While improving diversity and inclusion across the venture asset class continues to be top of mind, it remains easier said than done.
A 2018 survey from NVCA and Deloitte found 45 percent of VC employees are women, but only 28 percent of investment professionals are women; investment partners or equivalent are only 14 percent.
The survey also found that people of color make up just 25 percent of investment professionals; 21 percent are investment partners or equivalent.
The 2018 survey results, while bleak, had a better conclusion than the 2016 survey.
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“We did see some progress around the diversity when it comes to demographics,” says Maryam Haque, a senior vice-president of industry advancement at NVCA. “Most of that was seen on the gender side. Race and ethnicities are an area where progress has been even slower.”
Seeing the lack of diversity
Richard Kerby, a general partner and co-founder at Equal Ventures, has noticed this trend, as well.
Kerby started keeping data a few years ago, looking at diversity across gender, race and ethnicity and alma mater. “I saw the lack of diversity personally,” Kerby says. “When I would walk into a room, I was the only black individual sometimes.”
Haque said that the NVCA strives to keep diversity and inclusion top of mind for the industry by working with firms to bolster such things as human resources training and hiring practices to help bring in more diverse talent and retain it.
“Some of the things that I’ve heard have been as simple as implementing a ‘Rooney Rule’ when recruiting talent,” Haque says, referring to the NFL’s policy that requires teams to include minority candidates when hiring for head coaching and senior operation jobs.
Kerby notes that while venture firms develop strategies to increase diverse talent, many are small and aren’t consistently hiring, so it doesn’t move the needle much. That means it’s vital to think about diversity from day one, he stresses, since that slower pace of hiring makes it difficult to remedy later on.
There has been progress in multiple areas, including emerging managers who emphasize diversity. “The progress we have seen is working with emerging managers and these smaller micro VCs,” Haque says.
Angela Matheny, the head of diverse manager equity at Colonial Consulting, has seen this as well. Matheny works with LPs, mainly foundations and endowments, to find emerging managers who will help bolster their portfolios.
Matheny says that she was hired a few years ago when their LP clients were asking them to provide more varied manager options. “We were missing a huge opportunity to tap into differentiated talent,” Matheny says. “You need diversification on many levels. We just wanted to build better portfolios.”
Rising Stars exemplifies diversity
There is hope for the industry, especially if the Venture Capital Journal’s Rising Stars list is any indication. The nominations and final 40 Rising Stars presented a refreshingly different slice of the VC market.
The pool of about 120 candidates from the venture community worldwide was diverse across gender and ethnicity standards.
Women make up 40 percent of the final list and 40 percent of the professionals are of color. Women of color make up 50 percent of those featured, and one out of three of the male rising stars are of color.
These numbers are a far cry from the diversity figures of the asset class. While they still don’t represent industry equality, it’s a foundation for an increasingly diverse future for the asset class.
“It’s going to take everybody,” Matheny says. “It’s going to take LPs, it’s going to take the VCs being ready. If you have an LP like us who is not looking at this community and who is not intentional about it, clients should be pushing for this.”