We face an unprecedented crisis of global challenges – pandemic, economic inequality, climate change, food scarcity, and more. Never before has there been a greater need, demand or opportunity for the game changing, novel solutions that entrepreneurs bring in reshaping our world.
And yet, venture capital – the primary system for funding innovative, high-growth, early-stage companies – is broken.
As it stands – and has stood for the past 20 years – less than 10% of venture capital is invested into companies that include women on the founding team or in leadership.
And despite the huge attention this subject has gained in recent years, the rhetoric does not match the woeful statistics – the numbers in 2020 were worse than years prior.
The scale and complexity of today’s problems demand change – not just for equity and inclusion sound bytes, but for our future. We as investors can no longer ignore the innovations presented by diverse teams and the fact that they, as businesses, are proven to outperform.
The question should never be ‘why can’t women raise capital?’ It should be ‘why don’t VCs invest in them?’ This question can be repeated for many forms of intersectional bias, including, most importantly, for race.
Venture capital at its core seeks to invest in the hidden gems of innovation and entrepreneurship – the under-funded, the best performers, the yet-to-be found by others.
What if the bias baked into our traditional VC process, conscious or often not, is blocking us from the very deals that define success?
As gatekeepers of innovation – and critical sources of funding – VCs should be leading the charge for inclusion and diversity. VCs should want all deserved innovations in the market and they should want to remove all unnecessary hurdles for those entrepreneurs leading the charge.
Where to start? Reimagining how we source and screen investments – when we look only at the deals that our network introduces and we rely on that same network to validate markets – we perpetuate bias.
When we stick with what we know, we perpetuate bias.
When we picture a typical startup CEO and see a young, white, male dropout in a hoodie, we perpetuate bias.
When we look at our pipeline of deals and they are quite diverse, but our actual investment portfolio is not, we know we have perpetuated bias.
It is ours to own as investors.
I think especially after 2020, we all recognise the world needs big ideas and real solutions. As venture capitalists, it is our work to find those big ideas and real solutions – and invest in them.
Let’s do what we have done time and again: seek out something different, something truly game-changing.
But in doing so, let’s change our model so that we set the standard for equity. Because, the next big thing might just be hiding in those companies that we haven’t yet heard of, that we aren’t taking the meeting with, and that don’t quite “fit” our typical understanding of “entrepreneur”.
Sharon Vosmeck is CEO of Astia