5 minutes, 17 links


Updated September 15, 2023
Raising Venture Capital

You’re reading an excerpt of The Holloway Guide to Raising Venture Capital, a book by Andy Sparks and over 55 other contributors. A current and comprehensive resource for entrepreneurs, with technical detail, practical knowledge, real-world scenarios, and pitfalls to avoid. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, over 770 links and references, commentary and future updates, and a high-quality PDF download.

Harassment based on race or gender is inextricable from pay inequity, funding discrimination, and lack of diversity. According to a 2018 survey conducted by Inc. and Fast Company, 53% of 279 women founders surveyed “experienced harassment or discrimination in their capacity as founder”; 58% reported the “worst harassers” to be bankers and investors.*

2018 saw needed attention paid to women founders and founders of color, due in part to the #MeToo movement calling for increased transparency and action from VC firms.** November’s #GoogleWalkout involved 20K employees taking action worldwide to protest harassment and discrimination at the company against women, minorities, and contracted workers.* (The walkout comes in the wake of controversial lawsuits against Google,* a company that has, at best, fumbled with diversity issues, is infamous for pay inequity, and is often used as a touchstone for trends and failures in the technology industry.)

Sexual and gender-based violence in companies and firms is an “documentemerging investment risk,” according to studies conducted by Cornerstone Capital. Some firms are #movingforward in response.

The problem of harassment in Silicon Valley is structural and historic and it will take sustained action to make headway on any one of these problems. Though change is happening, underrepresented founders continue to face significant hurdles that are built into the structure of raising venture capital, not the least of which is the reliance on networking.* While some thrive in a networked environment, an emphasis on personal relationships and “being in the room” does not serve everyone and can be easily abused. A lot of the networking in the startup community is informal and casual: “Let’s grab a drink and discuss it.” Whether it’s drinks at a bar, a launch party at a founders’ house, or whatever other event, it’s important to recognize that some investors abuse this informality and use it as an opportunity to make unwanted inappropriate romantic, physical, or sexual advances. In Silicon Valley, stories of pitch meetings with women founders that men tried to turn into dates are a staple. Accounts of men abusing their positions of power to mislead, sexually harass, and assault women in the community have led to numerous individuals’ resignations, but far more are likely to have yet to answer for their impropriety or their crimes.* An ecosystem that depends on close relationships and networking can be particularly dangerous to vulnerable and underrepresented people.

A growing number of resources are available for founders to help them avoid investors who have been accused of sexual harassment or misconduct. The internet is your friend here—do as much background research as you possibly can before deciding to meet with someone. We cover this in more detail in Creating a Target List of Investors.

Speaking Out

It is crucial that all founders, VCs, and angel investors understand the stakes when it comes to speaking out about harassment, assault, and discrimination. Nonprofit Callisto develops technologies to help victims of sexual assault. In 2018 they partnered with Y Combinator to interview 125 women founders whose companies had gone through YC about their experience with harassment and assault in the fundraising process. Top reasons why those who had experienced these things with VCs or angel investors chose not to disclose the events or report their perpetrators include the following:

  • “Did not want to endanger my company’s funding prospects.”

  • “I was afraid of the consequences for my ability to get future funding.”

  • “VCs would penalize women for coming forward by icing them out of social and professional situations and denying them funding opportunities.”

Fear of being ostracized from investment networks and denied venture funding has kept founders from coming forward and speaking out about harassment. The New York Times reported on this harrowing reality after detailed interviews with several women founders in 2017.

For founders and investors looking for a safe way to help employees report sexual assault, harassment, or any kind of discrimination, reporting tool Spot is a good place to turn. Additionally, in 2016, TechCrunch reporter Megan Rose Dickey opened a Signal channel for founders to report investor sexual harassment and discrimination in order to build a “Silicon Valley blacklist.”

contribute We plan to add more resources for reporting sexual assault, harassment, or any kind of discrimination—if you have any suggested resources please leave a comment here!

What Founders Can Do

Founders cannot and should not be expected to solve all of these problems. But change can begin within your company. Look closely at your behavior and your company policies, and listen closely to those you work with—and to those not yet on your team. Sexism and racism are pervasive social systems that affect beliefs and cultural norms, not just a matter of “a few bad apples.” You’ll need to commit to having open, honest conversations with people at your company in an ongoing manner. In addition to helpful statistics and demographic data, DreamHost’s “The State of Women in Tech” provides guidance for founders and investors who want to make their companies or firms equitable, inclusive, and able to sustain diversity. In 2016, TechCrunch drew up a template sexual harassment policy for investors and founders, which can help you start a conversation with your investors and understand where potential risks lie.

danger Do not call lack of diversity at your startup a “pipeline problem.” This theory, which posits that there simply aren’t enough interested and/or qualified members of underrepresented groups available to hire, is not accurate. More commonly, people from these groups leave tech at a higher rate due to discrimination, harassment, and an unwelcoming environment.

Many community networks are using social media to grow their ranks and support women founders and founders of color in starting their businesses and raising money. Organizations like Latino Startup Alliance, Latinas in STEM, Black Founders, and many more exist to help connect and advance minority founders, and Twitter hashtags like #LatinaGeeks and #BlackTechTwitter can be a great way to connect and learn. The Case Foundation provides an excellent list of organizations promoting diversity in startups to follow on Twitter. You can follow them all with just one click.

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