Investing with the Inclusion Premium

Kauffman Fellows and MaC Capital released the first definitive study on financial outperformance and diverse founders this month.

The bottom line? Diverse startups return 30% more capital to their investors.

The study says,

“Our data shows that diverse founding teams who reach an exit by an acquisition or IPO return 30% more capital to their investors.” 

Across Valor’s portfolio, 70% is led by underrepresented founders, making Valor one of the most inclusive investors in venture capital. 

I’m proud Valor was formed in 2015 with inclusion at its core. Contrary to common wisdom in venture capital, which prioritizes in-network connections, since our beginnings, we’ve pioneered benchmarking dealflow across race and gender in addition to traditional metrics like stage, product-market fit, churn dynamics, and other common variables for VCs. We use scalable funnels to attract founders outside of our networks, including our own events like Startup Runway, our own networks like the Signature Family Office and Foundation series, our Innovation Council, and the Atlanta Startup Podcast.

Financial outperformance and financial inclusion

Our diligence process has a “green thread” of inclusion running through-out. We’ve been called out in prestigious publications from Forbes to our local Atlanta Business Chronicle for catalyzing inclusion.

How we see inclusion

Inclusion is a risk factor controllable by investors. It’s one we own as a core value and core differentiator for Valor. The region around us, the Southeast, has the greatest density of diverse founders regionally in the U.S. Plus it boasts the largest population of any region, with 38% of the U.S. population according to the U.S. census. It's also the fastest-growing U.S. region. Inclusion is a huge opportunity here, more so than in any other part of the U.S.

We have a published, stated inclusion philosophy called the Inclusion Premium.

Our Inclusion Premium philosophy for financial outperformance is:

Inclusion is a financial performance risk factor. Diverse management teams and boards are associated in numerous studies with 15-35%+ financial outperformance. Since inclusion is controllable and influenceable by investors, it is a critical fiduciary responsibility for private equity and venture capital fund managers. Valor processes accelerate and support inclusion at sourcing, at time of investment, and through investment management and disposition. Seed stage is the most dynamic and influential time to implement best practices around inclusion. This is where Valor invests.

Join us on the journey

Valor hosts monthly events for the inclusive innovation ecosystem on financial outperformance and inclusion. Whether you are building a start-up or investing, I hope to see you seen at one of them and wish you every reward on your journey toward the many benefits of inclusion.