Today, some of the world’s most respected and successful figures are those in the tech industry. They include entrepreneurs who have developed innovative products and launched industry-changing companies. An important segment of people who provide capital and (hopefully) assistance to these entrepreneurs are venture capitalists. While the technology sector continues to thrive, it suffers from a lack of diversity, which limits innovation.
African-Americans are Under-Represented in the Good Ol’ Boys Club
The Venture Capital industry in the US (and thus, in turn, Silicon Valley) is made up of nearly all white males. In fact, the National Venture Capital Association (NVCA), the trade group for the industry, has recently acknowledged the lack of diversity in the industry and has recently formed a task force to help tackle the problem. However, even the task force lacks diversity, with 7 of its 11 members being white males and none of the remaining four members being a person of color. Furthermore, a number of tech companies have released their diversity stats, revealing that roughly 2% of the employees at Google, Facebook, Pinterest, LinkedIn and Yahoo are black.
In my quest to determine the true diversity statistics within the Venture Capital industry, I conducted a study of over 200 firms composed of roughly 2,000 investors investigating the current number of black investors working in Venture Capital in the United States. I included only full-time investment team members, so I did not include EIR’s, Venture Partners, accelerators, or incubators. The results demonstrated that the diversity stats are eerily similar, if not worse, than that of the aforementioned tech companies, comprising 1.5%. You can find the data that I have pulled together here — Venture Capital Diversity Stats.
To dive a bit deeper, many of the more visible funds and, by extension, visible investors tend to be those at venture funds with a fund size of $100M+. The stats look even bleaker here with less than 1% of investors being African-American, and only one of which is a woman. Since we love discussing unicorns in the tech world, it is clear that female African-American venture investors are the “real” unicorns. In light of this data, I’m hopeful that there are additional African-Americans in the venture community that were not captured in my study, however, this wish may be inconsequential, as it is clear that there are nonetheless far too few.
A Technology Bias May be the Culprit
With venture capital often functioning as an “old-boys” club (where financiers mostly give to people who are within their network — friends, colleagues, college alumni, etc.), most African-American entrepreneurs lack connections to investors who have access to funds. Other issues that have led to the lack of black entrepreneurs and overall lack of diversity in the tech industry include, but are not limited to, few African-Americans who are studying STEM education and a lack of publicly visible role models for young African-Americans. Despite these obstacles, there is still plenty we can all do to ensure that tech careers are seen as a viable career path. While one would hope that the lack of black venture capitalists would not have any correlation with the presence of black entrepreneurs in Silicon Valley, this is not the case. Instead, there appears to be quite the correlation to the lack of African-Americans in the tech industry today as there is among venture investors.
Finding Ways to Diversify
Despite the bleak statistics, there are, fortunately, a number of individuals and organizations who are trying to improve diversity in Silicon Valley (and across the United States). Code2040 is an organization that I am involved in that connects undergraduate computer science majors with internships at Silicon Valley-based startups, with the goal of increasing minority representation within the tech community.
Other important initiatives to support the career growth of African-Americans who have been able to successfully enter the tech community include developing or growing a black or minority investment community and expanding the network of people whom existing venture capitalists recognize, know and fund. This community could help create more entrepreneurs, resulting in more successful black-led companies who can then go on to fund and help other African-Americans start their own businesses. My close friend Charles Hudson and I have started one such community called Stealth Mode, which hosts quarterly events to bring together African-Americans within the tech community. Please reach out to me if you would like to join our community or learn how you can help the organization grow.
The lack of diversity is clearly a significant issue in Silicon Valley that needs to be addressed, and one that I care very deeply about as one of the few black faces within the industry. I would love to hear other people’s thoughts on the matter and discover more ways to improve the status quo of the venture capital and tech communities.