June 19, 2021
Image: Malte Mueller/Getty Images
Hello and welcome to Pipeline. Today is Juneteenth, so I hope you take the time to reflect and celebrate the end of slavery. To honor the holiday, today's Pipeline will be a special issue examining diversity efforts in the industry over the last year. We'll return to your normal dose of overheard tweets, interviews and links next weekend.
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Last year, I wondered if America's overdue racial reckoning would be the event that would change venture capital forever. As Axios's Dan Primack had pointed out at the time, venture capital isn't the primary cause of the country's racial inequities, but it does exacerbate them as a driver of wealth and opportunity. The industry's response was reminiscent of the #MeToo times — when venture firms looked around the table and realized there was some major work to do.
"I think that the venture capital industry is attempting to work toward change, but I think that we don't know yet, to be honest, how lasting those efforts will be," GV's equity, diversity and inclusion partner, Candice Morgan, told me this week. "We don't exactly know what to do, so people are trying a number of things — there's a little bit of an approach of throwing spaghetti at the wall."
The efforts have been big and small, ranging from millions in funds directed to underrepresented founders to changing hiring practices to open up the venture industry:
That doesn't mean the industry deserves a gold star. There are still plenty of firms that do not have any women or underrepresented founders. Around 80% of investment partners in venture capital are white and 15% are Asian or Pacific Islander, according to a 2021 NVCA and Deloitte study. Funding to Black entrepreneurs increased to 1.4%, but is still a tiny slice compared to the industry.
One of the challenges now is accountability for an industry that is still notoriously opaque. While many companies in the tech industry publish yearly diversity reports, venture funds rarely publish their own diversity reports or measure beyond their talent numbers.
One year in, the question remains: Will this change the venture industry forever? "Worst-case scenario is lots of meetings, no change in funding and perhaps a perception that some of the declarations or the measures taken are performative. I don't think people set out with that intention, but that doesn't mean that good intentions will turn into things that are fruitful," Morgan said.
Only time will tell, but until then, Morgan and others in the venture industry are hoping to keep the momentum going past the initial flurry of commitments to see sustained change.
Join Protocol's Tomio Geron, Benjamin Pimentel and a panel of experts for a live virtual event where we'll explore what's next for financial education after the explosion of retail trading. June 22 at 9 a.m. PT/12 p.m. ET.