I love the Collision conference. I attend every year. As a fund manager, it is a great place to see old friends, meet new ones, gain market awareness, learn about ideas and problem sets and have numerous intellectually curious conversations.
Collision facilitates an “investor summit” every year where investors select a couple of “round table” discussions to join, from a list of just over a dozen options (with topics ranging from how to be a better board member to crypto currency and geographic investment focus, etc.).
I chose to attend the panel on “How to bring about diversity in the VC industry” and was rather surprised that this was the least attended session (only 9 participants versus an average of 20 for the other sessions) with only two male participants, and only 1 white male.
I’m disappointed in what this says about the mindset of white male VCs. What is it going to take, for white men to actively engage in doing something to increase diversity in the VC industry?
I was thinking about why this upset me enough to write a blog post and I think some of it has to do with the backdrop of where we are this week. The Collision conference is taking place in New Orleans. Last night we were out carrying-on just down the street from a place called Congo Square where in a dark period of our history, slaves were allowed a day off on Sundays to play the drums (for the entertainment of European onlookers) and thus the birth of Jazz. The history of this city, what happened in the water outside of my hotel room, what it brought to this land, and the heritage that flows from it amplifies this topic and the disappointment I felt about the lack of interest in this topic yesterday.
This discussion was one of the most interesting, thought provoking, challenging, and rewarding conversations I’ve been apart of in quite some time. Here are some of my takeaways from the discussion:
VC Lip Service on Diversity
I get tired of hearing VCs talk about diversity and then not actually do anything about it. I wish more VCs would track, and report their diversity statistics both at the fund level and within their portfolio. I wrote about this here, and have been posting stats on my fund’s website about the percentage of underrepresented founders in our portfolio. While I think quotas are a bad thing, I do think tracking the data for the purpose of effecting change to our behavior is a good idea.
Warm Introductions = Biased Deal Sourcing
Many VCs mention warm introductions as their favorite source of introductions to potential investments. This is so lazy. It takes a lot of time to go through the random inbounds and reply to them. However, when you realize that we are all biased based on our life experiences, you have to admit that warm introductions are inherently a biased source of deal flow. The only way to bring diversity to your deal flow channel is to broaden the sourcing. VCs need to stop taking pride in their “warm introduction” statistics and start introducing more randomness to their sourcing activities. Additionally, VCs should be tracking statistics around their pipeline to identify blind spots and bias in their deal flow so they can make a conscious effort to source more underrepresented founders by adjusting where and how they spend their time.
The Paths to VC Are Inherently Biased Toward Privilege
Duh! This discussion really got me thinking about how the VC industry sources talent. While I listen to all these VCs talk about their “random walk” to their current position (which drives me crazy to hear) I actually hear them telling me that they were highly privileged and likely came from one of a very limited number of backgrounds (investment banking, successful founder, angel investing). As you can imagine, those are very homogenous places so clearly the VC industry isn’t going to source a diverse candidate group by allowing self-selection from one of these non-diverse channels.
White Men Are Poorly Positioned to Address Remaining Market Pain Points
Aside from all of the obvious, well written about reasons, it wasn’t clear to me before this conversation, that white men are the least well positioned to discover and solve a number of the remaining pain points in the market. The problem sets experienced and solved by the experiences of most white men represent a very saturated market (well funded, much discussed, etc.). We just won’t be solving the most diverse set of ideas and problems unless we are more inclusive systematically as a society with regards to who is getting a chance to solve our biggest problems.
Unconscious Bias Training and Diversity Consultants
I learned that some VC firms (for example Microsoft Ventures — now M12) provide training for their employees as well as their portfolio company founders around unconscious bias. This training not only includes the obvious stuff, but help on how to craft job descriptions that don’t include bias, how to recruit/hire, how to lead/manage, the hiring of diversity consultants and how to create inclusivity from a 360 degree perspective.
Stephen Hays is venture capital investor that has invested in dozens of startups since 2015.