Silicon Valley firm starts blacklist of venture capitalists accused of harassing women

It could backfire

Adapted from a story by The Washington Post’s Elizabeth Dwoskin.

Faced with a burgeoning sexual harassment crisis, leaders in Silicon Valley have come up with a very Silicon Valley solution: Use technology to create a blacklist.

The influential start-up incubator Y Combinator recently emailed an online reporting form to 3,500 entrepreneurs, encouraging them to blow the whistle on sexual harassment by venture capitalists.

Unlike companies with human resources departments and defined sexual harassment policies, no formal rules govern the relationship between entrepreneurs and financiers, whose whims can make or break a start-up idea.

Y Combinator asked entrepreneurs to fill out a form with the names of investors who may have engaged in “inappropriate sexual or romantic behavior” toward company founders. Those named could be cut off from Demo Day, Y Combinator’s highly anticipated biannual event when entrepreneurs pitch venture capitalists on some of the year’s hottest deals.

Partners at Y Combinator are also spearheading an effort to create an app that could provide reviews of financiers, akin to Yelp or the workplace-review site Glassdoor.

“We don’t call it a blacklist, but that is essentially what is happening,” Kat Manalac, a partner at Y Combinator, said. “There has always been a whisper network, where investors and entrepreneurs know which other investors are bad actors.”

Other groups are also forming to help victims share their experiences. Founded by women, start-up BetterBrave aims to be an online hub for female workers who felt they were sexually harassed at work. SheWorx, composed of female entrepreneurs, is planning an online database that would enable women and others to report unethical behavior by investors.

Anonymous apps, blacklists and databases could backfire — on the app creators, on people who felt unfairly accused or on women themselves — and exacerbate the problem of gender discrimination and harassment, said Debra Katz, a partner with Katz, Marshall and Banks, a Washington, D.C.-based firm specializing in employment law.

Testimonies flood the Internet

Silicon Valley’s long-standing problem with gender discrimination and harassment came to a head in recent weeks, as more female start-up founders publicly shared their stories.

Some women said they were harassed or touched inappropriately when they went to pitch their companies or sought advice. Others said they were pressured to have sex with promises that their business plans would be funded.

Certain stories forced venture capitalists to apologize and resign from their posts.

A report last month in the technology publication the Information included detailed descriptions by six women of unwanted advances by Justin Caldbeck, a well-known local investor.

The women said Caldbeck sent unwanted explicit text messages in the middle of the night, groped one underneath a hotel bar and tried to have sex with several when they sought funding.

Caldbeck resigned from his post, but the fallout continued when his partners quit and investors began to pull money from his firm, Binary Capital.

Dave McClure, founder of the start-up incubator 500 Startups, also resigned after admitting to acting inappropriately.

Elizabeth Yin quit her position as partner at 500 Startups after news emerged that her firm had not acted quickly on news of McClure’s behavior.

“When you are in a mind-set when you need to raise money, you will bend over backwards, and a lot of investors take advantage of that,” Yin said. “The power dynamic is appalling.”

Chris Sacca, an early-stage investor in Twitter, Uber and Instagram, who retired from investing this year, was also named in a report by the New York Times and issued a public apology online. “In social settings, under the guise of joking, being collegial, flirting, or having a good time, I undoubtedly caused some women to question themselves, retreat, feel alone, and worry they can’t be their authentic selves,” Sacca wrote.

An old boys club

Venture capital is even more of a boys club than Wall Street.

Of the five top venture firms — Sequoia, Greylock, Accel, Andreessen Horowitz and Benchmark — three lack a female general partner.

The tech industry also has the biggest gender gap of any profession, with less than 15 percent of the most sought-after and highly compensated engineering roles in Silicon Valley companies filled by women, according to a database of 272 start-ups maintained by Tracy Chou, a Pinterest engineer and founding member of Project Include, a diversity program for chief executives.