Venture capital is not very diverse, but is that really the fault of its members? After meeting multiple millionaires in my life, all of them promote the idea of “sticking to what you know”. This means that if you’re looking to invest in an industry or with a company, you want to lean on an idea you understand and think can make alot of money. With this as a basis for investing, is it any wonder why most white investors put their money in companies run and operated by whites, in industries they understand. People are always asking individuals to support their community but when white investors do so it is frowned upon.
Now I do think that notion changes in regards to large corporations. As our country grows more diverse, we need to invest in more diverse businesses to compensate for that. But if you’re using your own money, it’s a different story. You’re not seeking a 50 year investment but rather, in today’s society 5 to 10 years at the most.
A recent study from “Deloitte and the National Venture Capital Association collected information from 2,500 employees at 217 venture capital firms nationwide” to analyze the diversity within the industry. Not surprisingly it’s low. “In 2015, while $60 billion in venture capital funding was disbursed, female founders received only 7 percent of that windfall, and black male founders only received 2 percent.”
Should venture capitalists really be forced to invest in organizations or communities they know little to nothing about? Probably not. In an ironic twist, the venture capitalist community is probably loosing millions not expanding their base to include more diverse companies however. Still, in my opinion there needs to be a larger effort in the minority and women upper class to support thriving businesses. It is true that there are tons of opportunities for investment dollars, but if they all come from 3 states that are not heavy in minority or female populations, these results will continue.