Diversity in Venture Capital: Scenes From Culture Shifting Weekend

Xconomy New York — 

While women and minorities make up 70 percent of the population, less than two percent of the tens of trillions of dollars in the asset management industry are entrusted to women or minorities.

In recent years, gains have been made among women in venture capital. Diversity beyond gender, though, continues to lag. That’s part of the motivation behind Culture Shifting Weekend, an event that attracted about 200 attendees in New York City in early November.

Fred Wilson of Union Square Ventures, who participated in a fireside chat on investing (pictured below) alongside his wife and angel investor, Joanne Wilson, noted that he is less optimistic that the venture capital industry will reach equal representation in terms of racial diversity within his lifetime.

Culture Shifting Weekend was started nine years ago by Culture Shift Labs, a consulting agency dedicated to improving corporate diversity. It’s taken on different shapes over the years, but in the last two, Andrea Hoffman, CEO of Culture Shift Labs, said the event has solidified to focus on inequalities of representation in venture capital—and on facilitating deals involving black venture capitalists.

The event is invite-only and attended by top-tier executives at companies including PayPal, Uber, LinkedIn, and Morgan Stanley. Hoffman said Culture Shift Labs makes an effort to ensure that each event includes between 25 and 50 percent fresh faces, so it can support serendipity and the formation of relationships between an ever-growing community of black players in venture capital.

To hasten the impact, Culture Shifting Weekend’s invite list this year was twice as long as last year’s.

At the event, Maya Horgan Famodu, a Nigerian-American attending the event from Africa, secured investment for her initiative to offer U.S.-based investors an opportunity to invest in Africa. General partners signed up to be paired with limited partners to explore where there might be opportunity for the latter to invest in the former.

The event facilitated not only deals, but the flow of a different kind of investment—relationships and personal connections. Some fund managers made connections with or identified other small funds with whom they might go in on deals together in the future. Yashreeka Huq, an associate venture capital attorney at Fenwick & West, said the event was great for knowing who to follow on Twitter. For first-time attendee Lisa Duncan, a senior broker at AON Risk Solutions, the event provided a level of visibility to a group of high-profile black people in venture capital she had not realized existed until now.

“It’s enlightening,” she said. “I’m so excited.”

While the event targeted deal signing, participants and panelists throughout the weekend spoke to the support tactics or career pathways that paved the way for their advancement in venture capital.

Several attendees and panelists said they sought out mentorship from people who didn’t look like them. This allowed Charmel Maynard, who is now the associate vice president and university treasurer at the University of Miami, to get where he is today—just 33 years old and leading the University’s investment of over $2 billion in assets, including endowment and pension funds.

In recent years, the number of black venture capitalists working at the seed or microfinancing level—deals below two million dollars, say—has flourished. But many black venture capitalists still find it challenging to be included in larger deals or be trusted with larger sums of money.

Daniel Miller, the current deputy executive director of New York City’s board of education retirement system, spoke to this phenomenon that plagues both women and minorities like himself.

“It’s just like when you go on a plane, you expect to see two white males in the pilot seat,” Miller said. “It’s what you expect to see because it’s what you always saw. So in this space, we’re used to seeing white men with money making decisions. If you see a Latino female—a woman—it’s not going to be what you expect. I think it’s the unconscious bias … it’s harder for us to get over.”

Without an opportunity to work with larger funds, though, minorities can’t build the necessary track record to take on larger deals.

Elliott Robinson, a partner in M12 (formerly Microsoft Ventures), said working within corporate VC offers a pathway to building a track record or portfolio of handling larger sums of money. On a corporate VC panel at the event (pictured at top), he said it not only offers greater access to larger sums, but working from within the company also offers a financial safety net. Robinson hopes this will make the transition easier when he wants to exit corporate venture capital and work with more traditional funds.

Others said fund-of-funds deals offer an opportunity for larger funds, like M12 or Google Ventures, to invest in black-run venture capital firms as well as tap into their network for ideas that they wouldn’t typically think to back.

HBCUvc, an initiative targeted at supporting black students interested in venture capital, works with students to prepare and connect them to internships. Hadiyah Mujhid, CEO and founder of HBCUvc, said working to educate students about venture capital at the collegiate level is crucial because, oftentimes, they are helping build the entrepreneurial ecosystem at historically black colleges and universities from the ground up. This is a great departure from Ivy League or state schools, where an infrastructure that fosters introduction and education about venture capital oftentimes already exists.

“I actually think it’s programs like that which open up access to who can participate in venture capital,” says Brian Dixon. He started out as an intern at Kapor Capital through its summer associate program in 2011. He made General Partner in 2015 and now serves as a mentor for HBCUvc.

Many large companies, like J.P. Morgan or even Marriott, have affinity groups—internal communities that allow black employees to network across the company and find mentorship and support within one another. Today’s tech companies, by contrast, have been slower to adopt methods of supporting diversity and advancement of diversity within their walls.

Daryn Dodson, managing director of private investment firm Illumen Capital, has implemented a strict requirement of bias training for any fund managers that accept his venture capital dollars. The bias training and interventions are in partnership with and derived from research at Stanford University.

Of course, who has the money in venture capital also decides which ideas get funded. This is one reason why supporting black men and women in venture capital is so critical, attendees and panelists agreed.

It offers a chance for ideas to be backed that might not register as important or worthwhile for someone with a different background or life experience, according to Kapor Capital’s Dixon.

“I think that the lived experience of the entrepreneur is so key to solving problems that other people just miss,” he said.

His firm—an Oakland-based fund that deliberately works to curate a diverse portfolio—recently backed a startup providing affordable legal services for inmates.

The company, called Court Buddy, works to make securing a lawyer more transparent and accessible for people without the means to afford (or have access to) a lawyer. Another company, Pigeonly, was founded by a man who had been incarcerated. When he was released, he decided to build a product for the prison population that drastically reduces the cost to make calls to friends and family.

“If you’ve never had a family member or loved one in prison, you probably wouldn’t be thinking about solving that,” Dixon said.

A 2017 graduate of the University of Wisconsin–Madison, Cadence Bambenek is a freelance science and technology writer and fact-checker. She previously interned at the Wisconsin State Journal, Business Insider, and Psychology Today. Follow @cadencebambenek

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