Oct 20, 2017

The (slowly) changing face of VC's next generation

Illustration: Lazaro Gamio / Axios

Venture capital is well-known to be dominated by white men, causing many of the industry's few people of color to raise their own funds.

  • Only 2% of senior venture investors are black or Latino, per a 2015 analysis by Social Capital.

Why it matters: Like the broader tech industry, venture capital has been reckoning in recent years with its lack of racial diversity. But the pace of change has been glacial, mirroring its better-documented issues with gender diversity.

Investors of color going independent:

  • "I just wanted to be able to bring every single piece of me into the office every day," Cross Culture Ventures co-founder Marlon Nichols, who was previously at Intel Capital, explains. This has meant both the ability to focus on sectors and startups he and his partner see as promising, plus establishing their own culture and policies.
  • "It was a means to an end to get capital to certain people," says Arlan Hamilton of her decision to form Backstage Capital.
  • "The cost to start a fund has come way down," Precursor Ventures founder Charles Hudson says. "Now if you can raise $10 million, you could be a full-time VC – you won't make a ton of money but you can do it."

Conventional wisdom: Most still agree that venture capital remains an apprenticeship business, so learning the ropes – and building out personal networks – by working at an established firm is still valuable (and, to some, even necessary).

  • But: Getting into and moving up the ladder at existing funds remains particularly challenging for women and people of color. Firms still use signals like alma maters and experience at particular organizations when making hiring decisions, as former Venrock vice president Richard Kerby has written. It becomes circular, and exclusionary.
  • The gap between underrepresented minorities at the junior and senior levels also exposes the venture industry's lack of true commitment to diversity. "From what I hear from a lot of my friends, they're constantly being passed over," says Unshackled Ventures associate Maria Salamanca.

Missing conversation: As is the case in the broader tech industry, there's a lack of focus on how various underrepresented demographics overlap, multiple women of color in VC tell Axios. "Even within the underrepresented set, women have it more difficult than men in general," says Arlan Hamilton, adding that she's focusing more and more of her investment into companies led by women of color.

  • Women only make up on 7% of decision makers at VC firms, according to data Axios recently compiled. One caveat is that this data only included funds that had raised at least $100 million, while the recent boom in small, seed-stage funds has created more opportunities for venture's underrepresented demographics. For example, 21% of all micro-VC funds raised in the past three years were founded by women, according to Crunchbase.

Follow the money: Michael Kim is the founder of Cendana Capital, which invests in other venture capital funds. He says that the racial and gender demographics of startups are changing, and that it's imperative for VC firms to keep up. "VC firms have to be able to work with [minority and women-led startups] and have them part of their networks," he explains. "So if traditional funds aren't attracting the best startups, then LPs have to ask what are the funds not doing."

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3:30 a.m. ET: 1,203,923 — Total deaths: 64,795 — Total recoveries: 247,273Map.
  2. U.S.: Total confirmed cases as of 3:30 a.m. ET: 312,237 — Total deaths: 8,502 — Total recoveries: 14,997Map.
  3. Public health latest: CDC launches national trackers and recommends face coverings in public. Federal government will cover costs of COVID-19 treatment for uninsured. The virus is hitting poor, minority communities harder and upending childbirth.
  4. 2020 latest: "We have no contingency plan," Trump said on the 2020 Republican National Convention. "We're having the convention at the end of August."
  5. Business updates: Restaurants step up for health care workers. Employees are pressuring companies to provide protections during coronavirus.
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World coronavirus updates: Confirmed cases top 1.2 million

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

The number of novel coronavirus cases surpassed 1.2 million worldwide Saturday night, as Spain overtook Italy as the country with the most infections outside the U.S.

The big picture: About half the planet's population is now on lockdown and the global death toll was nearing 64,800, by Sunday morning, per Johns Hopkins data.

Go deeperArrowUpdated 2 hours ago - Health

U.S. coronavirus updates: Death toll surpasses 8,500

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Recorded deaths from the novel coronavirus surpassed 8,500 in the U.S. early Sunday, per Johns Hopkins data. The death toll in the U.S. has risen over 1,000 every day for the past four days, since April 1.

The big picture: President Trump said Saturday America's is facing its "toughest" time "between this week and next week." Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said U.S. deaths are expected to continue to rise during this period.

Go deeperArrowUpdated 2 hours ago - Health