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Illustration: Shoshana Gordon/Axios

Ten venture firms last August announced plans to add “diversity riders” to their startup term sheets. Now, the effort is being supported by more than 50 firms and investors.

Why it matters: Diversity riders, which are intended to include investors from underrepresented backgrounds in VC rounds, are a concrete effort to expand who gets to invest in, and profit from, startup growth.

What they’re saying: “The conversation now has been firmly planted, and it’s not gonna dissipate into the wind because I believe the founders will no longer accept that,” says Act One Ventures partner Alejandro Guerrero, who spearheaded the initiative.

  • While small, seed-stage firms were more receptive, Guerrero says that firms like Maveron and Greycroft using the rider in their term sheets for later rounds shows that there’s no good excuse at any investment stage.

Between the lines: Many VCs say that including the rider language in term sheets has made it easier to broach the subject of diversity among a startup’s investors.

  • “This helped us to achieve a lot more consistency, as well as helping us have the conversation with our founders in a more constructive way early on,” explains Fika Ventures managing partner Eva Ho. Ho says Fika only needed to include the diversity rider in a third of the term sheets it issued, as the rest of the rounds it participated in already included investors from underrepresented backgrounds.

Yes, but: It hasn’t been without some hiccups.

  • For a diversity rider to be included, the round’s lead investor usually must be part of the initiative.
  • “What would be useful is if the organizers of the effort can get the rider into the ‘default’ documents that Silicon Valley legal firms (and YC) use for their funding rounds,” says Homebrew managing partner Hunter Walk.
  • It’s also difficult to quantify the exact impact of the rider so far. Of the firms Axios contacted, only a handful responded, and even fewer provided specific numbers.

What’s next: Guerrero is working on new resources for VCs and startup founders who want to diversify participants in their funding rounds and new tools for better tracking these allocations.

Go deeper

Biden says presidency "will be determined" by outcome of spending plans

President Biden walks with House Speaker Nancy Pelosi after addressing the House Democratic caucus on Thursday. Photo: Jim Watson/AFP via Getty Images

President Biden told the House Democratic caucus Thursday "my presidency will be determined" by the votes he wants in the next week on his $1.75 trillion social safety net expansion and $1.2 trillion infrastructure package.

Driving the news: Biden made the comment, according to a source in the room, as he tried to rally support for the $1.75 trillion package. House Speaker Nancy Pelosi acted immediately, calling for a vote on the $1.2 trillion bipartisan infrastructure bill later in the day.

Ben Geman, author of Generate
44 mins ago - Energy & Environment

China declines to speed emissions cuts in new UN pledge

A view of the skyscrapers in the haze in Shanghai, China, in December 2020. Photo: Feature China/Barcroft Media via Getty Images

Chinese leaders are sticking with a prior target to bring the country's carbon emissions to a peak before 2030, according to documents filed with the United Nations Thursday under the Paris climate agreement.

Why it matters: The new documents come just days ahead of the UN climate summit (COP26) in Glasgow. China is by far the world's largest greenhouse gas emitter, and its emissions path is key to whether the temperature-limiting goals of the Paris agreement can remain within reach.

Updated 2 hours ago - Politics & Policy

Biden lays out $1.75 trillion "framework" before Europe departure

President Biden in Kearny, N.J., on Oct. 25. Photo: Michael M. Santiago/Getty Images

President Biden announced Thursday a "framework" for $1.75 trillion in social program and climate change spending after failing in prior efforts to win over his fellow Democrats on a much broader and costlier package.

Why it matters: Biden is gambling that by proclaiming the broad contours of the proposal, which he immediately began selling in a meeting with House Democrats before jetting off to Europe, progressives will vote for his $1.2 trillion infrastructure plan if and when House Speaker Nancy Pelosi brings it to the floor.

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