In early October, Jeff Bussgang of Flybridge Capital Partners wrote about the VC gender gap in the provocatively-titled “Are VCs Sexist?”, where he talked about only 5-10% of the VC industry being female, and only 25% of VC partnerships having a single woman partner. As a result, these barriers to these barriers to the VC industry are resulting in the loss of “50% of the world’s best talent!” It seems to me that this is applicable to social VCs, as well, to a great extent.
Even though I’ve only been more closely involved in the VC and startup arena for a short while, another disparity seems to be present as well–that of race. It seems that almost all the bios I run across on VC websites seem to portray partners that are either white or Asian (both East and South), with few other races/ethnicities present.
And even for entrepreneurs, it seems like most of the ones I run across (at least on the East Coast) seem to be similar. Sure, there are plenty of South Asian programming and IT guys, and maybe a few East Asians as well, but it seems as if African-American and Hispanic entrepreneurs are not nearly as well-represented.
Now, before people start calling me names, let me just admit that 1) I know I am new to the space, and 2) I am no sociologist. So my observations are just that of the layman, not an expert or industry veteran. With that said, a blog entry I read recently on the Stanford Social Innovation Review’s website did confirm that I was not only only one to have thoughts about these things. (The SSIR is specifically focused on the area of social entrepreneurship, but I’d guess that the same likely applies for regular entrepreneurs too). Marcia Stepanek, founding editor-in-chief of Contribute Media, considers the following argument: “Unless you’re a Caucasian and unless you’re an MBA, it’s tougher to get support for your good work trying to start a social enterprise.”
Furthermore, one of the arguments in the social entrepreneurship world is that those who actually “understand” the developing world are being left out of the startup picture. They’re not being included in the process of social change. In other words, it seems as if companies, organizations, and individuals aren’t “willing to really get their hands truly dirty side-by-side with us (those people at the bottom of the pyramid)… It’s always the so-called academics and ‘successful’ business persons who dictate terms and conditions. Too few of us will ever be helped by the continued exclusion, but who else knows the conditions [at the bottom of the pyramid] better than the people who live there?”
And if it is true in the social VC world (as it is in the traditional VC world) that many venture capitalists got into the game originally as entrepreneurs themselves, can we expect diversity at the VC level if it is arguably lacking at the entrepreneur level? What are your thoughts? Please comment!
Mark,
To start, I think it’s a compelling point to make, your argument about those that truly understand the need for social change being excluded from the actual process that is controlled by the top of the pyramid.
Regarding disparities in ethnic representation in VC and entrepreneurs in general, a couple of thoughts come to mind:
1. You only mention entrepreneurs that you’ve interacted with. I’m going to assume, and correct me if I’m wrong, that doesn’t include the thousands of small business owners out there that don’t play in spaces where VC/PE typically have a role. I think it’s helpful to clarify that this is a pretty small representation we’re talking about here- even more so for social VC, as I would imagine.
2. The world of VC and startups, and this may be pure conjecture, plays in fields that require a relatively high level of skill and/or education. I think your observation of the industry being dominated by whites and Asians is really a natural result of the relative underrepresentation of blacks and Hispanics in higher education that has been observed for decades.
Personally, I am not somebody that subscribes to the idea that diversity is a goal to be explicitly worked toward. Don’t get me wrong; I am all for curing the ailments of socioeconomic inequities, but diversity in and of itself, in my opinion, represents little value.
Brian, thanks for the insightful comments. I think you’ve made some pretty good points. I did not go into my hypotheses regarding the reason for the racial disparity present, but I think that your reason (carryover from higher education) is a likely cause. And the inequalities present in both higher education and in the professional workforce could likely be attributed to family socioeconomic context, as well, but that’s a whole other can of worms!
You’re absolutely right on it being a can of worms! That was the one phrase running through my head, but I decided to throw some bold statements and assumptions in there anyway