Intel Capital broadens diversity push

A year-and-a-half ago, Intel Capital kicked off its $125 million Diversity Fund with the goal of backing more companies run by women and under-represented minorities.

In October, the mandate grew to include U.S.-based entrepreneurs from the LGBTQ community, entrepreneurs living with disabilities and military veterans. The diversity effort also became a horizontal strategy, not just a vertical one, with all Intel Capital investors called on to bring forward startups led by diverse teams.

The initiatives have placed the investment arm of chipmaker Intel in a leadership role on a workplace issue that has dogged the venture-capital community for years.

Co-leading the Diversity Fund effort is Director Christine Herron, who expects the present fund to be invested prior to its anticipated five-year lifespan. (Working alongside Herron is Managing Director Trina Van Pelt.)

“On the pipeline side, I can’t speak to what every fund sees in their pipelines,” Herron said, “but I can certainly speak to our pipeline and our pipeline has most certainly become more diverse and we do see more companies than we would have prior to announcing the fund.”

Herron, in an interview, offered suggestions for VC firms eager to bring women and minorities into the upper ranks for their partnerships.

They include not simply inviting more diverse candidates to the interview process but challenging partners to better understand why they feel comfortable, or uncomfortable, with the non-traditional candidates they meet.

VCJ recently had the chance to speak with Herron. What follows is an edited transcript of the conversation:

Q: How many deals have you done with the $125 million Diversity Fund?

A: Specifically in the last year-and-a-half, we’re looking at about 10 investments. And we’re looking at about $40 million out of that $125 million.

If you look overall at current active investments and what we have invested in the companies we are actively managing with diverse teams, that’s about $115 million dollars and that’s about 30 companies. That includes companies that we invested in prior to the initiation of the Diversity Fund specifically or which we invested in as follow-ons after the Diversity Fund was started.

Q: Has the Diversity Fund had an impact?

A: I believe we have had a significant impact by putting a spotlight on the issue, in much the same way our pledge to support equal pay for equal work and to invest in diversity and inclusion have.

I believe our fund, as a center of gravity, and our efforts to continually evolve and innovate have been influential. If you look at the momentum in the industry in the last year-and-a-half, it turns around quite a lot. I don’t believe we get all the credit for that, but I believe we get some.

Q: In October, you expanded the Diversity Fund’s mission to include the LGBTQ community, military veterans and founders living with disabilities. Why?

A: Two answers. One, it seems the right thing to do. It seems true to the spirit of our effort.

And two, it is extremely consistent with Intel corporate’s approach to diversity and inclusion.

Q: Why did you also broaden the diversity effort to include the entire Intel Capital investment team, not just the partners managing the fund?

A: By taking that vertical strategy, which we started with, horizontal, we will be able to actually support many more teams and be much more effective in achieving our initial mandate, which is to cultivate more diversity at the front end of startup ecosystem.

Q: Has the deal flow from gender and minority-diverse companies been greater or less than you expected?

A: It’s been about what I imagined. What I wasn’t sure of was what would happen with our 50, 60-person investment staff when we made the announcement that, ‘Hey, you don’t report to me, but all of a sudden I’m looking at you and how diverse your pipeline is.’

If every Intel Capital investor is a diversity investor, that’s work. We’re asking these people to do more work to broaden the top of their funnel. What’s been rewarding for me is seeing people start to do that work.

Q: Does venture capital itself have gender diversity problem? Presuming your answer is, ‘yes,’ how do you suggest firms solve it?

A: Yes, there is a problem. I think the easiest, least friction way to solve it is do not make a hire unless you are interviewing diverse candidates. If that means men that aren’t white, if that means women, whatever that means to you, get some of that diversity in there.

Get people who are not already sitting around the table into your interviews. And not just for associates or principals, but when you’re talking to recruiters, about new partners, too.

Q: Are old habits hard to break?

A: Research has shown that men are most influenced about women in the workplace, and they’re comfortable with women in the workplace, based upon whether or not their wives work.

Whether you are more likely to think of women in terms of a professional peer relationship, it’s your wife that drives that. If you are male VC, marry a woman who works.

Q: In interviews for top roles at a partnership, the conversation turns to good chemistry and trust. I imagine it is hard for decision makers to take chances in these instances?

A: Working with someone who is not the same as you is uncomfortable. So you have to be OK with a certain amount of discomfort. You have to be OK accepting that not everyone communicates the same way you do.

You need to look inward and figure out, ‘What does make me uncomfortable about this person I met with?’ And don’t just say, ‘I didn’t feel it.’

Try to figure out explicitly why you didn’t feel comfortable. Why didn’t things just click with this entrepreneur vs. that entrepreneur? As a woman who has been both an entrepreneur and an investor, I have had to think about, ‘Why I am not clicking with this potential investor, why am I not clicking with this potential syndicate partner.’ So I think about it all the time.

Q: I assume you’ve made other adjustments, big and small, as a woman in venture.

A: I have done silly things, like learn not to tilt my head when I listen, which is a feminine characteristic.

Men don’t do that. I force myself not to tilt my head anymore. I force myself to stand a certain way and so forth.