Conversations: Rethinking the Ecosystem

3 hours, 45 links


Updated February 11, 2023

Varza: Station F

Roxanne Varza (Station F, Sequoia Capital)

Roxanne Varza is the director of Station F, the world’s largest startup campus, which gathers more than 30 incubators in one campus in Paris. Based in the 13th arrondissement of the city, it opened its doors in 2017. One of her core goals with Station F is to make the startup world a more inclusive space. We talked to her about Station F’s Fighters Program for underprivileged founders and were lucky enough to include two of the Fighters—Dinal Kurukulasooriya (founder of Autochatic) and Brian Thielly (founder of LinesDude)—in the conversation.

Interviewed November 2020

The Origins of Station F

Johannes Lenhard (JL): We really want to talk about how you make space for underprivileged founders at Station F with the Fighters Program. What is this program? Why did you start it? What are the features of it?

Roxanne Varza (RV): The Fighters Program is our program for underprivileged entrepreneurs. At Station F, to be completely inclusive, we do not specify what it means to be underprivileged. Our assumption is that we cannot even begin to imagine all of the different situations that people may have found themselves in. We provide some examples for guidance, but we are open to people from all contexts and walks of life.

Fighters could be refugees, or anyone who has lived through a difficult situation. Examples of people who have previously gone through the program include a former prisoner and somebody who has been homeless. We have also worked with entrepreneurs without formal higher education who are from particularly difficult regions and ecosystems where they couldn’t implement their project locally for political or other reasons. We are open to everyone who has faced adversity.

Once someone has been taken onto the Fighters Program, we provide them access to the formal Station F program free of charge for one year. This means they are integrated into our Founders Program—our main program that welcomes 200+ early-stage companies—and ensures that the bar and expectations for our Fighters is the same as for other entrepreneurs, but we support Fighters with additional resources and an extended time frame to reach their entrepreneurial goals if they need it. That is essentially the mindset behind the program.

You asked, why are we doing this? The answer is simple, diversity is incredibly important to Station F for a number of reasons. What is interesting about the Fighters Program is that it was actually one of the core reasons that our founder, Xavier Niel, wanted to create Station F. Besides filling a big building with entrepreneurs and creating an ecosystem, he also really wanted to prove that anyone can be an entrepreneur. This is a very important message, especially in France, where there is an elitist entrepreneurial mindset, built upon an elitist educational system. Often, even in the Station F ecosystem, we see that there are subsets of people who are on a path to succeed: those with a specific educational background or who are from a higher socioeconomic background. Our founder really wanted to prove that this is not the only background with which entrepreneurs can be successful. Hopefully, we’re contributing positively to that narrative with the Fighters Program.

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How The Fighters Program Supports Founders

JL: Can you share a little bit about what the Fighters Program entails? How many people do you take? What do Fighters receive in terms of benefits? Is there an education element to the program? Is there a stipend? I can imagine moving to Paris in normal circumstances is expensive. Where do Fighters live?

RV: Firstly, I must put this into context and comparison with the other programs on the Station F campus, which are very hands off. Entrepreneurs are usually provided with workshops and access to support and it is largely up to them to make use of the provisions, or not. A lot of the startups on campus—because they are part of a dedicated partner program with a dedicated team—won’t necessarily have contact with the Station F team, unless in a specific context of specific groups, events, or meetings. For the Fighters, we have a very different approach; we started small, because we thought we really needed to get to know each of the Fighters, see them regularly, work with them very closely. It’s a much more hands-on approach. Our first batch was three years ago, and we are, for the first time, increasing the number of startups we take this year from 15 to 30.

The real challenge is often just getting them up to speed on the basics, things like how to incorporate a company and how to find and file all the paperwork. They have all heard the jargon, “I need to fundraise.” And we’re like, no, we need to build a product and to get a team first. We have to walk them through the steps. To do this effectively, we see them on a monthly basis. We also organize additional workshops for Fighters that we wouldn’t necessarily host for the rest of the campus, because lots of our entrepreneurs come to us with an entity already created, an existing team and a product. The Fighters tend to be one step earlier. And then to your question about stipend, we’re looking at reinforcing some of the financial elements in the next edition of the program. The Fighters Program is free for all entrepreneurs for one year. Meaning there is no cost to be at Station F and participate. Then there is the housing we offer. Our housing is very low cost at €400 per month per room. We don’t provide any additional discount for Fighters at this stage, because we would lose money. But we are looking at how we can provide a stipend in the future.

Erika Brodnock (EB): I am intrigued. How does someone who has previously been imprisoned or homeless afford to do the program? Do you allow mixed teams—can there be just one Fighter in a team if it’s a team of two, or do both team members have to be Fighters?

RV: Yes, we do have mixed teams. I think what we are looking for is a mixed team that is somewhat balanced. We don’t want somebody who has a big-name MBA and has built their business and then they find a Fighter to add to their team as an easy way to get a free year at Station F.

However, we don’t usually see that. What we do see is Fighters doing the searching. One of our Fighters had to search long and hard to find a CTO for his business. It has been very challenging for him, but he’s done an excellent job.

We have only ever had one team that couldn’t stay in the program for financial reasons. This was before we had housing available, and they really struggled to pay rent in Paris and to find a place that they could live in. As a result of this, when we launched our housing units, we did so ensuring that a lot of the criteria needed for an apartment in Paris don’t apply to our housing. Rent is affordable and entrepreneurs do not need a guarantor. As a result, a lot of our Fighters live in our housing units. Other than that, the program doesn’t require full-time attendance on campus. Entrepreneurs can therefore do consulting, and other things to make ends meet outside of launching their business. We also have people who have saved some money or who are scraping by while bootstrapping, crowdfunding, and finding different ways to make it work financially. Because the program is free, they are not actually paying to be at Station F, so all the money generated goes back into their businesses.

How Station F Builds a Cohort

EB: How do you find the right people to support? How do you encourage them to apply? And how do you look beyond your existing network that may indeed be privileged, in some respects, to find the right people for the program?

RV: There are two things. One is we have actually changed the application criteria for Fighters who are applying. For all of the other Station F programs on campus, we use a lot of startup lingo, we require that you apply in English, we say you need to show us a working MVP, and that you need to have traction. These are things that I think people who are less familiar with the startup ecosystem would not be able to provide. So, for the Fighters Program, we opened up the criteria by saying applicants just need to show us that they have an idea and have done something with it. Some entrepreneurs applied with a Facebook page and a multitude of subscribers, while others had launched a series of YouTube videos they were struggling to monetize. We take the fact our Fighters had an idea but didn’t just sit there with it as a proxy for having the hustle they need to succeed. The second element is that it is the only program on campus that can be applied for in French. Both English and French applications are accepted to enable Fighters to apply in the language that is most comfortable to them.

In terms of how we find Fighters, that is a really good question. In France we have a very solid network of partners that help us. We work with a number of different networks and organizations doing outreach in primarily suburban and rural areas in France. On a global level, I think we could do more to generate greater visibility for the program. We don’t have any global partners, so all of the incoming applications have been organic. We have noticed that global applicants have a very similar profile to the Fighters we get in France: we have received applications from people who have been persecuted for political reasons and people from very difficult educational backgrounds.

Translating Life Experience to Entrepreneurial Success

JL: Perhaps one more question before we move to questions for the Fighters: from your perspective, what is the biggest success story you have seen from the Fighter Program so far?

RV: It takes longer for the Fighters to mature their companies for two reasons. One is they’re coming to us at a much earlier stage, a lot of them are coming pre-product, pre-team, pre-everything, and in a lot of our other programs, they already have some kind of metrics and traction and revenue when they come. The second reason is simply because Fighters face a lot more barriers and challenges. The biggest success we’ve seen so far is Tally. He is a former prisoner and the founder of DigiTall Paris. His story is incredible. He was initially arrested for car theft and went on to create an anti-theft device for cars.

He brought this prototype. And there were so many wires. And I was like, “Tally, what are you showing me?” But he knows exactly what he is doing, and it is fantastic. Yet, he had a very difficult time finding co-founders, he had a very difficult time getting funding, because obviously all the investors didn’t want to fund him given the fact that he had a prison sentence that was pending. Despite all this, he didn’t give up. He was just like, “I’m going to build this and we’re going to see what happens.” But now that’s all behind him, he actually managed to sign a partnership with Sigfox, which is a French unicorn company. They are helping him with the industrialization of his prototypes. They are co-building them together. He has also managed to secure a couple of investors. He also managed to finally secure a CTO after two years.

Two Fighters Tell Their Stories

JL: Let’s also hear from two of your current Fighters—welcome Dinal and Brian. You are both Fighters from Season 2, so are still at Station F as we speak. How has the program helped you so far?

Dinal Kurukulasooriya (DK): As a foreigner coming from a low-income country, Sri Lanka, it gave me time to settle in since I had no office space cost. I have made a few friends at Station F, too. But a big part of the benefits are financial: I was able to get perks for cloud space and for technologies such as Stripe, which we wouldn’t have had access to in Sri Lanka. What Station F also really helped us with is to see the market we are in with Autochatic from a European or Western perspective; the viewpoint helped us to understand aspects such as pricing, product development, value propositions, and especially sales, better.

Brian Thielly: For me, the Fighters Program helped me so much with visibility for LinesDude in the press. I’m frequently contacted by journalists who heard of me thanks to the Fighters Program and it enables me to grow my business network, which is really powerful in this early phase.

EB: What advice would you give to others in your previous situation wanting to start a business?

DK: First, you need a kind of emergency checklist: always make sure you have enough money in hand. Ask yourself: are you ready to go through a stressful and an anxious period with a lot of ups and downs? Also, make sure there is someone to start the business with—being a solo founder is really hard. To find the right person: make sure the business idea you’re willing to pursue is in your (or co-founders) core competencies. Once you are on it: move fast, validate fast, iterate fast, and fail fast (something we took time to learn). And back to my first point: money. Ideally, you can make sure the business can stay alive on its own for a long enough period of time without external funding.

What’s Next for Station F

EB: To wrap us up, Roxanne, I am keen to hear about the next steps you are taking to help overlooked founders at Station F. You mentioned before that you may be able to offer stipends, is there anything else? And what other aspects of the ecosystem are you working on?

RV: Today the Fighters Program has been largely the Station F team meeting with the Fighters companies, organizing workshops, and offering support. We think that we can do more. Everyone is talking about diversity, but people aren’t actually doing so much. We’re looking at strengthening the program one step at a time. We have doubled the program in size. Next year, we also want to find a number of partners and financial supporters so we can provide Fighters with financial aid, but also, we’re realizing that many of the big companies, the Googles, the Facebooks, and Microsofts, they all want to make a difference, but they are not currently doing very much. We are looking at how we can work with them to better support the Fighters Program. Can they mentor the Fighters? Can they provide more tools for free? Do they have content they are not making as available as it should be? We are speaking to a number of different potential partners right now to really reinforce this.

We have also asked all of the Station F partners who are on campus to somehow contribute to the Fighters Program. They are on campus, so they are accessible, but the Fighters probably don’t dare to go and speak to them unless they really see an opportunity that they want to take advantage of. We want to reinforce the whole experience and offering by ensuring the Fighters have greater access to all of our partners. In terms of a stipend, we have a deal in place for the upcoming year with La French Tech for all of our Fighters to access a grant of up to €12K.

Warner: Diversity VC

Check Warner (Ada Ventures, formerly Diversity VC)

Check Warner is one of the co-founders of Diversity VC, an organization that was started in late 2015. Check raised a fund in 2020, as general partner at Ada Ventures, focused on overlooked founders and markets. In this conversation with her, we talk about organizational and structural efforts, with a particular focus on the venture ecosystem in Europe, to change the lack of diversity and inclusion, including the power of statistics, internships programs (such as Future VC), and Diversity VC’s new Diversity Standard.

Interviewed October 2020

The Origins of Diversity VC

Johannes Lenhard (JL): Tell us the origin story of Diversity VC. How did it all begin?

Check Warner (CW): I had come into VC from a very unusual background for most associates in the industry. I started out in advertising and I studied English literature. When I got my first job in venture capital, it was through a series of fortunate events and some nepotism and introductions. After my first few months in the industry, I was really shocked looking around at all the founders we were meeting, everyone who worked in the investment teams, everybody who worked in the industry at large, when I went to networking events, and all the conferences: it just seemed like everyone was pretty much coming from the same background, which was either accountancy or finance or consulting, from the same handful of universities, from the same private schools before that. And they were all white, and they were all male.

At that time, I assumed there was someone who was already doing something like Diversity VC. And it turned out there was nothing. I joined up with Lillian Li, who was running a series of dinners for women in VC. We talked about the fact that something much bigger, something more structural needed to exist, that was actually going to address the root causes of this. It was all very well to have a couple of dinners getting together with the few females who already worked in the industry, but what Diversity VC was intended to be, and is, is a body that is created for the industry, run by people in the industry. Diversity VC is actually empathetic to the context of venture capital, while helping VC funds to be more inclusive in how they operate, and addresses the root causes of the lack of diversity and inclusion in the industry, both in terms of the industry itself, but also the founders who get funded.

Best Practices From Five Years of Investigation

Erika Brodnock (EB): Over the last five years, what best practices have emerged to really shift diversity and inclusion for VCs?

CW: The first one, and what we started with, is actually understanding the state of play as it is today. We were quite horrified to find out when we went to talk to the industry body, which is the BVCA (British Venture Capital Association), that there was no data on, for example, how many women worked in the industry. That was our first port of call. We needed to actually understand what was going on in order to try to design good interventions that would drive change. We’ve done quite a lot of research since then, also in much broader areas than just gender. But in terms of best practices for VCs, actually understanding where they are at within their firms in terms of both who’s working in their firms, and do people in their firms feel included? Do they feel like they have a voice? Do they feel like they can bring their whole selves to work? And on the flip side, who are they investing in? Who are they seeing at the pipeline stage? And how is that translating into invested capital? Collecting and understanding data is a really important and fundamental best practice.

The second piece is thinking about the pathways into VC firms. We decided to set something up called Future VC, an internship program. It is a first of its kind program, whereby we take all of the difficult parts of actually running an internship program in terms of recruiting the talent, assessing the talent, teaching the talent, and building a network between them, away from the VC firms. And we have now had at least 16 people who’ve now got jobs in the industry and another nine on internships who’ve come through the Future VC program. Future VC is still in its infancy, not even four years in. But we want it to be a program that enables people to come in at all levels. Partner level, principal level, and associate level, as well as intern. I think that we have been facing the perception of a cold start problem. VCs are currently saying, “We need you to have experience, otherwise, we can’t hire you”. And with Future VC, we’re giving candidates a foot in the door to get two months experience under their belts. Often that then becomes a six-month internship. It’s often also turned into an associate position that’s full time. And then what we want to do in the future is help operators to understand investing. So actually getting them up the curve of becoming a VC. Eliminating some of the basic blocks and tackling issues such as: What is a cap table? How do you assess financial models? If you’re looking at it from a VC’s perspective, how do you structure investments? That’s the kind of thing we want to do with Future VC to create a more senior pipeline going forward.

And then the third piece is about best practices and concerns on the inclusion side, within the firm. It’s all very well to recruit diverse talent, but actually, unless you change your organization to make sure that they are heard and included, and they feel seen, and they feel supported, then they’re not going to stay in your organization and thrive. So we’ve focused in a couple of ways on that, both in terms of a toolkit, and also in terms of the Diversity VC Standard, which we recently launched.

Guidance from the Diversity VC Standard

JL: The Diversity VC Standard is a set of practices for everyone who wants to change something but doesn’t know what, right? So, what does the Standard’s toolkit look like?

CW: The first thing we did was training and, again, helping VCs to understand the nuance and complexities of these issues. Because I think a lot of the time I hear people saying, “I want to do something about it,” but they haven’t actually taken the time to even really understand what’s going on, and what’s driving the issues. And you do need to engage with that if you’re going to be successful in helping people feel included within your organization. So we actually ran a training session where we had 16 European VC partners with a group called Fearless Futures. That would be the first really concrete thing I’d suggest people do: D&I training, including at partner level.

And then there are a huge number of evidence-based interventions that you can make, that ensure that you are being inclusive in how you operate. So what we’ve done with the Diversity Standard is actually just distilled those into an assessment and certification process with the funds. For example, when looking at your shortlist for the people that you intend to interview, have you got a 50/50 shortlist? Have you got a diverse shortlist of people to interview when you’re hiring for the new candidates into your fund? And many of them say, “Oh, no, we’ve never thought of that.” So that’s something that we know works to create a more diverse employee base and recruitment. And that’s just one example. There are 30 different policies across recruitment, pipeline, internal policy and culture, deal flow, and portfolio support.

This Standard was really an evolution of what we started out doing, which was the toolkit, but we found that people just weren’t using or implementing it. We did a study about a year after we had published the toolkit and over half of the funds that we surveyed, which already were a self-selected group of people who were quite interested, had no D&I representative, no one in the organization was responsible. They didn’t have parental leave policies, they hadn’t done the basic stuff. And so we thought, we have got to go much further than just creating a toolkit, which is a PDF that they can download from our website. We decided to look at, how can we use behavioral science to drive FOMO, fear of missing out, or the competitive spirit of the funds? So the Standard is about trying to bring the whole industry up to a better level of compliance and implementing a lot of the things that we know work to increase diversity.

Concretely, we decided to work with a group called Diversio, which is an organization based in Canada. They’ve done a lot of work for big asset managers, and thought leadership work with groups like McKinsey. And with them we have designed this set of best practice guidelines that is based on existing research and evidence. We take the VC funds through the assessment, and we ask them to provide evidence of what they’re doing. And we look at all of that evidence, and then we can then show them, in terms of their industry, how well they’re doing in relation to other funds. We can benchmark them and they get a kind of industry average score, including a breakdown based on deal flow, internal policy, culture, recruitment, and portfolio support.

The benchmarking has already started to create so much more action on the part of the funds that we are trying to get to move. One particular fund, for instance, said, “We had D&I kind of on our roadmap, but there was no real forcing function to put any of it in place. So actually being part of the Diversity VC standard has accelerated all of it, internally.” For the launch, we had 16 funds, five in Canada and the rest in the UK. Since then, we have had funds in the US, in France, in the Nordics, across Europe, already taking part in being assessed. Eventually, we want this to become a kind of global benchmark, which over time will move; we can make it harder to achieve level one and level two at the Standard.

The Outstanding Need for Transparency and Clarity

EB: What are some of the big issues outstanding in the UK and EU ecosystem? And what are the next steps that you intend to take with Diversity VC to tackle them, and indeed the data?

CW: I think we need to make progress across the board, we are right at the very start. And I wouldn’t want to let any of the issues off the hook by talking about things we need to move onto because actually, we need to do all of it. But what has come through the work with the Standard is that, on two fronts, funds are doing badly. One is actually investing the capital. We’ve seen during COVID-19 that funding going to diverse founders who come from different backgrounds has actually gone down and has gone down quite dramatically. And this is at a time when, generally, venture capital funding has been going really well. And so I think a lot more progress needs to be made in terms of the mechanism of access, in terms of transparency, in terms of mentoring founders in what they need to look like, and what the business needs to look like.

So far, we’re trying to help where we feel we can, and I think there are elements of this that are beyond our reach. Unfortunately, and it makes me really sad to say this, but the stories I hear, day after day on the ground, in terms of the feedback the founders that I work with get from the market, it’s just incredibly bleak and incredibly depressing. So I think a lot more work needs to be done there.

EB: Is the answer then to give the founders more mentoring and to shape their propositions better? That kind of buys into the notion that there is a pipeline problem, that the founders aren’t educated enough or competent enough or running good enough businesses, right? As opposed to, there’s an issue on the other side.

CW: Definitely. It is always a bit of both. But I’m not advocating for more mentoring, more mentoring, because the crucial change will come from sending the wire and making the hire. It’s not mentoring so much as transparency and clarity. Let me give you an example: I heard a stat this morning, from a pitch event I was at, which is that 80% of the female founders that were at this pitch event didn’t know the difference between angels and VCs.

I was surprised by that. But the industry is still a bit of a black box in lots of ways—funds don’t publish things like their average check size, what they are concretely looking for, what kind of sectors they invest in. None of that is visible on VCs’ websites. Also, very basic things like: how do you contact us? The other piece is VC funds that have portfolio companies already, pumping capital into those portfolio companies. They need to do a lot more to support, challenge, and ultimately restrict funding to companies that are not taking this issue seriously, or not doing the right things. And I think currently, because the VC funds themselves don’t feel that they’re there in terms of their own work, they’re not doing it. And that’s a big gap.

Kostka: All Raise

Pam Kostka (formerly All Raise)

We caught up with Pam Kostka while she was CEO of US venture diversifier All Raise for her take on how and why All Raise came about, and how to build a more prosperous, equitable, and sustainable future for all.

Interviewed October 2020

The Origins of All Raise

Erika Brodnock (EB): Tell us a little bit about the history of All Raise. And when did it start and why? What are the goals for the organization?

Pam Kostka (PK): All Raise started as a grassroots effort. The #MeToo movement in Silicon Valley served as an external impetus. Susan Fowler’s blog post about her experiences at Uber was followed by Justin Caldbeck in the headlines and it just struck a nerve. It was the right time, the right place, and every woman in tech resoundingly said, “Yes, that! I’ve been there, experienced that.” What was impressive is that Aileen Lee went on to become an organizing force. She sent out an email to the community. Thirty-six or so women responded immediately to say, “Yes, this is a time, this is a moment when we can do something.”

I think it’s emblematic of a couple of things. One, the need for it in the industry: things had been bubbling up in the community and the ecosystem, not just for years, but for hundreds of years! It was incredibly important that these were women of power and influence who came together and said, “We have a platform, we have power and influence, and we can share that to actually drive change.” Thus, All Raise was born, first as an all-volunteer effort, then we actually “incorporated ourselves” as a 501(c)(3). We started that process in 2018 and finalized it in 2019. We then brought in myself and some other staff to professionalize the organization and make it operational so that we could expand.

EB: Can you clarify what a 501(c) is? Is it a B Corp?

PK: It’s non-profit status in the United States. We call ourselves a startup non-profit, because we take the ethos of how to build and scale a startup, how to be a disruptor in the industry, and apply it to our mission. We just happen to do that via a non-profit structure. It’s interesting that in our financing structure, part of the uniqueness of who we are is the magnitude of power and influence in the community that we’ve brought to the table. It’s traditional philanthropic organizations, and corporations that support the tech ecosystem here in the United States, such as Silicon Valley Bank, J.P. Morgan, UBS, Bank of America, EY. In our recent fundraising initiative, the venture capital firms and high-net-worth individuals in tech themselves are coming together to fuel our mission. We see that as an interesting investment model, where we have this large investment base coming to us and funding the disruption of the industry. That aligns with our mission, which is to accelerate the success of female founders and funders for a more prosperous and equitable future. That mission drives everything that we do and now we’re getting the power and influence curve to say, this is something that matters to us and to women throughout the industry.

Moreover, everybody who contributes philanthropically to the organization is also put to work in our community in service of the mission. We have a bias toward action, so it’s not enough to just write a check and let us do the work, our donors also need to be part of the change that we want to see. So every conversation we have with Reid Hoffman, with Sequoia Capital, with the long list of individuals who support us, is centered around engaging them to join in and be an advocate—not just a voice, but an advocate for change.

How to Build a More Prosperous and Equitable Future

Johannes Lenhard (JL): Picking up from this mission that you talked about, what are your high-level goals? And how have you been working towards these over the years?

PK: As I mentioned earlier, our mission is to accelerate the success of female founders and funders to build a more prosperous and equitable future. We fundamentally know that diversity generates better results. It’s not just about the redistribution of power and influence in the industry, but the wealth creation that is generated when you do that. Morgan Stanley estimates that we have the opportunity for net new wealth creation of up to $4.4 trillion. In the industry, that’s huge! Investing in diversity, equity, and inclusion (DEI) is a massive opportunity on par with the moonshot investments that the venture community likes to invest in.

At All Raise, we call this the guaranteed moonshot: if you invest in this, benefit will come from all avenues. If you’re an investor, it’s to your portfolio. If you’re a founder, it’s to the effectiveness of your company. There is a wealth of power and momentum at stake. We hold ourselves and the industry accountable to two North Star goals. One is to move the needle on the number of women, including women of color, who are check writers at partner level within a venture firm. It was 9%, when we started. By 2028, we’re looking to move that number to 18%. We’re still doing the crunching for what happened in 2020, but as of 2019, we know that number was at 12%. That’s great progress, yet 68% of venture firms still don’t have a single female partner. And the numbers for women of color in the industry are abysmally worse, in the low single (like 1%) digit range. We recognize that we have a lot more work to do there as we continue to move the needle.

Our second goal is to accelerate the percentage of funding going to female founders, and we’ve changed this goal since we started. Originally, we were looking holistically at the system, then we began to use data to make ourselves smarter. In that process we learned that, when a woman raises her Series C she has an equal likelihood of raising as her male counterpart. I’m not saying it’s easy for her as she still faces obstacles and hurdles, but the raise is equally likely. So we shifted our focus to hone in on seed, Series A, and Series B, because that’s where women are at a significant disadvantage—by as much as 35%—relative to the male cohort at a similar stage. Our 2030 goal is to move from 11% last year to 23% of funding going to female founders in 10 years. We also look at top of funnel, early stage rounds to make sure that we’re empowering a lot more women and women of color to get funding and drive that change through the ecosystem, so that in 10 years we can see women we supported in the early stages becoming unicorns.

Our vision for how we get there is twofold.

From a top-down approach, we aim to reshape culture to move beyond DEI being a checkbox activity towards making it synonymous with success. We call that moving from FOMO to DOMO: we’re moving from the “fear of missing out” to the “danger of missing out.” If you are not diverse and inclusive, your business will not succeed. That may mean, as a venture capitalist, you’re not attracting the best talent. As a founder, you’re also not attracting the best talent, you’re not building the best products, and therefore you’re missing out on the economic opportunity available to whichever side of the equation you’re on.

A lot of that for us rhymes with creating a megaphone: DEI is this unstoppable force that is coming in the industry, for women, for underrepresented individuals. It’s like a freight train coming down the tracks. We do this by leveraging our 20,000-strong community and thousands of the most powerful male and female venture capitalists we have attracted to our table. We’re working with around 1,500 of the most iconic founders, funders, and unicorns—people who have succeeded, as well as those who are up and coming—to understand how we can leverage their voices to enact the change we want to see. Our ethos of enabling important people with power and influence to take ownership, to make the change, and to be the drivers of the change is again clear to see.

An example of reshaping culture is the All Raise Visionary Voices speakers bureau. Women’s voices, especially underrepresented women’s voices, are not widely recognized in the tech ecosystem in conferences, panels, and media coverage. We wanted to address the red herring issue of, “I couldn’t find anybody.” This is not a pipeline problem. This is an access problem. To that end, we’ve made 1,000 women available through Visionary Voices, a database of vetted speakers who have great talent. Their expertise and area of knowledge is made clear and anyone can tap into it. The list is growing every quarter, and we have worked with prominent media and conferences to make sure that they are being diverse in their panelists and in their coverage. Of course, we also use the list ourselves when sourcing speakers!

After the top-down reshaping of culture, we look at what we can do from a bottom-up perspective to achieve those two North Star measures. We focus on rewiring the industry from the inside. The flywheel we have today is a continuous cycle in which white men fund white men, they become very wealthy founders, they exit, and they make investments in people that they know within their network. This is not necessarily intentional, it’s about networks. Who do they know? Therefore, who do they invest in again? This results in a very powerful flywheel that has been perpetuated and strengthened over time. When we look at the statistics in 2020, 68% of firms don’t have a single female partner and, amidst COVID-19, the amount of funding to women is actually falling this year.* That is statistically improbable, therefore there has to be some kind of an intentionality behind the decision not to fund women this year.

The Role of Research and All Raise’s Theory of Change

EB: Data shows the raw amounts being invested are going up, while the numbers invested in females are going down. As you said, this is statistically improbable, therefore, it appears there is intentionality behind underinvesting in women. There are a couple of things here, because one, how has research shaped your approach? And two, now that we have data like this, what do we need to do to change this?

PK: We’re big believers in data, because what doesn’t get measured doesn’t get fixed. That’s true in life in general: If you want to run a marathon, you’ve got to put yourself on a schedule and know what your mileage is in order to know you can finish the race. Every day, you’ve got to measure yourself. If you do the work, you will complete your marathon, if you don’t do the work, you’re not going to complete the marathon. Simple. At All Raise, we believe data is core to our understanding. We are constantly reporting on our two North Star objectives, as well as on the obstacles that are behind the numbers.

Based on our research, our theory of change is access, guidance, and support. Access is crystallizing the point that this isn’t about capability. This is about networks. If you don’t know a female entrepreneur, or you don’t know a Black or Latinx entrepreneur, then it is much more difficult for you to connect, and for them to break into, for example, the circle in venture. We want to make sure that from an access perspective, we’re blowing that up and creating intersecting networks and creating moments when connection can happen. We are facilitating access to opportunity, mentors, money, talent, people, and experts. If entrepreneurs have a question about doing something, they usually have to Google it and try to figure it out, or they tap a network that can help.

Access guides a lot of our programming. For example, When Founder Met Funder is a very dedicated program that recognizes the unique lived experience of Black women, and we’re going to be extending it to Latinx women next year. We’ve run this program for two years and the purpose is to give some guidance, but also to bring venture capitalists and these amazing Black entrepreneurs together so that they meet each other and can develop a relationship before there is the need for a transaction or an ask for money. Bringing those networks together is important because it invariably leads to the scientific phenomenon in nature called the edge effect, which is when two different ecosystems brush up against each other. An example of this is where the savanna meets the desert. The most biodiversity is found right where they connect together. As we bring these two communities together, we create those edge effects where we can see the amplification of money and power between them. We have been privileged to see creation and creativity blossom in that area. The benefits of this are extended to both the entrepreneurs and the venture capitalists who get together and meet one another.

Guidance is the second pillar in our theory of change. There is a language of venture, the venture-backed ecosystem and venture scale companies, and while we’re not trying to teach women to become men, we are trying to teach them the rules of this particular game. What is the language? What are the expectations? Making sure women are getting that inside knowledge so that as we rewire the industry and seed that new flywheel, it is successful. We want to pass on insider information, the things that people aren’t going to tell you, that you can’t Google. An interpretation and explanation of when they say “x,” it really means this. Many of our bootcamps and digital programs do that for women. Our VC summit is one of our biggest programs of the year, taking place every fall. We regularly convene over 800 women in venture. It is the largest convening of anybody in venture and brings women together for a day of inspiration, but also guidance, across areas including career, negotiation, how to be a good board member, how to improve your investment thesis in a particular area, and more.

Finally, the last pillar is support. All Raise offers support through cohorts. Being an investor or founder in tech is a lonely journey for women. We use a cohort-based model both on the venture side and on the founder side to make sure that women get the support they need. Ten to 12 entrepreneurs develop deep relationships with people whom they can ask the awkward questions they can’t ask in their own companies. Real business gets done. It’s not just emotional support, it is also deep, impactful business. In the venture circles, we see deals being shared and won competitively against incumbents in the industry. In the founder realm, we see people being able to materially accelerate their business forward through connections, introductions, knowledge-sharing, and access to something they need.

EB: You’ve given us tangible examples detailing how All Raise could be recreated by others in their local tech ecosystems. A cookie-cutter approach that could be adopted and adapted seems to be emerging, which is fantastic.

PK: We have a bias towards action and hope we are creating a platform that other businesses can replicate and leverage.

Perspective on Key Players in the Field

JL: Looking at this from a systemic perspective, who do you think are the key players that have to move now? What do you think about the role of LPs? Do they form part of the structures you are addressing? And if so, how?

PK: The first part of your question was, who needs to be engaged in this movement, right? And the answer is everyone needs to be engaged in the movement. But there are two levels. One, people with power and influence, absolutely need to be willing to accept the responsibility of sharing their power and influence. We believe that the way to get somebody to do that is not just to appeal to the moral rightness of this movement. Because we are a venture-capital-backed ecosystem, we look at capital gains and benefits as the main driver. Increased DEI yields better results. People at the power and influence curve in the venture industry are always looking ahead at who’s seeing around the corner and what the next trend is … The next trend is DEI. Two key events have occurred. The first back in 2017, which sparked All Raise, then in 2020, George Floyd and Breonna Taylor were murdered, and that opened up another aperture around social justice. These are moments in history that we’re not going to move back from. There is a change afoot. The tech and venture industry can either acknowledge and embrace that and be drivers of that change, or be left behind. That serves as one of the key motivators for the industry. The way All Raise started was with 36 amazingly powerful women who had succeeded, and recognized they had a chance to accelerate the pace at which change could happen, and engage their male peers in that conversation too.

We see examples everywhere of those with power and influence taking responsibility to be the change. David Swensen, the head of the Yale endowment, which is one of the largest endowments in the United States, has come forth from the LP perspective to say, “We invest in you, so you can invest our money. If you do not diversify, I’m going to pull our money from you.” That is a powerful move from somebody who has their hands on the reins of substantial amounts of money. He’s doing that because it is both the right thing to do and it is the economically prudent thing to do. This serves as a clear economic incentive to venture firms to make change. It’s a great example. Goldman Sachs coming out and saying, “We won’t take somebody public unless you have one diverse board member by the end of 2021. And two by the end of 2022.” NASDAQ, coming out and saying, “We’ll delist you if you are not diverse.” These are powerful motivators for people that it is time to move. As I mentioned earlier, what gets measured, gets done! We’re all good at setting OKRs for key results and measuring ourselves on them. It is hard work, but if we measure, put incentives in place, and those incentives are appropriate, we will see change. It is about power and influence, and the truth is everybody has power and influence.

As part of our community culture, everyone who has been to a program at All Raise has a responsibility to pay it forward. All Raise participants get access, guidance, and support, thus, are more empowered on the flip side than when they started. So, when the next woman, Black person, or Latinx person reaches out, it’s an obligation to share what has been learned to create an opportunity for that individual. It’s not just the top of the pyramid. It’s everybody in the ecosystem, driving macro and micro changes.

Success Stories from All Raise

EB: What are the biggest success stories that you think All Raise has contributed to, or indeed, instigated and written?

PK: We have a couple of success stories; one is at a campaign level. Founders for Change was the recognition that there was an increasing generation of founders who care deeply about diversity, equity, and inclusion in their teams, on their boards, and, when possible, in their choice of investors. We rally these founders together, not only to give them a support framework of others who share this ethos, but also as a communication to, for example, the venture community, that we are your lifeblood. If I walk into your organization, or go to your web page, and see that you’re all white men, I could make the choice not to work with you because I don’t think I’m going to get the benefit from working with a monoculture and I want something that’s more diverse. Founders for Change was very much a social campaign, and we continue to work with it. It served as a wake-up call and that is where we started to see a change from that 9% [of check writers at partner level within a venture firm being women] moving to 12% [in 2019].

I would say every woman that we engage has such a powerful, amazing story. There are many throughout the ecosystem, but Tiffany Dufu stands out. We connected at a party for the Alpha Girls book, a book about the four female pioneers in venture, on whose shoulders we stand today. When I met Tiffany, she said, “I’m looking for funding and somebody said I should talk with you.” We started to network, and I plugged her into the All Raise network. We always call ourselves the rocket fuel accelerating powerful women founders. Tiffany is amazingly charismatic. She has a business called the Cru and she is one of the few Black female entrepreneurs [as of 2020] who’s recently raised over a million dollars. She’s amazing. I never want to take credit for her success. She did that. Yet, we had an influence there. Tiffany went through some of our boot camps and we were able to plug her in and make introductions. Even though she has now raised, Tiffany has joined our next boot camp. We want to continually support a female entrepreneur throughout her journey. She’s a great success story.

We can see this new flywheel turning now. Is it turning as quickly as the established, white male flywheel? No, but we’re beginning to slow that one down as we’re ramping up this new flywheel with funders, founders, and operators, so that women and underrepresented individuals can participate in the funding, founding, and scaling of companies.

JL: We’re actually going to interview two of the Alpha Girls, Sonja and Theresia, for the history section.

PK: Sonja is amazing, as is Theresia. They’re both part of the All Raise network. The work that we do is cumulative. We’re standing on their shoulders. The generations that will come will stand on our shoulders. And that’s the whole point.

How Quotas Fit into the Changing Ecosystem

JL: Do you think quotas are going to play a role in changing the ecosystem? If so, for whom? On what level? Or is there something else that you think we need to bring onto the agenda?

PK: I don’t think quotas are inherently good or bad. They’re neutral. We talked about the importance of measurement, right? Quotas, in some ways, are just measurement tools. What gets measured gets fixed. Quotas can have a negative side, of course, if people are using them for checkbox reasons. Where I see quotas being effective, and quotas mean something different to everybody, is when you’re tying the quota to an economic imperative. It is NASDAQ saying, “I’m not going to tell you how many people per se you need to diversify your board, but here’s the de minimis that you need to do. If you don’t, you can be delisted.” Is that a quota? Yes. Is it a quota tied to a relevant economic incentive for the organization? Absolutely.

Conversely, “you just need to hire two people” doesn’t work so well. The problem with some quotas is that you don’t get inclusivity. You can end up seeing a revolving door where individuals are brought in, but then there’s no inclusivity, they don’t feel welcome, they don’t feel effective, and they leave the organization as quickly as they came.

What I think is interesting about board-level initiatives is that now you have board members helping to drive diversity, equity, and inclusion down through the entire organization. One of the things we focus on a lot is how to encourage boards to focus on all facets of DEI, including, what are the numbers of people, but also on questions such as: Who is leaving the company? Why are they leaving the company? What is being done to create inclusivity? And to look at that, not just in your employee base, but in your product operations and your supply chain. Measuring and treating DEI as a core strategic value for the organization and as important of a board topic as the sales pipeline.

I think many industries are getting more sophisticated in the way we think about and measure quotas, not just at a moment in time, but for long-term success. Tying a metric to an economic outcome and measuring impact is an important trend of the future and will lead to a tipping point, the beginnings of which we are seeing now. I think one of the reasons we’re seeing this in the boardroom is board members can impact what the company does and hold the company accountable.

Tech’s Role in Measuring DEI More Consistently

EB: Finally, do you think that tech has a role to play in terms of real-time measurement? It’s almost as though diversity, equity, and inclusion tend to be surveyed once a year, and not focused on much for the rest of the year. There isn’t an All Raise in every single country where there is venture and tech. So how do we keep this current at the front of mind, all the time, rather than just some of the time?

PK: I think tech absolutely has a role to play in how we approach diversity, equity, and inclusion going forward. And where we focus, I think there’s been a lot of focus on the “D” in DEI. And that’s measuring the inflows, but not a lot of measurement on the equity and inclusion piece. Tech runs on data, we have a lot of data, but we still need to add data! So we’re talking to, for example, Crunchbase and PitchBook about how they, as trackers who have data on the industry, add data on race and gender, and do that in the right way for self-identification. They do a good job of producing quarterly reports, but how can they start to report on a regular basis and allow people to make informed choices, while making the state of the industry transparent? I don’t think you can measure this in days. This is not real-time trends. But when we look at moving the numbers and measuring the industry, we look on a quarterly basis, and by doing that, then you avoid that end-of-year shock. DEI needs to be woven into the fabric of organizations. It’s also why we say that at the board level, it’s a strategic imperative to measure. The board’s going to meet at least quarterly and if your obligation is to report to the board and have a strategic conversation about DEI—where you’re succeeding, where there’s room for improvement—you’re measuring, again, what’s happening on the back end, who’s leaving the company and who’s not, as well as issues like pay equity.

I’m excited to see what this next generation of companies will do, when they’re looking at whatever space they’re looking at and incorporating more real-time information, whether it’s around how they build their product and who they target. There are so many products, and thus companies, that could be so much bigger if they were thinking more broadly about who their customer base is and really infusing DEI throughout every element of the company. It’s not just an HR problem. It’s not just a team-building problem. There are a lot of things that companies can and should be doing, and tech is going to play a role in that.

Lynn, Sievers, Liu: Accelerators

John Lynn (Cela)

Camilla Sievers (Qi Health, Female Founders)

Kevin Liu (Techstars)

More and more startups go through their phase of initiation with accelerators and incubators; dozens of these institutions are appearing each year, many with a specific focus on an industry, a particular group of founders, or a geography. We spoke with three accelerator experts: John Lynn, who has built many accelerators over the years with Cela out of New York; Camilla Sievers from Female Founders in Austria; and Kevin Liu, investor in San Francisco for Techstars. We asked them about the role and responsibility of accelerators in considering DEI. We also discuss unconscious bias, opening up the funnel, and the importance of fostering not only diverse hiring and accelerator intake, but also inclusive practices within the accelerators and portfolio companies.

Interviewed December 2020

Building Community for Women and Support for Diverse Founding Teams

Erika Brodnock (EB): Camilla, you’re a part of the Female Founders accelerator in Austria. What motivated you to start at FF and what are the aims of the program?

Camilla Sievers (CS): I became part of the startup world from early 2013. At that time, while there was only a small ecosystem in general, there was for sure no visibility for women at all, no female role models, no network, no female investors—none of that. As these things go, the couple of females that were in the space in continental Europe found each other very quickly. We immediately saw that there’s huge potential in this market because people don’t know that they have a place to come to, where they will be understood and welcome. So we want to encourage women to become part of the industry, to have role models and mentors and people they can talk to about ideas and about problems that they’re facing. We started by building a community for women to meet each other.

Now the core of our program, the mission of our accelerator, is, obviously, to foster diverse teams across Europe. We all know female-led startups or even diverse teams aren’t funded. They, at the moment [in 2020], get between 2% and 3% of all VC money. This is crazy when we also know that they tend to outperform male-led startups by two to three times. We don’t just focus on female-led teams but diverse teams more broadly, and then the potential within the marketplace becomes even bigger.

We believe that biased investors or investor networks, where women are not represented as much, are a core reason why women are not put in positions where they are actually visible. So diverse and female-led teams have a much harder time to raise capital to get into this network that is very much male-driven, and find the resources that they need. That’s where we come in: we help them build the network, and meet role models and mentors. We help them become investment ready, which is at the core of our program, and then help them with the fundraising process.

The Role of DEI in Setting up New Accelerators

Johannes Lenhard (JFL): John, you’ve helped quite a few accelerators over the last five years get off the ground. How important are different principles of diversity, equity, and inclusion when you set up a new program, and why is that something that you care about?

John Lynn (JL): We believe that the essential function of an accelerator is to systematize access. So it’s inherently a tool that can be a vehicle for inclusion and diversity. Installing an accelerator system that can be applied to address the problem of inclusion and set up in the right way is essential to a good accelerator, even if it’s for a homogenous group. I think from the perspective of what makes an accelerator work, being able to understand what kinds of access someone needs and prepare their contact with your network to achieve that need—that should be at the core of an accelerator. But from the other side of things, it’s also what makes accelerators a really good tool for solving the problems of diversity to some extent. So not only is it something that makes an accelerator work, but it’s also a resource that’s only beginning to be tapped in the right way to solve this greater problem.

Strategic Commitments and Working with DEI Data

EB: Kevin, you’ve been with Techstars for more than two years and you mentioned before that you’re doing some interesting things around DEI. How important is it to you, and can you go into the specifics of what you’re doing to increase DEI in your programs and investments?

Kevin Liu (KL): At Techstars, DEI is very important to us. Over the last few years, we’ve done various efforts at the strategic level. For example, we kicked off our 1,000 diverse CEOs initiative. The goal is to invest in 1,000 diverse CEOs through our accelerators by 2026. This has been primarily led by our head of D&I, Andrea Perdomo, and she’s done a fantastic job to push that create a culture of awareness for D&I within Techstars.

From the investing side of things at Techstars, we do want to have high percentages of companies that do well financially. So at the end of the day, we as investors push DEI because it has been proven to be good for startup businesses, too. That is an opportunity point that we do want to push on. That is also very much in line with our overall philosophy and vision. When we began Techstars in 2007–2008, the goal was to go into a market and help entrepreneurs and places that historically were not seen or supported; our founders did not focus on the coastal cities. Most of our programs are in the Midwest here in the United States.

One other observation I want to bring up is this: if you’re not tracking it, you’re not going to improve it, right? So, DEI is something that we do track. So, you know, looking at my dashboard right now, and some high level stats, I can present here, about the kind of companies that apply and are accepted, the makeup of teams. And we have good news there: close to 30–35% of teams that are accepted into our programs have one or more female founders in that mix. Another interesting stat: about 40% of the companies that are accepted have one or more underrepresented founders from the race and ethnicity side.

Now that we know that, what do we do with this data? How do we increase the numbers? I’m looking at the questions right now. The problem of increasing a number and widening a pipeline is not just about the portfolio and the companies in our program; it is also about the decision makers. We are always actively trying to increase the number of manager directors that we have in our pool that are female or come from underrepresented backgrounds.

One final thing I want to mention is the work we do with portfolio support. A lot of the work we do is post-program support work. How do we help companies when they graduate, go out, and find capital? We do have active programming, where we help connect founders to the right investors. One of the parameters that we recently introduced is, for instance, if you’re a female founder and a female-focused fund, we will make that connection more systematically than we have done in the past.

Tackling and Revealing Unconscious Bias

JFL: Camilla, you have already built in a certain bias in your accelerator given your specific focus. And Kevin, you just talked quite a bit about how you’re trying to widen your lens as much as possible. But do you believe that you have had unconscious bias in your programs before and that you have been able to eliminate it?

CS: We explicitly talked about certain biases we needed to avoid and eliminate. We also went the other way and tried to not completely overcompensate; we decided that we didn’t want to have a female-only funnel, a female-only investors network, a female-only venture partner network, ambassador network, etc. It needed to be diverse, as we can only achieve our goals in equality if every stakeholder (and sex) gets involved and contributes to the conversation. We believe that in terms of age of gender, ethnicity, and probably also life experience, we need to be diverse in order to build the best product and I think we are on a good way to raise awareness about bias and be mindful in our day-to-day operations to foster an unbiased environment.

JL: In the overall ecosystem, we see the element of unconscious bias permeating many business relationships. It is especially hidden in language—the culture of emailing and calls (VCs are known for using subject-only messages, or messages in the body of an email that have no capitalization, punctuation, greeting, etc.), entrenched terminology (almost any startup term: hustle, scalable, innovative, disruptive, etc.).

We’ve seen coordinating direct interactions between diverse entrepreneurs and key stakeholders like investors or customers has been a high-cost but impactful solution—and is ever-present in accelerator program experiences. Our own Cela Office Hours series focuses on producing direct interactions between diverse founders and mentors that identify the same way as the founder. Finding mentorship that identifies the same way as the founder is the top problem of diverse entrepreneurs (next to capital), so we’re able to address it by isolating this key connection activity in accelerator programs. This is a crucial part of what has made the access elements of acceleration central to our belief that accelerators offer a missing piece to education, generally.

Best Practices for Widening and Filtering the Funnel

EB: In the interest of sharing good practice, what are some of the key processes that you are using in your respective programs to widen participation and filter applications?

KL: As Techstars evolves, we’ve played around with many different methods around sourcing companies into the accelerator programs. Historically, sourcing was done very locally, the managing directors would go out sourcing companies; these days, we have a central sourcing function with a team of people who do sourcing very broadly. What we are trying to do is engage in a more systematic discovery process of what opportunities are out there; we believe that doing this centrally can help with eliminating some of the more local biases. So the sourcing effort now involved a lot of different puzzle pieces (in addition to MD-led sourcing efforts) to achieve this goal: it is everything from having associates go through conference schedules, looking at relevant companies in Pitchbook (and Crunchbase), and plugging into special interest forums—for example, Techstars worked with Barclays to run their Female Founders First program. The global pipeline team aggregates those leads and then distributes them to the MDs, making sure they’re a fit for specific programs, corporate partners, and themes that the programs are focused on. So that’s a big piece we’ve done in the last year or two to invest in some central resources that we hope will yield a lot of longer term benefit in terms of increasing the diversity of our sourcing channel.

JL: A concrete step for every accelerator is to have a systematic process for applications, and to minimize warm introductions. What you see happening a lot is that a system or process is lacking completely; the investors see a startup out on a platform or an article and they hunt them down. The number of startups that are applying and getting in is often quite small, there are accelerators that get thousands of applications and half of the 50-company cohort that gets into the program has been found in other ways, based on the personal preference of individuals. So there should be an institutionalized application process that every company has to go through and that is influenced by a large group of people. The diversity of decision makers in that process can again eliminate a lot of bias.

Encouraging DEI in Portfolio Companies

JFL: For portfolio companies, or the companies in the accelerator, how do you think about D&I and address it there? What are tangible actions when it comes to increasing DEI in the companies?

JL: This is right—while accelerators can help produce progress on DEI, the ultimate outcome for the ecosystem is that companies themselves can bring on more diverse leaders and team members. One of the key struggles of entrepreneurs is that they are looking to move too fast—helping them realize that they themselves are investors of time, energy, skills, recruitment, and that they should take time and care in making those investments, is a fundamental concept that can help them build more diverse teams early on. Accelerators are in a key position to make this case, and to start making it a part of the startup’s DNA by including it in the curriculum or other program activities. Next, attaching key outcomes to greater diversity can work as well: diversity can help attract better talent, capital, and overall make for a more comprehensively creative and productive environment.

CS: It starts with the startup team itself; we need to foster the mindset in them that it is in their biggest interest to increase diversity. At the end of the day, they will make the decision on who to employ. Again, role modeling can play a big role here, we need to show them what works and connect them with the right people to implement change if need be. At Female Founders, we have a job platform, where they can put up job posts, for instance. We actively share best practices on how you can diversify your funnel. We give them some input on how to win female talent, for instance, because women have to be addressed differently.

And once you manage to recruit, for instance, women, you have to be aware that this talent needs to be supported so that these people stay on. One way of encouraging thinking through the whole process from diversity to inclusion is to suggest to companies to nominate a diversity and inclusion officer. They are responsible for diversifying the recruiting but also the development of the team; it is important to grow a feeling of belonging and openness. Diversity needs to be fostered every day and lived every day. That is why we also focus on personal development topics within the accelerator to address these unconscious biases that one might have, and how to be more aware of them.

Miura-Ko, Eesley: Universities and DEI

Ann Miura-Ko (Floodgate)

Chuck Eesley (Stanford University)

We chatted with Chuck Eesley (professor in engineering at Stanford) and Ann Miura-Ko (GP at Floodgate but also a teacher at her alma mater, Stanford, in Chuck’s department) about the role of education for DEI in tech. We touch on issues such as how to achieve fair representation both for faculty and students, the right teaching materials, and diversifying the educational experience as such. The bottom line: schools like Stanford absolutely have a responsibility to drive this effort—and they are standing up for it; the difference they are pushing for now will take a while to pay out in tech, but then will hopefully help us achieve a sea-change that does away with the often cited “pipeline problem.”

Interviewed January 2021

Education’s Formative Role in DEI

Johannes Lenhard (JL): We are talking about diversity, equity, and inclusion, and we are thinking about what the role of educational institutions can be when it comes to driving change on this front in tech and venture capital. What do you think the responsibility and the opportunities are for places like Stanford when it comes to producing a more diverse tech and VC ecosystem?

Ann Miura-Ko (AM-K): I believe the years of schooling, of university, are such formative years. How you think about yourself and how you relate to other people are formed in high school and college. I reflect back on my own days as a student; one of the magical pieces of being an engineer, and being at PhD programs in quantitative sciences, was that I had this opportunity to meet very diverse groups of people that I normally would not be friends with. This is really important as an experience. In college, I remember complaining to my mom that I was the only woman in most of my classes. My mom said to me, “Why does that even matter? Are you looking for friendship in your classes?” That was a turning point for me about the way I thought about this; I can form different kinds of relationships in different kinds of contexts. It turns out, I made great friends in undergrad with people who were very different for me. That became a skill set that I learned in college to forge those relationships.

The second thing is something that my husband taught me. He was in law school and, I remember, he realized he could not read all these things that he needed to read, so he had to create a study group really quickly. When he looked for his study group, he did not look for just people who he could be friends with, he looked for the smartest people in the room. When I looked at his group, it was an incredibly diverse group of individuals. It was the nicest guy in the room who was from Canada. It was another kid from Indiana who grew up on a farm. It was an Indian woman from Chicago. It was another woman whose lifelong desire was to become an activist for Latinx people. It was really interesting to see the diversity, but he was just picking off who he thought were the smartest people in the room. It taught me to learn how to work with other people, to recognize really incredible talent. That is a skill set. You should start to learn and exercise it when you are in college and are being encouraged to get out of your comfort zone.

The last piece that I would say is the reason why it is important as an educator to give students those experiences and to coach them into those experiences: it teaches students to think about the network effects of the actions that they take. I have always said, in hiring, you want to have these network effects. That is why you want to access these diverse talent pools, because if you only stay within your own talent pool, you are limiting the network effects that you have. Those are the exposures that you want to give to students, and I am excited by having those conversations with our students early on in their careers.

Chuck Eesley (CE): There are so many opportunities, but there are also so many challenges for universities indeed. I often think both about the teaching side and the research side slightly separate. On the research side, we have increasingly strong evidence, larger data sets, and more context that there are real benefits to diversity, but also more research about how homogenous both venture capital firms and startup teams tend to be. Due to both systemic racism and unconscious bias, we are really innovating with one hand tied behind our backs. If you look at engineering schools, the faculty and the students are not particularly diverse. There are real challenges to changing that. Business schools have this problem, as well as the university as a whole. There is a disconnect there, between what we see in the teams, faculty, and students, and what we know is more beneficial for innovation.

On the teaching side, there are three aspects. As the head of the committee that is working on this for our department, we think in terms of diversity, equity, and inclusion. Diversity, meaning, how representative are the people that we are putting up in front of the classroom as role models, and how representative of the country or the world are the students that are sitting there in the classroom. We have a bunch of initiatives [one example is SERGE] that are trying to make a dent on that side of it. Inclusion means that everyone feels equally part of the community, that is, they feel included. Even if we make great progress on diversity and bring a more representative set of students and faculty to the university, if they are not happy and not having a good experience while they are here, then that is not going to last for very long. That is the inclusion and belonging piece of it. Then, the equity piece, making sure that those students all have equal access to the same opportunities, regardless of their background or their financial situation.

Tackling the Fear of Entrepreneurship in Underrepresented Communities

AM-K: When it comes to diversity, I am a co-director of a program called the Mayfield Fellows Program, which is for 12 undergraduate students to get exposed to entrepreneurship and leadership. We are making a really big push this year to get many more students just to apply to the program from a diverse set of backgrounds. We have specifically targeted Black, Latinx, and low-income students. What has been interesting for me is that there is not only a lack of awareness about the program, but also fear of entrepreneurship in many of those communities. Many believe that the lack of stability in entrepreneurship may be a risk that they cannot take. A lot of [the push] has been real targeted outreach to talk about the fact that, if you work at a startup, your salary is just as good as many of the other large companies. You just get the upside of equity, and if the company does not do well, that is actually okay. From a venture capitalist perspective, or a hiring manager’s perspective, that is not seen as a blight on your resume.

That outreach, the inclusion, but also the knowledge sharing, are important, because as students go from being a student within Stanford, or any of these other universities, out into the real world, understanding what opportunities sit in front of them is hard to untangle. I take that really seriously as an educator; not just for the students who enter into the program, but that educational outreach into these communities to say, you actually belong here, we want your thoughts and your opinions. Your experiences are very relevant to entrepreneurship, to leadership. But more importantly, even if you are not part of this program, when you go out into the real world, you should know that these opportunities are not out of reach, they are not high risk, and that you should take them.

Stanford’s Responsibilities toward Diversity

EB: Chuck, you are faculty in one of the programs that produces quite a few of the Silicon Valley engineers and entrepreneurs, the STVP program. What kinds of responsibility do you, your department, and the university have to actively increase DEI? What specific measures are you taking at the moment to make sure that happens?

CE: First of all, it is good to also take a step back and take a look at the big picture of the university system, and to put into perspective Stanford’s specific responsibility. We have an important leadership role to play, as the major university in Silicon Valley. A lot of people look to us for best practices, for how to do entrepreneurship education. We set an important example in that role. That said, I am actually a lot more optimistic about the HBCUs, and Latinx serving institutions, and the community colleges that MacKenzie Scott, formerly Bezos is funding right now. I have a friend, Hadiyah Mujhid from HBCUvc, who is basically saying, “All this stuff is perpetuated via networks. Those networks right now tend to be white male. We are just going to do a parallel thing to what Stanford has done for those rich white male students with HBCU universities, where we are not starting from such a low percentage of diversity in the first place.”

When I look at the numbers, especially Black, Latinx, and low-income students that we are admitting into Stanford, we have got a long way to go to have appreciable numbers where we can really make a dent in Silicon Valley. Even if we can get them admitted into the university, funded, and into the classes that we teach, then getting them access to funding from VCs (who are over 90% white male) or from angel investors is a further challenge.

Stanford is also in a unique position in having such a big endowment and being one of the universities that allocates a fairly high percentage of that endowment to invest in venture capital firms. This is in fact another starting point: one of the things that I started working on earlier this year was, why does the endowment management company at Stanford have so many white males making the investment decisions, and why can they not invest in more diverse VC funds? I had a number of conversations with former members of the Board of Trustees, others that advocate for more diversity, and asset allocators. They say, “These funds are too new; they are too small for us to allocate significant capital to.” These are all excuses. There are multiple levels to this, and that is why it is systemic. At one level, it’s getting those endowments invested in a more diverse set of VCs, getting a more diverse population of angel investors that have experience to become those VCs, getting more diverse students admitted to the programs in the first place, raising more funding to provide financial scholarships to low-income communities.

The other big responsibility is teaching the content in such a way that it connects with diverse communities. That is along the lines of what Ann was referring to there, that it is not, you raise $50K from friends and family, and then you do not take a paycheck for a year and it’s no problem. Then you reach out to all your wealthy angel investors in your network, and then you raise venture capital. Presenting the content with diverse perspectives, diverse role models, diverse mentors and judges up in front of the class, that is the other key responsibility. That is why we are excited to have folks like Ann as adjuncts and lecturers, as part of the program, and we need to further double down on those efforts to diversify the staff and the faculty.

The Individual Instructor’s Role in Diversifying Learning

JL: Looking back at what you have done so far, and forward to what you want to do, can each of you share a best practice when it comes to teaching and increasing D&I in the classroom and bringing people in? What should every instructor and teacher do differently?

AM-K: This is a really critical question. One point that I wanted to make that Chuck was talking about: the change that you were mentioning that is needed is coming. You start to see it already, even with the Yale endowment, which sent out a letter to all of their managers asking for diversity numbers, driven by David Swensen, their CIO. He wanted those numbers. He has had those conversations with managers, and he is pushing them to make these hires. When a Yale endowment does that, because they are one of the leaders, you will see that actually reflected in the numbers. You will start to see more diversity.

The second other point was that in tech, it is not just at the pipeline issue, because I see this as an Asian woman. When you look at the senior levels of executives and board members, you do not see that many Asians at that level. That is not a pipeline issue, and I have talked about this to multiple people to just try to understand what is happening. If we say we are just going to solve it at one level and ignore the rest, we are not going to be able to get there. This comes back to your question of, what are tactics that we can do at the educational level in colleges?

First of all, in the classes that I teach, I am actually constantly revisiting the topics that I am uncovering. I am looking at the case studies that we use. I am looking at the guest speakers that we have. I am looking at the students that are represented in the class. I am looking at how we recruit the students. It is comprehensive in terms of looking at the class from various angles, and it is not just my own eyes, I am sending this out to other students that represent different pockets to say, “How does this look to you? Who else would you want to hear from?” I may not be able to incorporate it this year, but I am going to incorporate it in the future, and I am just trying to keep a living list of what I should be doing better. Not thinking about my course as a static thing that is optimal already, but that it needs to always be changing.

The second thing that I do think about from a venture capitalist perspective, and taking off my educator hat, is we actually run programs for different types of students. Most recently, one of my partners ran a building breakthroughs class that ran for ten weeks. It was what we taught at Stanford, but we opened it up to Black entrepreneurs and Black students. We had fifty underrepresented minorities within this program. We could tell it was just the start. The quality of the applications that we were getting were mind boggling. Some of it is, what do we do within the confines of our university? There is a second order question: what can you do outside it? How can you use your megaphone to then bring others into the fold in ways that are now possible, because we have things like Zoom, and we are all sitting at home being able to educate others?

Diversity Initiatives Start with University Leadership

CE: Bottom-up initiatives are always helpful, but the most important thing is people in leadership positions in the university have to talk about this, as a critical challenge and mission for the university to diversify in general, and diversified entrepreneurship programs in particular. If those university leaders, deans, and department chairs do not speak up about it and do not change the way that resources are allocated for new faculty hires or for adjunct lecturers or for funding students, then it is very difficult for those of us that are trying to do stuff from the bottom up to make a lot of progress. That is the most critical thing.

Getting Help from Students (and Compensating Them)

CE: Tactically, we have hired a couple of RA [research assistant] students. Not asking for free labor, especially on the part of the affected communities, is really important. We hired a couple of master’s students and they have helped us to make a ton of progress. They’ve helped with recruiting, such as running the MS&E [management science and engineering] department version of our SERGE graduate recruiting program. They’ve also been meeting with faculty to help diversify the syllabus readings and guest speakers. Recently, they’ve helped us to coordinate an undergraduate diversity in research program. Finally, they are helping with some literature reviews in this area of what works and what doesn’t.

Relatively inexpensive RA positions have really infused us with a lot of energy in the department. They have been going around and setting up guides for faculty about how to diversify your syllabus, setting up networks of contacts for more diverse speakers, pestering faculty to meet with them to sit down for a half an hour and go through the syllabus, class session by class session. We have hit some resistance on that along the way. Faculty are very hesitant to have other people meddling with their course syllabi, but done in a sensitive, thoughtful way, we have gotten people to realize, “This is fairly painless, and nobody is going to yell at me, and I can make a few small tweaks and make some improvement in the experience for students.”

JL: Chuck, a last question for you: what do you think is a concrete next step you want to take to make your bit of entrepreneurship education more diverse and inclusive? What are your plans for the coming two years?

CE: One concrete step is in hiring more diverse students as teaching assistants in our classes. In terms of plans for the coming two years, it’s really focused on recruiting more diverse students and faculty to apply to the department.

Harbach, Shu: Investor Education

Jeff Harbach (Kauffmann Fellows)

Lisa Shu (formerly Newton Venture Program)

The default pattern-matching that skews the venture capital industry in favor of elite, white, male founders can as easily be ascribed to a lack of investor education, acumen, and skill as it can a lack of worthy pipeline or ability to source diverse deals. The apparent issue the industry has with the former is that it places the buck in the court of the LPs and GPs who are overlooking diverse talent, rather than on the diverse talent themselves, as has historically been the case. We were delighted to sit down with Jeff Harbach and Lisa Shu to learn how the Kauffman Fellows and Newton Venture Program plan to disrupt the venture capital ecosystem by training the next wave of GPs to be more inclusive than those who have gone before them.

Interviewed February 2021

Changing VC Is Not about Quotas

Johannes Lenhard (JL): VCs happen to be mostly white men with Stanford, Harvard, and Oxford degrees. Is that something you want to change with your respective organizations?

Jeff Harbach (JH): At the Kauffman Foundation, the way that we think about diversity in venture is not about quotas. It’s important to remember why the organization came about: we have long believed that in order to best understand the world’s greatest challenges, the future of the VC industry must be diverse and more reflective of society as a whole. The Kauffman Fellows Program originated as an endeavor of the Kauffman Foundation, from which it was spun out in 2000. The Kauffman Foundation was started by Ewing Marion Kauffman, who cared a lot about two things: entrepreneurship and education. Since the early 1990s, the Kauffman Fellows have pushed to build a global fabric of smart, connected capital that will fuel entrepreneurs everywhere and support entrepreneurship as a catalyst for economic growth and social change.

We recognize that many people do come from Ivy League institutions, however we think about it in terms of how do we continue to be a catalyst in making sure the venture ecosystem is more inclusive, equitable, and reflective of society as a whole? Over the next 25 years, we think that the venture ecosystem will continue to be a catalyst in supporting high-growth entrepreneurship. One of the key ways we think that venture is going to evolve and continue to change is that venture as a vehicle for supporting entrepreneurs is going to be more easily adaptable to businesses that are solving the world’s biggest problems in areas such as healthcare, education, food, water mobility, and energy, for example.

Due to Moore’s law and Metcalfe’s law, with technology getting faster and cheaper and people being more connected through technology than ever before, we will now be able to develop companies that are actually addressing some of the world’s biggest problems that we have not been able to do in the past because of some of these limitations. If that is true, and we believe it is true, then we believe the entrepreneurs that are going to be launching companies that are solving those problems are going to be individuals that have experienced those problems. Those individuals are going to be more reflective of society as a whole. If we are not as a venture ecosystem also more reflective of society and [with experience in] those same issues, we will miss those opportunities, some of those category-defining, and frankly, world-defining companies that will be built over the next five, ten, twenty years.

For us, this is not about quotas—it is about making the venture ecosystem more reflective of society as a whole, because it cheapens the conversation when we talk about quotas. It enhances the conversation when we are truly talking about economic development, in terms of building companies.

Lisa Shu (LS): I have to echo Jeff in the notion that decisions made by VCs trickle down throughout society and who gets funding determines which of society’s problems get solved. In its current form, venture excludes too many, and it serves too few. Newton has the explicit mission to make the venture landscape fairer, more inclusive, more representative of the population it serves. While we all agree that no one group has the monopoly on talent, overwhelmingly one group does seem to have a monopoly on power in the venture ecosystem. We take a quantitative approach with the Newton Venture Program in terms of looking at the investment landscape.

At the very top, we need to ask ourselves: who is in the rooms where decisions are being made, and who is left out of those rooms where decisions are made? We share the same ethos with Extend Ventures. Through this quantitative approach, we measure who is not in the room, and we ask: how do we get those individuals into these rooms in order for more of society to be served? It is the representation that is so important to capture among the decision-makers at the very top of that ecosystem.

Best Practices for DEI in VC Education

Erika Brodnock (EB): How exactly are you tackling diversity, inclusion, and equity in your educational programs? Are you able to share a few of your best practices and initiatives?

LS: We set a very clear mission from the outset. Newton was incorporated in September 2020. Kaufman has 25 years of history ahead of us. Our vision is that by 2030, venture investors will be 50% people from currently underestimated and overlooked groups. Working backwards, what do we need to do to get there? In every cohort of Newton learners, we ensure that at least 50% of our learners are female, and at least 50% of our learners come from Black, minority ethnic, and other underrepresented backgrounds. We also focus at the top of the funnel to ensure we attract candidates who might not otherwise naturally see themselves as a venture investor. Most of us do not naturally see ourselves as a venture investor.

We were very specific in planning our content, in partnership with like-minded partners such as Colorintech and Black Tech Fest, to make sure that we build content on how to build a more inclusive venture ecosystem for investment. We communicate that this is for everyone; venture is for everyone—it should be for everyone. We also have to acknowledge our own decision-making biases. I have a background in behavioral science, with a PhD in judgment and decision making. We have to acknowledge that we all bring our biases to the table. We have to guardrail against that in our selection process. This is where the beauty of technology comes in to help us with this.

At Newton, we use Applied, which is a blind recruitment platform. We rate our applicants through a blind selection process—no CVs, no names, and no demographics are attached to any individual’s application. We know the group demographics in terms of how they self-report—but we have no idea who’s who, where they went to school, where they are employed, if they are employed, etc.—when we admit our applicants. We are radically transparent about how we do our selection. The radical transparency involves blinding ourselves from who we are actually admitting to our classes.

EB: Will the use of Applied extend to how venture capital investments are made via the fund?

LS: There has been some traction in that direction. I know the fund Blackbird VC (based in Sydney, Australia) selects founders to meet with based on this blind process. There are some indicators that more and more firms will use this blind selection process—either for their own hiring needs, the hiring needs of their portfolio companies, or deal sourcing.

JH: We have two things that we focus on with Kauffman Fellows, and we are developing more. The first is our core program. It does not necessarily focus on the top of the funnel, but it rather focuses on individuals that are in venture right now. The median fellow is a junior partner in their firm. Some are more senior partners, some will go down to maybe principal, but the average investing experience is five plus years. The average operating experience is more like ten plus.

Each year, Kauffman Fellows identifies and develops a new cohort of accomplished investors who attend the two-year program part-time while they are investing full-time. The Kauffman Fellows Network spans six continents, representing over 50 countries globally—and is nine times more diverse than the industry average. Each year, we intentionally recruit, build, and design the incoming cohort with diversity as our north star and driving force. We focus very much on who we select, and we want to involve ourselves with all the different communities of individuals that are not our standard, typical communities that are, for instance, my network as a white man. We focus on talking to all the different groups that are working on diversity and getting individuals that are working in the business.

One of the core beliefs that we have is that it is actually easier now than ever to get into venture. It is hard to stay in the industry beyond five years, and it can feel darn near impossible to stay in VC beyond ten years. The reason why is because to stay in the industry beyond ten years, you have to start returning capital to LPs. I hate to say it but your tenure in venture is not measured by how many blog posts you write or how many speaking gigs you do or any podcast you launch. It is measured on a spreadsheet and on how much capital you returned to your LPs.

Our goal is to ensure that we surround these individuals once they are already in venture, to help them succeed. One of the ways we help them succeed is to learn beyond the rate of their own experience. We do that in two ways. One is we understand that networks in venture matter. With the Kauffman Fellows Research Center, we did some analysis using a network betweenness algorithm that actually put numbers to strengths of networks. We did this not by using weak social media data, but rather, taking how closely people are connected with individuals that have worked together multiple times either on boards, executive teams, at venture firms, etc. If they have worked together multiple times, the strength of that connection becomes that much stronger.

If you have a top 1% network in venture, your average realized multiple is over 10X, if you drop down to a top 10% network, your average multiple drops down to a 6X, which is still great. If you drop down to a top 25% network, which is top quartile, your average realized multiple drops down to about a 2X, which is under the industry average realized multiple. What we do with Kaufman Fellows is we try to make sure that we surround these individuals with a diverse, trusted network of individuals that are going to help them succeed. What I mean by helping them succeed is helping them with due diligence, helping them think about their next LP conversation, or helping them with situations like bringing on a new partner to the firm. It is having that trusted expert network around them that will help accelerate their learning and growth. These pieces are critical to helping these individuals learn and grow faster than they would on their own.

The second at the top of the funnel is we have a program called Venture Deals. It is a free program that we have been offering for seven years now, most recently in partnership with Techstars. We run it in partnership with Brad Feld and Jason Mendelson from Foundry Group, and it is open to everyone. That is our way of saying, “If you are interested in venture, and want to learn more about the industry, either from the perspective of an entrepreneur, aspiring venture manager, or established manager, you can learn this through the Venture Deals course. It helps you shore up your knowledge about term sheets, diligence, and all the pieces around venture.” That is how we think about it programmatically and it is the way that we approach DEI in the business.

The magic around any kind of conversation around DEI goes to getting a group of individuals together and creating what we call a brave space. It is not good enough just to have a safe place, but rather a brave space, where we are able to share all the messiness around this conversation. Having DEI conversations are uncomfortable, and they are hard. We all use different language. As a white man, am I supposed to say this? How do I recognize blind spots? How do I improve my knowledge and broaden my perspective on the things that I do not know? Those discussions are where we really think the magic happens. It is a best practice that anybody can do.

Considering Class and Social Mobility in VC

JL: Let us address one specific area that is not talked about much in this space, which is class and social mobility. Supposedly, one even more so than the other is very expensive. Is that something that you think about, because it makes it harder for certain groups to participate?

LS: Our programs are at different price points, but they are expensive for some. It starts at £2,000 for the digital program and up to £20,000 for the on-campus at London Business School program. In creating these programs, we wanted to ensure that inability to pay does not pose a barrier to entry, because there are already too many barriers to entry into the venture ecosystem. We are very lucky to have partnered for our initial cohort with founding sponsors who have underwritten 30 of the 60 spots for our first cohort, and we have lined that up for the next ten cohorts. It does not matter what the amount is; we do not want to add to the barriers into the venture ecosystem. We are explicitly eliminating it by partnering with like-minded partners, and the beauty of partnering with multiple sponsors is that you form this collective action. We have many different parts of the ecosystem engaged from all different fields, whether it is law or finance or government. It is really wonderful to see the collective movement building within the venture ecosystem. The more inbound requests I receive to sponsor a spot, the happier I am. It is about the number of firms, organizations, and individuals that we can mobilize towards collective action—even more so than the actual number of scholarships that we can deliver.

JH: Venture Deals is a free course for anybody that wants to take it. The core program that we have, which is a two-year program that is measured by nine different experiences or events, is $80K. Number one, we do not want this to be cost-prohibitive for individuals, especially those that are launching their first-time funds. When you are a first-time manager, and you are launching a $10M–$15M fund, and you have your GP commitment that you have to do as part of launching your fund, you do not have management fees and other cash flow to be able to pay for an $80K program. We understand that. We are aggressive in the way that we focus on scholarships.

The Kauffman Fellows Program is a non-profit with a tuition-based business model. Historically, we have granted scholarships almost entirely off of our own balance sheet. Over the last couple years, as we have increased the number of scholarships that we are giving, we have been grateful to individuals and organizations that have sponsored scholarships alongside us, allowing us to further increase access to our program. This year, between KF-sponsored scholarships and partner-sponsored scholarships, we were able to provide almost $1M total in scholarship funds.

What we want to focus on is merit. We look for candidates with an entrepreneurial spirit, deep domain expertise, leadership potential, and an appetite for risk, ambiguity, and the unstructured environments that the innovation ecosystem requires. More important than these traits, however, are core value traits like integrity, humility, empathy, service orientation, and a deep sense of gratitude. All of these “behavioral fitness” components distinguish outstanding finalists from the pool of extremely capable nominees. We want people that we believe are going to have a long-term impact on this business. If the cost of the program is the only thing that is holding them back, we won’t let this be a determining factor. We care a lot about there being access for all that are really on the path to making a long-term dent in venture.

Helping Underrepresented People Make It to the Top

EB: Are there any plans to create an emerging fund manager program that is specifically catered towards combating the issues where people from overlooked backgrounds tend to fail to progress to partner stage?

JH: Yes. We are always looking for what we should be doing to support our mission of helping the venture ecosystem look more like society as a whole. If you just have an emerging manager program, then you’re going to miss out on the important discussions that you get from having emerging managers, established managers, geographic diverse managers, and new managers all in the same room. We define diversity not just on the basis of gender and ethnicity, although those are two very important characteristics of diversity. We try to take a more inclusive position on diversity and view it through the lens of characteristics like gender, ethnicity, sector, stage, geography, and age to name a few. We want there to be an inclusive nature around all these discussions so that we are getting the value from seeing how different people are viewing this from different stages and different perspectives. I understand the purpose of an exclusive emerging manager program is to really make sure that we are focusing on the fact that oftentimes emerging managers or overlooked managers are not making it through that glass ceiling or making it to the partner level. We think that we are meeting that by seeing many of these new managers—especially over the last two, three years, and even at an accelerating rate over the last six months, based on what is going on in the US—becoming first-time managers, launching their own funds, getting to partner.

Our job is to make sure that they stay there. They are successful in that role, because that is ultimately the long-term vision for us. As of right now, while we are always open to new ideas, we are never going to get so set that we say no to something. As we measure this, and we think that we are not meeting the demand for the emerging managers that we think are out there, then we would either look at expanding the size of the class or starting a new emerging managers program. We have to balance that with our deep belief that it is not good enough to just have an emerging manager program, a Black VC program, or a women’s only program. We need them to be part of the entire conversation, because that is the way that we are truly going to advance this.

LS: I agree. I have been heartened to see programs such as VC Include develop a BIPOC fellowship, specifically to target these overlooked groups. As we build out Newton’s learning ecosystem, we have thought about what kind of custom programming we could develop for emerging fund managers. When you look at a cohort size of 60 individuals, and you look at the number of one-to-one relationships, that is 1,770 relationships. Take the perspective of a learner: who else is in the room with me? There’s 60 people but 1,770 relationships; 1770 is the real denominator, because venture is not done in a vacuum. Who raises from whom, who co-invests with whom, who sources from whom—all involve multiple parties; there is no individual contributor in VC. If our mission is inclusive representation, I do not think that we can limit it to just specific groups.

Goals and Challenges for the Future of VC

JL: What is your specific vision for the VC industry in five to ten years, and what do you think is the biggest challenge to get there?

LS: We have a very specific vision that by 2030, venture investors will be 50% people from currently overlooked and underestimated groups. The biggest challenge that I see right now is: we can create the best investor training programs that £2,000 or £20K or $80K can buy, we can provide the supply of the most talented diverse pipeline into the venture ecosystem, but what we cannot control is the demand for this talent. The rate at which firms hire is very slow. That is changing and there is an unprecedented amount of capital in both private and public markets. There is a macro shift from public equity into private equity.

To truly change what is “market” in the VC industry, you have to shift the status quo and shift that towards equality by design, and not as a mere afterthought. It is not enough to just create this brilliant pipeline; they have to have somewhere to go. There are more stages than just attraction and selection of diverse talent; there is also retention, belonging, and promotion. It is that ten-plus year journey after your first fund, whether or not you can raise your second, whether your LPs commit to this vision, that is the piece that poses one of the biggest challenges.

JH: One of the major challenges that we face in venture is the reality that less than 5% of the industry ever cashes a carry check and that most venture managers are going to fail because most startups fail. Going from fund one to fund four and beyond is really hard. It does not matter what background or stage or anything else you come from. It is making sure all the energy that we have around wanting to see the venture ecosystem look more like society as a whole, sticks to signal and turns into a signal, and it stays. The staying power means we must help more of these emerging managers.

We have to spread the success beyond just the relative few. That is not democratizing returns, it is instead making sure that we are looking in places that typically have not been looked at and that the venture managers are looking at those types of companies, because they recognize them, because they also come from those backgrounds. The biggest tragedy that we would see is if all this energy put around supporting diverse and emerging managers ends up seeing little success coming out of there in five to ten years and ends up reverting back to the mean or where we have already been. It is hard because the people that are realizing success have been doing this for 20–40 years.

Another worry is anybody out there who views venture as the cool job or easy way to make money or trendy cool thing is kidding themselves. One of the very first questions that I ask any manager that wants to be in venture is, “Why do you want to do this?” What is driving you to want to be in venture capital when the trends would say that you are better off learning something about another industry before coming into making investment decisions, and then ultimately mentoring and coaching decisions for the people that are building companies in that industry? It isn’t about where you get your experience, but it is about some sort of experience. It tends to mean that the more that you bring to the table, the more you are going to be able to both help evaluate and help those companies grow. That is tricky because we do not want to select only on education or experience. If we do that, then we end up reinforcing the biases that have been there in the first place. How do we make sure that we are supporting the individuals that are going to continue to drive more diverse outcomes, as opposed to just people getting in the business? How do we ensure we sustain this long term?

What Businesses Need to Reach Escape Velocity

EB: I have this analogy that if there is a fish and the fish is sick, if you do not change the water, the fish continues to be sick. This is the venture partners or emerging fund managers that are setting up new funds that are going to invest in new businesses, if we do not ensure that those businesses have a way of being successful, by potentially ensuring things like supply chain practices are changing. I have spent a lot of time thinking about what is needed to ensure that some businesses can reach escape velocity because once they do, the founders can become the LPs and even the GPs that are creating that cycle. We need to create one full cycle to do that. How would you say we need to go about ensuring that other pieces of the puzzle are in place so that it does not result in the failure that you just described?

JH: I am not going to pretend like I have the answer to this. My initial reaction is that I get antsy around everybody thinking that venture is the most important piece of this puzzle. It is not the venture layer; it is a service layer. Let us just put things in perspective, venture managers come and go, the true heroes in our story are the entrepreneurs. They are the ones who are solving the world’s greatest problems. They are the ones that are creating economic independence for many and are going to help solve these things from the supply chain all the way up and down, where we need systemic change.

From a venture perspective, we can help change that by overshooting the influence that venture has. I do recognize that there are power dynamics in all forms of life. That is where the power dynamic exists in venture is that between the entrepreneur relationship and the venture relationship, oftentimes the venture manager has more capital and they are perceived to have more power, because they have that checkbook. Any entrepreneur that has ever had a hot round or had their choice of venture managers would tell you that they really did possess the power in that dynamic. That power dynamic is only perception. It is not reality.

To think that venture can change all the systemic areas where we need change is overselling the impact of venture can have, and underselling the impact that the entrepreneurs can have. Do we play a role? Absolutely, but this is going to take all of us working and rowing in the same direction to ensure we are focusing on how things can change from the past, in order to succeed in the future.

You could not have imagined even ten years ago that Zoom would have the kind of impact that it has today, because of what we have seen in the democratization of technology. What do 2025, 2030 look like? Whether you are in NYC, Austin, or Johannesburg, it is going to look like having the same access to products and services because of this democratization through technology. We have to ensure our supply chains and everything up and down the stack are also representative of society as a whole. We all play a role in making sure that every part of this ecosystem is more reflective of society as a whole.

LS: I love the notion of the full-stack venture ecosystem. It brilliantly illustrates how so many pieces have to come together to enact systemic change. It starts with governments, with the tech transfer officers at universities, the R&D budgets that are invested into the innovation ecosystem. Then you have the LPs, the angels, accelerators, incubators, and the venture capitalists all working together. As the tide rises, all boats rise together. Every single piece of the stack needs to work together towards greater inclusion and belonging and representation in the ecosystem.

When we think about Newton’s role in that, we think about who is not in the room: in our cohort of learners, we want to fully integrate pieces of the venture ecosystem. We are very explicit about including public servants. We are outreaching to civil servants to tell them, “You play a pivotal piece in the very start of this innovation economy.” The decisions that governments make determine how big the pie actually is—not who gets a slice of it yet, just how big the pie can grow. Integrating the end-to-end venture ecosystem is a way for us to work together to get there faster.

Wehmeier, Teare: Data Collection and Analysis

Tom Wehmeier (Atomico)

Gené Teare (Crunchbase)

Tom Wehmeier, partner and head of research at Atomico, and responsible for the annual State of European Tech report, and Gené Teare, Crunchbase senior data journalist, discuss the role of data in improving diversity in the tech and venture landscape. Taking the call for “more data” among many investors seriously, we go into the details of what we already know and how data can indeed drive change.

Interviewed January 2021

Why Data Matters for D&I in Tech

Johannes Lenhard (JL): What role do you think data plays in moving the needle on D&I in technology?

Gené Teare (GT): Crunchbase was one of the organizations that led on diversity data. From 2013 onwards, there was an active discussion around female representation on engineering teams. In early 2015, we recognized that with a global dataset of companies and founders in Crunchbase, we could provide analysis on funding to female founders, and how that has changed over time. In March 2015 we began to add gender to the data. We analyzed personal pronouns to help with data analysis, getting to a very comprehensive dataset within about two months, and wrote our first report. That first report showed a big shift over that time frame. We found that the percent of companies that had raised a first funding with at least one female founder had increased from around 9% in 2009 to 18% by 2014. Since then, we have continued to report how those numbers have shifted.

JL: How important do you think this tracking is? What do we get from it in a secondary and tertiary process, as the tracking in and of itself doesn’t change the needle, right?

GT: For those concerned about funding to female founders, without knowing exactly what the numbers are, you could over-project, under-project, or misunderstand the trends. The numbers themselves do not shift the needle, but understanding the numbers does anchor the discussion. It also can lead people to act because they say, “Okay, this is worse than I thought it was,” or “This isn’t moving quickly enough, we need to do more.” We have seen the data propel individuals to go out there and do something because they realize the numbers are not where they would like them to be.

Tom Wehmeier (TW): I agree. I think data assists in helping to understand the scope of the issue and the potential for solving it. If we are not familiar with the scope of the challenges that we face, we won’t understand what levers we need to pull in order to shift the needle in the right way. I think data in general, whether it’s around D&I or anything else, is such a vital component of telling stories and doing so in a way that is objective. In doing the work to source the data, then using that to drive a data-driven narrative is a really powerful mechanism to raise awareness to engage people and close those knowledge gaps. When measured over time, data enables us to track progress and hold different stakeholders accountable. The last piece is that it can be incredibly empowering. It becomes easier to speak up about when you have data to support and validate your experience. All of these things, when taken together, shape how data plays a role in helping various different individuals or organizations to try to move the needle in the right direction.

How the State of European Tech Report Has Centered D&I

Erika Brodnock (EB): Tom, you oversee the State of European Tech report yearly, covering funding and developments in the industry, as well as a large survey of more subtle attitudes among VCs and founders—including many questions on DEI. Why is the State of European Tech report such an important piece of work at Atomico?

TW: I think it’s a small contribution to the discussion. I look back to the first report we delivered back in 2015, and I think a very limited amount of data was focused around gender and diversity at the founder and operator level. Over subsequent years, we’ve grown the level of focus in the report. In 2018, we really doubled down the level of data, specifically pulling out and creating a chapter around diversity and inclusion. We also used that as the lead narrative into all of the media briefings following publication.

We are fortunate that over the years the report has become a high-profile piece of research that reaches a large audience of influential people—investors, founders, policymakers, LPs, and others. We have always been aware that it is a powerful tool and platform to influence the industry agenda. Take 2020 as an example, hundreds of thousands of people have engaged with the report;* 9,000 people attended the launch event. We rarely measure social reach, but beyond the launch itself, there was a huge amount of engagement too.

Given the reach and potential influence of our reports, we felt a sense of responsibility to put diversity and inclusion at the front and center of what we do. Some of the things we do as part of the research process gives us a means by which we can gather information and data about D&I that wouldn’t otherwise be possible to collect at the scale that we can. Our survey, for example, features 5,000 voices from within the European tech industry. For multiple years now we have used that survey as a mechanism to collect interesting data around issues such as discrimination within the industry, or the extent to which companies that operate in the European tech industry are implementing different policies to drive positive progress around different aspects of D&I. Furthermore, we have some nice leverage in that when we have conversations with data partners that support us on the report, we can both ask them and push them to think through what data sets they might be able to share with their audience.

An incredibly important aspect is that it is a free report. It is open to anyone and each data point is exportable. The raw data, the charts, everything. This has been very deliberate, because we want it to be used as a resource that can be reused and recycled to create a compounding reach. It is a resource for anyone who wants to advocate for change. It has been great to see just how much people have taken that on, including the media. There are more than 500 media articles that we have tracked over the years that have a specific focus on D&I that reference back to some of the data in our reports.

However, we are still far from having anything close to all the answers, there are still mega hurdles in terms of collecting information about the state of what is happening. It is sobering to think that there might be people out there who think that what we do goes beyond what others do. Yet internally, we are there thinking this is only 5% of what it should be. It is amazing that we have people like Gené, with Crunchbase, who have for many, many years now been looking to address this too. As the diversity discussion has evolved beyond gender, Crunchbase has been at the forefront looking at ways to paint a clearer picture with data on different aspects of diversity.

Collecting the Data We Need to Drive Change

JL: Gené, what do you think is the most important data that we can collect to change the landscape? Give some examples of things that you have already found and dive into some of the results.

GT: At Crunchbase, we track companies as soon as they first raise funding, and then they start showing up on our reports. What is critical is that Crunchbase is an open platform that founders can access, to add themselves and their early funding rounds and become a visible part of the ecosystem.

In 2020, we added race and ethnicity to the dataset for the US market as part of our Diversity Spotlight data. People had been asking us over the years to look at the data with a race and ethnic lens. We had previously thought this was too difficult to address as race and ethnicity is sensitive data, and the meaning of race varies in different parts of the world. People would need to self-report at scale for it to be meaningful. We took the decision that, as a global database, it was too challenging.

In 2020, specifically in response to Black Lives Matter, we decided to add race and ethnicity to the data. We started with the US market, as it is a leading funding market. The process we went through for this data was interesting; we partnered extensively to get feedback and collect the data with organizations active in the Black and Latinx community, as well as investors. We worked with organizations such as the Black Founder List, Black VC, Stanford Latino Entrepreneurship Initiative, and All Raise, and the venture community.

After updating companies that were started by Black or Latinx founders, our findings confirmed what many were saying. “Within the US the funding to Black and Latinx founders is low, we think it’s 1%, we think it’s 2%”—everyone was collating their own datasets and coming up with those findings. We thought, given that Crunchbase has all this data, when we build it out we can do a comprehensive job and possibly show improvement on these stark statistics, whilst recognizing that we will miss some companies that will be added over time. What we found is that funding to Black founders was around or just under 1% over the last five years. When we looked at Latinx founders, that number was just under 2%. However, if you look at those two communities, Latinx make up 18.5% of the US population based on the US Census Bureau, and the African American community came in at 13.4%.

What’s meaningful for us is that having worked with these partners, they don’t need to recreate the dataset. They can take the Crunchbase data to then inform their own reporting on these issues.

Expanding to Europe

EB: I work with Extend Ventures, and we have published similar reporting for the UK. We are really interested in looking at the numbers across Europe. Do you have plans for that?

GT: Yes, we would like to explore expanding our diversity data to Europe. For Diversity Spotlight we tag companies, not individuals, with “founded” or “led” based on race or ethnicity. By “led,” we are focused on the CEO role at a company.

How Research Translates into Programs

EB: Tom, how has Atomico used the research findings to enhance its thesis? What are the particular programs and investments that you’re making now?

TW: Atomico’s founding thesis back in 2006 was, “Great companies can come from anywhere.” And that is what we have learned. We have spent more time understanding the industry issues around D&I, that “anywhere” really means “by anyone in any location.” The more we have spent time understanding this, the more it has reinforced and strengthened our conviction in that initial thesis, specifically, our resolve to back underrepresented talent in tech. It has been really influential in helping rethink every aspect of what we do, in terms of how we invest, also how we think about building our team as a fund.

To highlight a few specific initiatives that have directly come off the back of the work that we’ve done around D&I: we run an angel program and are launching our third cohort of angels. The first cohort was run in 2018. The primary motivation was to play a role in building a more diverse universe of early-stage angel investors in Europe. Assessing the numbers, we can see that, significantly greater than 90% of all angels and significantly greater than 95% of all investments involve white male angels, and so right from the outset of that program, D&I was embedded. Across the first two cohorts, 60% of the angels were women and 25% came from an underrepresented ethnicity. One of the core beliefs we held was, if we brought a more diverse set of people into the program, they would go back and invest into a more diverse set of founders. That group of 30 or so angels have made 150 investments across two years; 64% of those investments had a founder from either an underrepresented gender or ethnicity. It has been rewarding to see how research translated into a thesis, that translated into a direct initiative, that is now translating into amazing results in terms of helping to drive allocation of funding to a more diverse set of founders.

Ultimately, this is a long-term initiative for us, because our hope is very much that those companies that get backed with angel investments will mature and develop to become the next the companies that we back from our core fund. Also, from that program, the deals that we do are a direct reflection of the network that we maintain. It is therefore critical for us to ensure that we have a diverse network ourselves; inherent in getting to a more diverse network, is building a more diverse internal team. This has been reinforcing how we think about driving diversity into our investment team, as a direct means of driving more diversity into the investments that we make.

Some of the research we did highlighted the industry’s dependency on warm introductions and the barriers to entry and blocks to network diversity this creates. Understanding that warm intros form a barrier to more diverse ways of capital allocation led us to roll out our Access Atomico program. We scaled a program that runs permanently and allocates time from every member of our investment team to be available for people to apply to directly.

More broadly, research has shown there is a lack of diversity at the GP layer in Europe at the early stages, which are formative moments for any young company gaining its first institutional check. That is problematic for us as a Series A investor, because clearly the companies that flow through to us are a reflection of the companies that get backed by the funds that invest before us. We created an initiative off the back of some of those insights to basically run a small fund-of-funds program. We are now making LP commitments to early-stage emerging fund managers with a clear focus on investing in underrepresented founders.

Turning the Tide of Warm Introductions

EB: Tom, how are you selecting the angels? If the angels are selected from a warm introduction style network, surely that kind of perpetuates the problem, so is it open?

TW: We start by going through our network to find candidates to go to our shortlist. We then leverage the network of the angels already on the program to make recommendations too. Though I would say that they are sought-out recommendations from our network, we are thoughtful in who we go and ask to supply those introductions to ensure that that field of people is diverse. There is also then the opportunity to openly apply. We have also been proactive in a data-driven way, to identify a potential diverse pool of candidates that we have reached out to ourselves, because we thought that they might represent interesting candidates for the program.

The search for potential angels has actually highlighted another problem that is not just at the founder level. Essentially, when you look at the founder level, then you look at the senior executive level across venture-backed startups, there is very high lack of diversity at that specific level. That matters given what we know about the flywheel of how those people go on to become the next generation of founders, and in having that profile. If you cannot break that lack of diversity at the senior executive level too, it just becomes cyclical and really hard to break.

Facing the Next Set of Challenges

JL: Where do you think we need more data for the future? Crunchbase started collecting data on women eight years ago, and on ethnicity relatively recently. What do we not yet know enough about, and what is another frontier that we can help push with data?

GT: I spoke with BBG Ventures founders Susan Lyne and Nisha Dua, who focus on investing in consumer technology companies with a female founder. One of their findings is that their incoming deal flow in 2020 during COVID-19 for female founders increased. We spoke with other funds focused on female founders and confirmed this finding. That contrasts with our most recent report, demonstrating funding in 2020 to female-only founded companies was down, tracking closer to 2% than the previous year’s 3%. That is concerning. We also cite a McKinsey report, which mentions 30% of working mothers may leave the workforce due to COVID-19. The concern at this point is: are we going to see stagnation or a step backwards for women in the workplace?

Tom, your point about the lack of diversity in the senior leadership level is an indicator that the next set of founders might not be as diverse as we expect. From my perspective, looking at the data in 2014, 18% of companies with an initial funding had at least one female founder. This includes female-only and female/male co-founded companies. The numbers have shifted a couple of percentage points to about 20% of companies in recent years. We haven’t seen the same leap in the last five years that we did in the previous five years.

However, absolute funding has gone up considerably. In 2016, total global funding was around $170B. In the last three years, funding has almost doubled, closer to $300B per year on a global basis. Based on percentages, the pace of change has been slower. From an absolute number of companies founded by a woman and from an absolute number of dollars, however, the counts and amounts have grown compared to the previous five years.*

Tom made a point about networks being incredibly important. All Raise, which supports female founders here in the US, were concerned during COVID-19 that video conferencing doesn’t quite replace the traditional networking function. The fact that people can’t meet at events serendipitously, they feel, has impacted women because networks are incredibly important in this business.

TW: I agree. The things that would be most impactful is just building a more comprehensive coverage of some of the research and initiatives that we are already undertaking, whether that is building out coverage across regions, for gender or ethnicity. Also, being able to comprehensively map and understand the full lifecycle of a company. Not just in terms of their investments, but also be able to comprehensively look at things like exits and returns and IPO pathways. I think we need to be able to connect all of those different dots through the lens of gender or through the lens of ethnicity, and to start putting even more data on the table around the relative performance and returns from different founder groups. We are probably still at a point where we will still find amazing datasets that emerge from this level of research, but often, it’s snapshots in time. I would love to have continuous longitudinal time series data across some of these areas that offers deeper coverage—then we would be in a really powerful position to tell the real story of what is happening.

But I would just say that every incremental 10% of improvement in the data that does exist is to be celebrated. It is not about trying to get to 100%. Every incremental report helps and is a valuable contribution to how we will eventually be able to create lasting and systemic change.

Lewin, O’Hear: Tech Journalism and DEI

Amy Lewin (Sifted)

Steve O’Hear (Zapp, formerly TechCrunch)

Media and journalism have always played an important role in agitating and facilitating the narratives, conversations, and movements that lead to change. Where DEI is concerned, we need to create systemic change at a variety of levels. This will only be achievable with sustained storytelling. Smart, sophisticated, strategic communication skills are essential for presenting a narrative in which systems are seen as open to change, controllable, and redesignable. We chatted with the tech journalists Amy Lewin (Sifted) and Steve O’Hear (formerly TechCrunch) to learn more broadly about diversity in journalism, as well as the perceived responsibilities of journalism in creating greater levels of diversity in the venture capital industry.

Interviewed March 2021

Diversity in the Journalism Industry

Erika Brodnock (EB): Tell us about your world, tech journalism, and the issues around discrimination, equity, and diversity that you perceive to be there.

Amy Lewin (AL): The journalism industry as a whole is not very diverse. Look at the number of editors of big publications that are women or people of color. Historically, tech journalism has been male dominated, especially on the gadget and big tech company side of things. I am very proud of the fact that at Sifted, we are nine women and six men on our editorial team—and these are regular editorial contributors. It boils down to access to the opportunities you need to have to get into the industry in the first place. People need to have done an internship or several to get into journalism. Most media publications are based in London, if we are talking about the UK. It is not cheap to do an internship in London, as many of them are unpaid. The standard problems with diversity that you find across many industries are also present in journalism, which is partly the reason why we have the status quo as it is.

Steve O’Hear (SO): When I first entered the industry, I was taken aback. It was very stereotypical, with male journalists going to press events hosted by female PRs. I’m not sure that much has changed in gadget and consumer tech journalism. In the world of tech business journalism, however, the gender balance has slowly improved over the last decade. I am not sure it is so bad now in terms of regular reporters, but it gets worse as you go up the hierarchy, as is the case in many industries. Journalism is still heavily private-educated, Oxbridge, middle- to upper-class dominated to this day. That is strange, because in digital media, the proof is in the writing. I always tell other young journalists, if you want to be a journalist, just start writing.

EB: Given how few people at Oxbridge are diverse in terms of ethnicity, social status, or socioeconomic class, what are your thoughts on diversity of that nature in journalism? Is there anything that could be done around tech journalism to open doors so that new people come to the fore?

AL: Many internships are not being paid and most people need to come to London to do them. There is a great organization called PressPad, which got some money from Harry and Megan (the Duke and Duchess of Sussex) this week [in 2021]. They help people find accommodation while they are doing internships so that they can get the experience they need to break into the industry. We need media publications to be paying interns the London living wage, at the very minimum. We also need more examples of best practice around internship schemes. I run our internship program and every single time, I want the people who apply to it, and the people who are interviewed, and the people we select to be as diverse in all these different areas as possible. I still am clearly not spreading the word in the right places to get as diverse a pipeline of candidates as I would like, although we are getting a good mix. I would love to be able to speak to other people who run these schemes, who can say, you need to share it in these places or connect with this community. I do a lot of that legwork, but I know there is so much more to do. The answer is not easy to find. There is not a long list that says, “Contact these people, share it in these places.”

EB: There is also a disconnect from people to communities that have historically been overlooked where they do not know who to reach out to. There is this gulf in the middle that needs to be filled.

SO: There is a pipeline problem, and it is hard to reach parts of society that you do not reach through your existing network. Journalism is terrible because there is an even worse hypocrisy. Journalists increasingly write about diversity and are supposed to be bastions of objectivity. Yet journalism is not made up of the people it serves, so how can it report on the important stories and/or in a representative way? How can it find the hard-to-reach stories if it cannot even find the hard-to-reach aspiring journalists?

EB: Is there pushback on the fact that there is a pipeline problem? Are we suggesting that there are not enough good journalists graduating, or are they not graduating from Oxbridge and therefore not given the opportunity?

AL: You do not need a degree from a red brick university to be a journalist. That is not a problem. A lot of journalists are very lazy when they are recruiting, and they will just email City University, which is the gold standard of journalism. They will say, “Anyone on your courses want our internship?” This is not the answer. You do not need a degree; you just need a passion for writing and to be really nosy.

Journalism’s Responsibility and Impact in Tech and VC

Johannes Lenhard (JL): Let us shift our views slightly away from journalism as an industry that has its own problems towards what tech journalism can do with diversity more generally in the venture world and in the technology startup world. Do you think there is a certain responsibility that journalists have with the DEI agenda, and a responsibility to advance this? What can you do as a journalist? Do you see that space for you?

SO: One of the main reasons for journalism is to hold power to account. In any inequitable society, that means the power is concentrated with the privileged and not with the many. Tech journalism has a responsibility to hold diversity of companies and investors to account. I don’t say this out of some sense of doing good. It is basic 101 journalism. At TechCrunch, we had a reporter that focused almost exclusively on diversity and inclusion. At the same time, we also had an editorial direction, which is that for any news story, we will consider the D&I angle. It is not just a separate topic.

AL: I see this as my responsibility and Sifted’s responsibility. I was the first employee at Sifted. Right from the start, I have tried to ensure that we focus on this and we do what we can to represent the startup ecosystem that we would like to see in our reporting. There is still a long way to go with that. It partly comes down to the criteria for inclusion that publications have. If your number one criterion is how much money has this company raised, then inevitably, you will not be featuring a very diverse set of founders. You have to change your criteria for inclusion. We focus a lot on what we call startup life, including hiring or organizational processes. Everyone has those kinds of jobs, and there is a much broader pool of people you could speak to, if you are writing about mental health at startups or about hiring and firing challenges. That is one practical method other publications can use if they realize that they are struggling to speak to diverse voices. You need to think about the reasons that you are not speaking to them in the first place, and do those barriers need to be there. There are other things you can do for events, such as making sure at the very least you have a “no manel” policy, meaning you must have a panelist who is a woman. If you want to go even further, include somebody who is underrepresented in another way on the panel. If you feel that you are struggling to find a woman for your panel, then your publication has issues, and you need to widen your network and range of sources. As Steve said earlier, you are not doing a very good job of reporting on what is out there if your network is in that state.

EB: You both have done a huge amount of work with your writing and raising awareness around important topics, some of them with the D&I steer. Are you content with the impacts that you have? What, if anything, is missing to make you feel as though you are making a difference?

SO: Do I make a difference? I don’t spend too much time thinking about that, as it is hard to quantify. I get lots of lovely feedback, which can just boost someone’s ego. Where journalists need to double down on making a difference is in two areas. There is a creep towards sort D&I washing, similar to greenwashing, whereby people exaggerate the company’s D&I efforts or progress, because you get an incredible amount of PR. I find that at times disingenuous, and slightly creepy. For example, I am not sure that the first thing I want to read in a press release about a potentially amazing company is the D&I credentials of the team. I am going to judge the company on their product or the market they are attacking. That is what I do every day. PRs will come in where they have almost weaponized D&I, which I think is something to watch out for. The second thing that I struggle to grapple with is that the D&I agenda as a whole has fallen into a trap of importing US identity politics, which is quite easily hijacked by people that want to fight a culture war. I do not see coverage of D&I that starts with, why is it important to have a diverse and representative workforce? I would suggest that in a more traditional British progressive politics context, it is about social mobility as much as anything, which is making use of all the talent in society. It is about removing barriers so that talent can come through.

AL: Sifted is a place where people know they can find stories on D&I. However, we have not figured out how to make people care about diversity who do not already care about diversity. Often, I feel that we are sharing information with the people who already know it. I do not know how much we are changing hearts and minds or getting information to people who really need to think about this topic. More generally, we need more data. So often, you are writing a piece and you want to go and find stats on what is the percentage of founders who are x or what is the percentage of investment that went here. It is there for gender and it is coming for ethnicity in the UK, but not in Europe. As Steve said, then when you get to socioeconomic background, there is nothing. It is almost completely homogeneous—so many people who have been to private school, Oxbridge, and worked at an investment bank or consultancy. It is utterly ridiculous that a sector that only requires you to have a laptop to get started is full of people who have had such privileged upbringings. It does not need to be this way.

SO: The debate has largely been framed around identity politics, so it is not really surprising that socioeconomic status was not mentioned until about two years ago. If you start from a progressive position of wanting to advance social mobility, you would not miss that at all.

JL: Social mobility is still not talked about very much. We made a specific point of having a conversation about socioeconomic class with an LP and GP, and the Americans do not recognize class in the same way Europeans do. There is still a distinct focus on gender and not much else in VC and LP conversations. In France, we cannot actually ask about ethnicity. In America, they do not think about social mobility.

Bringing Intersectionality into VC Reporting

EB: At Extend Ventures, we showed that you are able to capture demographic information. One of the things that we found was that 42% of the money that is invested at seed stage goes to graduates of Oxbridge, Harvard, and Stanford. There is a flywheel that has been created. The thing that is overlooked is intersectionality and what it means to be four of the traits, such as if you are Black, trans, female-presenting, and working class. What could be done in terms of bringing that intersectionality to the fore, as well as raising the issue of social mobility and class?

SO: VCs, especially in Silicon Valley, used to talk a lot about this notion of pattern matching. When you think about pattern matching on a personal level, that is almost confirmation bias meets unconscious bias, and within VC is promoted as a feature not a bug. I do not know how you deal with intersectionality in the context of pattern matching! Within journalism, you should also be making sure that you work hard to reach out to people that are not always featured. You should also focus on not just what you write but also the images that you publish, and other ways of making sure you do not miss the opportunity to represent the ecosystem fully.

AL: I do not have a good answer on intersectionality, either, but a lot of this comes down to journalists working harder. We need to ask more nuanced questions. If an investor says their team is 40% women, ask, is that the investment team? What percentage of your team are university educated? What percentage of your team have previously worked at a consultancy or an investment bank? Every time someone presents you with a stat, dig into that a little bit more. Continue to widen your network. Go to events, join Slack communities for people of color or women in tech. Use Twitter. There are many ways you can find different voices. When you are in a more senior position, be the person at your company who champions this, taking it upon yourself to educate other people or to share resources with other people so that they can get a better grasp of these issues. Make that part of the culture of your whole organization.

SO: It is really important to explain why it matters, not just that it does matter and how it is not happening. If the technology industry is not made more accessible to every part of society, then we are missing out on so much talent. We will all lose. It is not just about saying, “We need more diversity.” It is going back to basics and saying why. As journalists, if we are not covering enough underrepresented groups, we are not giving them the same access to amplifying their mission or message, and we all lose out.

Conversations: The Power of LPs and Policy Makers2 hours, 25 links

Spencer, Henig Shaked, Tan: LPs and DEI

Monica Spencer (formerly Mellon Foundation)

Darya Henig Shaked (WeAct Ventures)

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