It has been an interesting month to say the least in regards to articles surrounding venture capital and diversity.  If you’re a fan of the new investment trend surrounding diversity, April and parts of March have been a time of self gratification.  In another post concerning the budgeting efforts, Sharon Wienbar’s TechCrunch article entitled “How big money can drive diversity in venture capital” discusses her own experiences with venture capitalists looking to hedge their bets around diversity.

In a global look at investing, Wienbar points out that the “world’s largest asset manager just called for more corporate responsibility in governance” and that “twenty-one countries already legislate diversity on corporate boards or mandate practices that enhance diversity in the workplace.”

In addition to the global outlook, Wienbar mentions that in her own experience someone working on behalf of a large pool of capital asked her “what actions would help it produce strong returns with diverse venture capital investors and diverse entrepreneurs. Their investments to date had all been with middle-aged white guys — literally — and they worried about both social justice and business relevance and returns.”

The reason for the new trend is the performance of diverse companies.  “Women- and minority-owned venture capital (VC) firms are flourishing, partly driven by public employee pension funds. Strong performance in venture capital is tied to access to the best companies, many of which are now founded by a diverse range of entrepreneurs: young, racially diverse and not all male.”  It is the belief of many in the post-Binary Capital era, Wienbar writes, that non-diverse investment firms, can be “old-fashioned monocultures” which leads to poor decisions, less flexibility and may even foster illegal or undesirable workplace behavior.

The new look into venture capital diversity is heart warming and the suggestions given by Wienbar make sense.  Similarly to Wienbar, I also do not believe that this new push for diversity should lead to quotas, but instead, “require LPOC (large pool of capital) to measure where it invests its money and staffing, and requires its investment partners to do the same.”  Establishing norms around these new pushes are what will keep diversity strong and ultimately help strengthen our global economy.