The Information is a niche Tech news site that began ranking venture capital firms based on gender, age and ethnic diversity in 2015. With another year in the books, the organization has released its latest rankings which you can find by clicking the link below:
According to the site, the rankings were based off of “a list of 581 investment team leaders across the 72 firms selected.” The list of firms can be separated based on assets managed and people employed.
While the list is extremely informative and I encourage everyone to go and check it out, I can honestly say that after looking at the list I came away learning nothing new about diversity in venture capital. Venture capital is a white, male dominated industry with no serious solution to become inclusive. And to be honest why would they.
No I’m not saying the people in the industry like the way the breakdown is at the moment, but they do like the money I’m sure. In the past I’ve consistently stated that success and revenue should be an organization’s top priority. If you’re not making money, your business model doesn’t make sense. When it comes to investing, there is nothing more true than return on investment / a company’s revenue.
When you’re investing you’re going to invest with people you know and trust. In a past article I’ve written about the fact that over 50% of white Americans don’t have a close minority friend. Statistics pretty much prove that the numbers revealed in the study are…well….expected.
Now the question becomes….how do we get more diversity into venture capital. Well for starters, I believe the investment opportunity is there, just in a different light. No, you won’t get a $1 billion venture firm that caters exclusively to minority owned companies with minority owned founders, but you can probably find a few worth a couple million. In the near future it is my belief that small minority VCs have to come together and support specific minority owned firms to bolster their capital and success rates. Currently the funds available are too spread out and too few. However if a community of investors was created, it would be the perfect opportunity to bolster under represented VCs and the companies they invest in.