VCs are *still* ignoring Black founders. What can we do now?

In many ways, diversity, equity, and inclusion have become empty buzzwords, a box to tick off on an human resources to-do list after enough employees attend a few well-chosen trainings. Erika Brodnock, an entrepreneur, researcher, and PhD candidate at the London School of Economics, and Johannes Lenhard, a lecturer and researcher at the Max Planck Cambridge Centre for Ethics, Economy and Social Change, want nothing to do with this kind of vague nod toward “progress.” 

Their research focuses on why it matters that venture capitalists themselves are such a homogenous group. By funding people whose experiences and backgrounds are similar to their own, investors are not just leaving better returns on the table, they’re missing huge opportunities to solve societal problems. The type of world-changing innovation that Silicon Valley and other tech hubs claim to want just can’t exist without a wider, deeper, and thornier set of challenges—and a more diverse group of problem solvers. 

In their forthcoming book, Better Venture, Brodnock and Lenhard explore how the economic and structural history of the VC world have led to a lack of diversity in the industry. Their research, data, and interviews with industry insiders like such as partners at Kapor Capital, Precursor Ventures, Balderton or Atomico, representatives from AllRaise, Diversity.VC, and the BVCA as well as LPs in big endowments and state funds, show again how founders who fit a certain pattern (white, male, from a privileged background) are far more likely to get funded, regardless of the strength or weakness of their idea or business.

Sherrell Doresy and Annaliese Griffin talked to Brodnock and Lenhard about risk and reward, entrepreneurship, and new, alternative investing models that make equity possible.

Sherrell: I live in Miami, where we’re currently experiencing an influx of founders and investors from Silicon Valley. When I talk to the transplants, they want to turn it into the next utopia for tech unicorns. And then when I speak to the locals, their deepest fears are being realized by the way in which the Silicon Valley folks are coming in—they're staying insular with one another and funding each other's companies. They're not looking outside of their bubble to look at the infrastructure of the city and who has equitable access to investment and opportunity. 

This industry is organized around the idea that adopting a “high risk, high reward” philosophy will change the world, but there are obvious flaws in the funding-and-founding structure that leave out some of the most challenging, impactful work that could happen. How are you seeing this sort of replication of Silicon Valley values playing out as tech hubs spread to new cities?

Erika: From my perspective, the notion of “high risk, high reward” is directly linked to the failure and actually the mediocrity of the people who are being invested in at the moment. The investments are made into mediocre males who have, for the most part, been to the right schools—the schools the investors also went to. The failure rate for most startups receiving investment is exponential—that's why it's deemed “high risk, high reward.”