I’m thrilled to share more about VC Unleashed: a community of BIPOC and women MBA investors.
It’s no secret that diversity in venture capital…err…isn’t great. We see the same story across startup funding, who venture capital funds hire, and who makes money from this industry. Systemic change of venture requires communities to step up to make a difference. I’m proud of the 250+ BIPOC peers I met this summer from across the country who are stepping up with me to revolutionize the face of venture capital. What started out as a Whatsapp group is growing into an organized online community that won’t take no for an answer.
I’m honored to be part of the VC Unleashed founding team along with Michelle Dhansinghani (our fearless leader and visionary), Fuad Ligali, and Tiq Chapa.
If you are in your MBA, identify as BIPOC and/or as a woman, and are interested in venture capital as a career path, apply here. We can’t wait to meet you!
Don’t identify with these groups but want to help? Questions or comments? Reach us at vc.unleashed@gmail.com
Why We Need VC Unleashed
When you don’t see people who look like you, you don’t think a place is for you. VC Unleashed’s goal is to show BIPOC individuals and women that venture capital is a place for them.
We have and will continue to:
- Educate our community on what venture capital is and how to succeed in it.
- Support our community through job applications, interviews, salary negotiations, and more.
- Build a national network to share deal flow, open opportunities, and industry insights.
Moreover, we need people who understand our experiences; who know what it’s like to constantly wonder…
Would this founder have said that weird thing to me if I was a man? Are my partners taking me less seriously because of my race? Am I missing out on good deals because of my identity? Why is this path so much harder for me?
Why Race & Gender Matter in Venture Capital
American demographics are rapidly changing, and venture capital needs to be representative of who’s in the country.
The US will become a minority-majority country by 2045 according to Census estimates. Racial minorities were responsible for all of the nation’s population growth between 2016–2020, with the LatinX population increasing by almost 1 million per year.
And yet…this isn’t a focal point for most venture capital funds (shoutout to Concrete Rose Capital who is focusing on it). Venture capital funds are jumping up and down to understand Gen Z, but expressly less interested in the $2.7 trillion buying power of racial minority consumers (by the way, Gen Z is set to be the most multiracial generation ever).
Let’s talk gender. Women currently control 2/3 of global household spend and there is a $30 trillion wealth transfer to women that will take place over the next few years.
The future consumer is both racially diverse and increasingly female. We need representative venture capital investors so the ideas, companies, and products we build are equitable.
Let’s Talk Stats: Diversity in Venture Capital Today Is Abysmal
Capital Raised by Founders:
- Black and LatinX founders have raised just 2.4% of total venture capital funding since 2015 (Crunchbase).
- Funding to female founders fell to 2.3% in 2020 from 2.8% in 2019. This is in part due to the overall negative impact COVID had on women’s employment but let’s be real 2.8% isn’t great either (Crunchbase and McKinsey).
Venture Capital Investors
- White men control 93% of venture capital dollars, white women control only 3%, and the rest of us are left with a meager 4% (Forbes).
- Just 5.6% of all US-based venture capital firms are women-owned. Only 2.1% are owned by women of color (Women in Venture Capital report).
- Only 1.5% of the total AUM in the US is owned by diverse-led or diversity-focused funds. 65% of these funds are considered micro-funds with AUM < $100M (Harlem Capital).
- 90% of women-led funds are considered emerging funds, and emerging funds have a harder time fundraising (Women in Venture Capital report and Chicago Booth Review).
- 40% of general partners at venture capital funds went to Harvard or Stanford (Forbes).
I want to spend a bit of time on that first stat: 93% of venture capital dollars are controlled by white men. In the same way that women are less likely to be in P&L owning C-suite roles, so too are women and racial minorities less likely to be in charge of actually deploying capital. I love that stat (from Elizabeth Edwards of H Venture Partners) because it focuses on the core issue: who controls the money and who benefits from wealth generation? That’s where the true power is and where we need to be.
Venture Capital’s History: How did we Get Here?
Essentially, venture capital started with the government. During World War 2, they began funding elite east-coast universities (Harvard, MIT, you get the gist) to drive innovation that would help the US win the war. Post-war, Stanford saw this opportunity and began soliciting government funding for similar research.
Thus, these universities begin incubating entrepreneurial centers and as venture capital emerged as an asset class, individuals from these schools were best poised to fund and profit from startups. And who attended these universities in the 1940s and beyond? White men of course! Since 40% of general partners at venture capital funds are from Harvard and Stanford, let’s look at their diversity stats during the 1960s — 1980s when the venture capital industry was forming:
- Harvard Business School: 42 black graduates 1915–1968, with many classes having no black students. The first cohort of women graduated from HBS in 1965. Couldn’t find anything specific on LatinX or Native American student admission statistics — anyone know?
- Stanford Graduate School of Business: motivated to increase racial representation in the late 1960s. The GSB Class of 1972 was 98% male. Couldn’t find anything specific on Black, LatinX, or Native American student admissions statistics — anyone know?
After learning this history (here for more information) and knowing the racist and sexist origins of our country, it’s hardly a surprise that diversity in venture capital is where it is. But with a community like VC Unleashed, I know we will make a difference.
Here’s to changing the venture capital landscape, one investor at a time!
