserved entrepreneurs.

Startup Grind

Stories, tips, and learnings from and for startups around the world. Welcoming submissions re: startup education, tech trends, product, design, hiring, growth, investing, and more. Interested in submitting? Visit our submission form here: https://airtable.com/shrShpeN89HrzCzOB

Kasem Rodriguez Mohsen

Written by

Serial entrepreneur, ethical disruptor and impact investor. Committed to creating equitable and sustainable funding models for underserved entrepreneurs.

Startup Grind

Stories, tips, and learnings from and for startups around the world. Welcoming submissions re: startup education, tech trends, product, design, hiring, growth, investing, and more. Interested in submitting? Visit our submission form here: https://airtable.com/shrShpeN89HrzCzOB

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