Never Too Early: How Homebrew Approaches Diversity at Seed Stage Startups

In this series, professionals discuss solutions to make the tech industry more diverse and inclusive. Read their stories here, then write your own using #TechTalksDiversity somewhere in the body of the post. For more insights and news on this topic and more, sign up for LinkedIn’s weekly newsletter on startups and venture capital here.

"I'm a tall, straight, white male who went to Stanford and worked at Google. So, you know, it was a real uphill battle." That was my response on a "Diversity in Venture Capital" panel a few years ago when we started Homebrew. The panelists prior - all from underrepresented segments - had most certainly encountered more struggles in their careers than I had. Sure I've worked hard and been lucky, but I've also benefitted - knowing and unknowingly - from looking the part.

With Homebrew, my partner Satya and I asked ourselves upfront what our diversity priorities looked like with regards to founders we backed and the teams they built. It was intentional - not just because it was the "right thing to do," but because we knew from experience and published research that diverse teams make for better outcomes. There was very little chance that Homebrew could be a top-performing seed VC if we didn't attract the best founders to our fund. Approximately 20-25% of our core investments feature at least one female founder, slightly above the 18% cited in the LinkedIn survey.

For example, one of our fund's first examples was in a NYC-based startup called The Skimm. What we saw were two founders perfectly suited for their business, helping people be smarter by bringing them the daily news in a completely original format. What we saw was a small but passionate community growing organically and remaining committed over time. What we saw was a new voice bringing together an incredibly valuable but previously underserved market - professional and aspiring-professional women 18-42. But we were the sole VC to lead the the seed (other venture investors have invested substantially in subsequent funding rounds). Why? Well, some saw *just* two young women without technical backgrounds and a simple email newsletter. That was correct factually but very, very wrong when assessing the business opportunity through such a narrow lens.

The lesson for us from The Skimm and others is that top notch founders don't look like any single visual archetype. But even internalizing this mentality at Homebrew hasn't yet produced sufficient results: while we're thrilled to back so many gender-diverse teams, we don't feel as if our founders are ethnically diverse enough with regards to their background and countries of ancestry. That needs to change and it's an active work-in-progress for us.

Homebrew also takes a longterm view to helping create the next generation of diverse founders. We're fortunate enough to have engineer Tracy Chou as one of our fund advisors and her work helping convince large technology companies to share their diversity numbers, inspired us (and Homebrew founders) to ask, "what does diversity mean on seed stage teams? When you're hiring your first five, 10 or 20 people, should 'diversity' still be a focus?"

This question resulted in "How to Think About Diversity at Your Early Stage Startup," a resource guide we assembled and published for the startup community. Helping your founders build great teams is one value-add that can really distinguish an investor so I was especially surprised that LinkedIn's Diversity survey found "3 out of 4 investors “in the know” said that their firms are not supporting any initiatives to increase diversity among founders in their portfolio."

So no, don't count Satya or me among the "More than 40% of male VC investors think the media spends too much time discussing the diversity issues facing the tech industry," according to a recent survey by LinkedIn. There's a new wave of funds and founders who don't see diversity as just a moral imperative but rather as a competitive advantage. Even as a small fund we intend to continue investing in diversity-related initiatives aimed at not just assisting the startups we've backed, but the tech community as a whole, grow more inclusive in the years to come.