Blog Post #19: On Why Competition is Inefficient for Diverse Founders

I’m often asked how to increase the number of black founders that get into the rooms of venture capitalists. The question is innocent, but it is the wrong one. As we near the one year anniversary of George Floyd’s death, the resulting social unrest and the influx of venture capital dollars being allocated to people of color, one thing has become glaringly clear: getting black founders into a historically exclusionary system is no more effective than bringing a black child to a “whites only” water fountain in the Jim Crow South and asking him or her to drink. Sure there is increased permission / access, the true problem however has not been solved.

Investors and founders I’ve worked with know me as someone who shares contacts, makes introductions and am generous with my resources to both founders and investors alike. Not only is this a function of understanding that our roles as investors is to add value to the ecosystem (second only to generating returns) but also a result of a much larger problem: Founders of color are far too underfunded to create additional barriers to entry to a system that has already excluded them. In spite of the social unrest of 2020, Black founders alone still collected less than 3% of all venture capital dollars. Women collected just 2%. Black women? Close to 0%. The odds are stacked against these groups in unimaginable ways and given the already stark disparities in wealth and socioeconomic enablement amongst Black and White Americans and the impact of entrepreneurship on wealth generation, the implications of BIPOC men or women being unable to start, build and scale businesses due to a lack of capital not only stands to widen an already significant wealth gap but continues to rob the economy of trillions of dollars. Simply put, given the need for access, investors cannot afford to compete for deals when it comes to Black founders. Our only choice is to encourage collaboration. The same is true for other marginalized groups finding difficulty securing capital.

I have a list of investors I’ve both admired and followed over the years on my path to becoming one myself, each share two common traits: transparency and founder advocacy. I call on all investors, particularly those investing through a diverse lens to consider what is in the best interests of the founders who seek our counsel and our capital. The most successful among us have proven it is the value you create that makes you great, not simply the resources you collect. Let’s commit and re-commit to creating value and building a system where the only unfair advantage is a truly great product or service. Ultimately, that’s the very idea this asset class was built on.

See you in blog post #20.