VC Isn’t Concerned About Diversity. It Should Be.

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.

In recent months, the news cycle has been dominated by stories of the abuse, harassment, and violence that powerful men inflict on women—not only in Hollywood, but in tech, politics, journalism, and every other field where men are the gatekeepers. This moment of reckoning is long overdue, and I’m relieved that we’re finally starting to wrestle with the moral costs of these behaviors. I also hope we’ll use this moment to take a hard look at the economic costs of keeping so many women from reaching their full potential in the workforce.

The venture capital industry could play a major role in driving progress toward a more equal world—but until it makes diversity a priority, it will continue being a barrier to equality instead.

The data makes clear that diversity is good for business. Companies across industries are more innovative, more profitable, and less likely to take dangerous risks when women and minorities are more equally represented in their ranks. When a woman or a person of color—or a woman who is a person of color—doesn’t have a seat at the table, it has consequences for companies, their shareholders, and society at large.

The venture capital industry could play a major role in driving progress toward a more equal world—but until it makes diversity a priority, it will continue being a barrier to equality instead. Only 7 percent of the partners at the top 100 venture capital firms are women—and women-led startups get only about 2 percent of all VC funding. It’s no coincidence that the startup community is rife with stories of sexual misconduct, harassment, and even assault from potential investors. So long as men control the purse strings, women in search of funding will continue to find themselves on the wrong side of an enormous power imbalance.

Given both the problem and the opportunity, you would think increasing diversity would be at the top of VC’s agenda. It certainly should be. Yet when LinkedIn surveyed venture capitalists about diversity in tech, the results were dismal. Only 3 percent of respondents rated diversity as one of their top concerns. Fifty-nine percent of them said their firms didn’t support any diversity initiatives for founders. And a rising number of respondents—both men and women—agreed that the media “spends too much time discussing diversity issues facing the tech industry.”

Even in this depressing array of data points, one sticks out: 42 percent of venture capitalists believe the number one obstacle preventing investment in diverse founders is that “there are too few diverse founders with startups.”

As I see it, that answer says less about the landscape of founders and more about a blind spot among funders. The fact of the matter is, in VC as elsewhere, men are almost always the ones who get to decide who will have a shot at success—and they tend to pick people who look, speak, and act like them. It makes you wonder: How many talented women and underrepresented minorities are funds overlooking, leaving behind, or pushing out?

There’s a strong chance the next Bill Gates isn’t going to look anything like the last one. So I’m interested in finding solutions that will help ensure we recognize her when we see her.

There are a lot of good ideas out there. Reid Hoffman of Greylock Partners suggests that companies adopt a version of the NFL’s “Rooney Rule,” a policy that requires teams to interview a diverse range of candidates for high-level jobs. Kathryn Minshew, founder and CEO of The Muse, recommends that funds “commit to treating harassment and discrimination against female founders with the same legal protections as harassment and discrimination against employees.” And Theresia Gouw and Jennifer Fonstad, founding partners of Aspect Ventures, want to see more firms applying the scientific method to their diversity efforts: “actively hypothesizing, testing those hypotheses, and reanalyzing data on a continuous loop.”

There’s a strong chance the next Bill Gates isn’t going to look anything like the last one. So I’m interested in finding solutions that will help ensure we recognize her when we see her.

For my part, earlier this year, I began investing in women-led VC funds. I am, quite literally, putting my money where my mouth is. And, I’m doing this separate and apart from my philanthropic work because I don’t see these investments as charity—I see them as an opportunity for big returns. I hope other funders join me.

A more inclusive VC ecosystem is an important goal in and of itself—but it’s also only the beginning of what’s possible. As more women finally have the chance to reach their full potential, we’ll all reap the rewards: more innovative ideas, more disruptive products, more transformative products, and a better future for us all.