Less than one-third of venture capital firms have even a single women involved in investment decisions, according to a survey by Page Mill Publishing, and too many have none at all. The barrier to entry is high. Even with the new wave of emerging venture capital firms, VC dollars make their way into the hands of less than one percent of minority or women-led startups. It is proven that investors tend to fund entrepreneurs who look like themselves. So, I ask when you look up the ranks what do you see? As Sheryl Sandberg famously said, “There aren’t more women in tech because there aren’t more women in tech.”
We have a problem. We know that. But how do we really fix it? Because in my opinion creating funds that have an investment strategy geared toward companies led by women of color fail to mention the fine print. We have to talk about the fine print. The “you must have been in operation for over 3 years or have an income of over 1 M to even be considered print.” The “you must have a technical co-founder fine print.” The “you must go through an accelerator fine print.” The “you need to ask your friends and family to invest first fine print.”
But what does that say to an entrepreneur that is not wealthy? It says you have to go out and raise outside capital or struggle to figure it out by bootstrapping. But then, you come back to the fine print or close up shop. It’s cyclical. It’s maniacal. It’s diabolical. No, it’s raising capital.
So in order to make investment funds geared toward women of color mean anything we have to create the opportunity for women of color to succeed in attaining those funds. One way to do this is to have more women in VC. Not just the best friends board that consists of mostly men. And the women that are in VC need to be champions for change. This requires true champions who will put in the effort to find those entrepreneurs and invest in them. If women VCs do it just like their male counterparts then it may as well be a room full of men because at least women of color wouldn’t be as disappointed by a woman attempting to act like a man instead. We are women. We are different. But that does not mean we are not capable. Because trust me, we are.
The new wave of emerging VC firms like Precursor Ventures that seek to minimize funding disparities impact is slight as the percent of funded women of color startups is still disproportionately low. It is profoundly clear that investing in businesses led by women of color would increase innovation within areas that white male counterparts would have no interest.
We need more emerging and minority funds to be aggressive seeking out women of color startups in the most unconventional settings to even put a small dent in the wealth gap. If they were to do that the billion dollar spending power of people of color would be favorable in the economic cycle. The numbers speak loud and clear.