Since the widespread protests against police brutality in the wake of the murder of George Floyd, Breonna Taylor, Rayshard Brooks, and countless others — large-scale public conversations have followed. Many companies have shared statements expressing their condolences to and solidarity with their Black employees and customers, and outlining their commitment to fighting racism.
<p><span></span>Many of these statements have been welcome, with leaders sharing heartfelt personal sentiments that have hit the right notes, while others have been less well-received, with critics pointing out their uniformity and arbitrary tone.<br/></p>
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzQxODIzMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNDY0MTAzOX0.JheSpWfmK0VaP5Jc_U47E5T071oXZZz3ok_70wztdiM/image.jpg?width=980" id="2622b" class="rm-shortcode" data-rm-shortcode-id="7fb6684cd101ab3607a3307925a015c1" data-rm-shortcode-name="rebelmouse-image" />
Eyana Carballo is the manager of global commercial strategy & IP at BCG Digital Ventures.
<p><span style="background-color: initial;">But no matter how strong or wanting these statements have been, they mean very little without a concrete commitment to tangible steps that companies can enact. Now that the words have been shared, it's time for companies and leaders to walk the talk.</span><br></p><p>So, what can companies do?</p><h3>Expand Diversity Networks<br></h3><p>Enabling employees to work to bolster internal networks is an integral part of making sure their voices are heard. These networks can drive real change, helping to raise issues and set priorities and, in turn, to be heard by leadership. They can be vessels for mutual support, mentorship, and representation.</p><h3>Invest and Donate</h3><p><span></span>One obvious way companies can take action that backs up their words is by contributing financially. Consistent donations to causes such as the NAACP Legal Defense and Education Fund or the Southern Poverty Law Center are valuable, giving them the resources they need to affect positive change. But companies can also invest other resources, such as talent; partnerships with leading organizations that address racial injustice and inequality are extremely valuable for all parties.</p>
<p><br/></p><h3>Apply Metrics and Foster Accountability</h3><p>Without a clear view of what's happening, it's difficult for companies to affect positive change or even decide on what that change might look like. Honing in on the current status quo and what 'good' would look like, in terms of internal diversity but also the external impact of work, enables companies to move in a positive direction and assess success, bolstering accountability in the process. </p><p>One aspect of this is a commitment to accelerating representation, which encompasses driving retention parity, increasing representation in leadership and educating leaders and staff. Metrics, whether internal and external, can be the levers which drive this and ensure tangible and lasting impact.</p><p>Each company will have its own set of circumstances, its own state of play, and different work that needs to be done. But now that these issues have been raised, we need to make sure that they do everything they can, starting with the initiatives above, to really support Black employees and the wider Black community, moving beyond spoken sentiments to actively making the world a more equitable place. </p><p><em>Eyana Carballo is the manager of global commercial strategy & IP at BCG Digital Ventures, the corporate venture arm of Boston Consulting Group.</em></p>From Your Site Articles
- How Can L.A. Tech Promote More Diversity in Its Ranks? - dot.LA ›
- Actionable Steps to Fight Racism, A Conversation with Dr. Cheryl ... ›
- How Can L.A. Tech Promote More Diversity in Its Ranks? - dot.LA ›
Related Articles Around the Web
Read more
Show less
Editor's note: This is the third in our series examining diversity in venture capital. Read the first story here, our second one here and sign up for our newsletter to get the latest updates.
For all the well-intentioned talk on social media and beyond about the need for diversity and inclusion after the killing of George Floyd, there is one thing that speaks louder than anything else in venture capital: Money.
<p>There is certainly a considerable amount that VCs and founders can do to improve diversity, but those in the industry say it is the limited partners who fund the whole ecosystem who could make the biggest difference.<br/></p><p>"It's the LPs that have the power and can demand who they should or shouldn't be investing with," said Sue Toigo, co-founder of the Robert Toigo Foundation and chair of Fitzgibbon Toigo & Co.</p><p>At this moment of heightened public awareness, forcing big public pension funds to commit to putting more of their dollars in funds controlled by minorities could have a major impact. These public institutions, unlike their corporate kin, represent a wide and diverse swath of the country, making investment decisions for public servants like teachers, firefighters and municipal workers. </p><p>Two major funds, CALPERS and the Illinois Municipal Retirement Fund, illustrate the stark differences in the rules that govern pensions and the people who manage them. </p><p>"Our sources of capital are the LPs – like the city of L.A., CalPERS, foundations, and endowments," said Kate Mitchell, who co-chaired the National Venture Capital Association's first diversity and inclusion committee in 2014 and co-founder of Scale Venture Partners. "Their constituents are diverse, and they care greatly about this."</p><p>Just 2% of VC investment partners identify as African American or Latino and less than 10% of VC-funded companies are led by women or people of color, <a href="https://www.pledgela.org/" target="_blank">according to PledgeLA.</a> LPs could greatly increase both numbers, according to Paul A. Gompers, a professor at Harvard Business School who studies the demographics of finance. </p><p>"Who you invest in looks a lot like who you are," Gompers said. "We know there are underserved pockets of entrepreneurs out there and those opportunities could perhaps create greater returns."</p><p>In response to the #MeToo movement, the Institutional Limited Partners Association, the industry voice for pension funds, foundations and sovereign wealth funds, expanded its due diligence questionnaire in 2018 to measure ethnic and gender diversity as well as hiring and promotion. Those changes, Mitchell said, have had a noticeable impact raising the bar with firms that must now answer to questions about hiring and diversity.</p><p>"It isn't done in a day," she said. "If you are going to make it happen, you have to make it a sustained effort." </p><h2>Two Approaches: California and Illinois</h2><p class="shortcode-media shortcode-media-rebelmouse-proxy-image">
<a href="https://upload.wikimedia.org/wikipedia/commons/b/be/CalPERS_headquarters.jpg" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGd2lraXBlZGlhJTJGY29tbW9ucyUyRmIlMkZiZSUyRkNhbFBFUlNfaGVhZHF1YXJ0ZXJzLmpwZyZobz1odHRwcyUzQSUyRiUyRnVwbG9hZC53aWtpbWVkaWEub3JnJnM9MTA3Jmg9MGRkYjhkYzM2ZjBkMGZhN2FjZmJmMGNmY2ViYjgyM2NhMzBjZTU4ZTRmZWY5NDM5YzVhZDZkYWYzNmI2ZmFkZCZzaXplPTk4MHgmYz0xMzM0MTY2NjExIiwiZXhwaXJlc19hdCI6MTU5NzE2MjU4MH0.sZ48f46sdxl24BUJlvM9M6DfOhMhLZ7gclbQrytxfu8/img.jpg" id="ca56a" class="rm-shortcode" data-rm-shortcode-id="027f0926fd58e57660bf093039a43ede" /></a>
<small class="image-media media-caption" placeholder="Add Photo Caption...">CalPERS headquarters in Sacramento.</small>
</p><p>The granddaddy of pension funds, <a href="https://www.bloomberg.com/quote/3261Z:US" target="_blank">California Public Employees' Retirement System</a>, divested from apartheid South Africa in 1986 and got out of tobacco stocks in 2000. It also doesn't invest in thermal coal miners, manufacturers that make guns banned in California and businesses operating in Sudan and Iran. But prioritizing diverse funds has proven trickier because of the 1996 voter-backed <a href="https://www.google.com/search?q=proposition+209&oq=proposition+209&aqs=chrome..69i57j0l6j69i60.2932j1j7&sourceid=chrome&ie=UTF-8" target="_blank">Proposition 209</a>, which CalPERS says bars it from giving preferential based on race, ethnicity or gender.<br/></p><p>"LPs love to use Proposition 209 as the reason why they can't do anything," said Emanuel Pleitez, co-founder of East Los Capital who runs an annual conference aimed at educating officials that sit on institutional boards about how to invest in asset classes. "But you can still gather data and be transparent and be sure that the public knows what you are doing. There's a massive opening for LPs to do their jobs that's about picking the best managers and vendors that are diverse."<br/></p><p>Pleitez argues that by not emphasizing diversity, public institutions have tipped the scale of wealth toward a class of white asset managers who have gained outsized profits.</p><p><span></span>In an effort to legally promote diversity, CalPERS, which manages about $400 billion in assets, started an "emerging manager" program in 1991. But <a href="https://www.latimes.com/business/story/2019-12-04/calpers-drops-most-emerging-equity-managers-many-led-by-women-and-minorities" target="_blank">last year it slashed the already small program from $3.5 billion to just $500 million</a> in assets under management. </p><p>CalPERS declined to make anyone available for an interview. A spokeswoman explained the reduction occurred amid a broader effort to reduce fees and increase returns by shifting to managing 95% of private equity investments internally, up from 80% before. (CALPERS says during the last fiscal year it also "engaged" 700 companies to encourage greater diversity on their boards, half of which did so.)</p><p><a href="https://www.ai-cio.com/news/almost-14-billion-pulled-calpers-equity-managers/" target="_blank">An internal memo obtained by the website CIO </a>warned that terminating the program "could receive media or legislative attention" but said the cuts were necessary because of long-term underperformance.</p><p>"A lot of the women and minority funds have actually closed," said Toigo. "All of the data indicates when you have diverse boards and diverse leadership you have better returns. I would argue you're actually violating your fiduciary responsibility by not paying attention to the data. Unless you're only selling to white people, if I was at a firm I would want every point of view represented in the investment process," said Toigo.<br/></p><p>The Illinois Municipal Retirement Fund (IMRF), with $44.8 billion in assets under management, has taken the opposite approach of CalPERS', placing a high emphasis on diversity in its investment decisions. </p><p>"It's not about whether you can just do diversity or meet returns," said Dhvani Shah, IMRF's Chief Investment Officer. "We can do both."</p><p>As of the end of last year, minorities managed 33.8% of IMRF's actively managed assets, a 19.6% increase from 2018. </p><p>Shah says she is mandated to prioritize diversity under the <a href="http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=638&ChapterID=9" target="_blank">Illinois Pension Code</a>, which states that pension funds should "increase the racial, ethnic, and gender diversity of its fiduciaries, to the greatest extent feasible within the bounds of financial and fiduciary prudence."</p><p>IMRF's annual return for 2019 was 19.57%, beating the industry benchmark of 18.68%. </p><p>"I think Illinois can serve as a model," said Shah. </p><p><em>Rachel Uranga contributed reporting to this story.</em></p><p><em></em><em>Editor's note: This is the third in our series examining diversity in venture capital. Read <a href="https://dot.la/lots-of-talk-but-little-action-how-can-venture-capital-solve-its-whiteness-problem-2646188887.html" target="_self">the first story here</a>, <a href="https://dot.la/black-venture-capital-2646196848.html" target="_self">our second one</a> here and <a href="https://dot.la/st/newsletters" target="_self">sign up for our newsletter</a> to get the latest updates.</em></p>
From Your Site Articles
- Blck VC Group L aunches 'We Won't Wait' Campaign - dot.LA ›
- Navigating the Venture Capital World as a Black Person - dot.LA ›
- Venture Capital's Diversity Problem - dot.LA ›
- Can Venture Capital Solve Its Whiteness Problem? - dot.LA ›
Related Articles Around the Web
Read more
Show less
'I Don't Live in a World Where Fairness is an Option': Navigating the Venture World as a Black VC
Jun 18 2020
Editor's note: This is the second in our series examining diversity in venture capital. Read the first and third stories in this series and sign up for our newsletter to get the latest updates.
Entrepreneurs usually fall over each other for the chance to meet with people like Kobie Fuller, a partner at Upfront Ventures, one of Los Angeles' oldest and most prestigious venture firms, and a former investor at Accel, one of Silicon Valley's most well-known early-stage firms.
But Fuller, who is black, had become used to being overlooked at parties and mistaken for junior-level staff.
"I have been at network events where people don't know who I am, they assumed I was a random moron," he said. "They treat you like you are not in the room or you are some wait staff."
<p>Fuller said as his profile has risen, he's encountered fewer slights. But the experience is shared by other black venture capitalists who work in the mostly white, elite world of high-stakes capital, where there are few people of color. </p><p>The venture world, along with the rest of the United States, has been reckoning with the aftermath of the George Floyd killings and the deep inequities it exposed. </p><p>dot.LA talked to more than half a dozen black VCs, most in Southern California, that say they are constantly navigating the issue of race. The burden is often compounded by the fact that they are often the only black person in the room. </p><p>"Saying the same thing over and over again is exhausting, but I think what that represents is a bigger issue of feeling like you are the one that always has to do it," said Sydney Sykes, a co-founder of Blck VC and a former analyst at NEA who has been advocating to diversify the ranks inside firms. </p><p>"Think about walking into a boardroom. A black person walking into a boardroom is really going to notice they are the only black person in the room. The white person maybe will notice there's a black person in the room, but they will be like, 'oh, I don't see color' and they will feel pretty good about that."</p><p>"But the truth is we need to walk into every room and be aware when black people don't have a seat at the table," she said.</p><p>Earlier this week, the National Venture Capital Association <a href="https://dot.la/venture-top-industry-group-launches-nonprofit-to-diversify-its-ranks-2646175232.html" target="_self">announced a $5.5 million</a> effort to add diversity to its ranks. The effort is an acknowledgment that venture, which fueled the modern tech industry by pouring boatloads of cash into aggressively growing startups, has failed to diversify. <a href="https://nvca.org/pressreleases/second-edition-of-nvca-deloitte-human-capital-survey-uncovers-progress-for-diversity-inclusion-at-venture-capital-firms/" target="_blank">Only 3% of investors</a> at firms NVCA surveyed are black, though most firms didn't reply to it, suggesting the true number may be much smaller. </p><p>That has consequences beyond venture firms and for the culture at large, as those dollars rarely trickle down into communities of color. To see the connection between venture and the wealth gap, Harvard professor Paul Gompers said you can turn to places like Silicon Valley where largely white founders and investors have quickly become millionaires and billionaires and exacerbated income inequality. Across the U.S., <a href="https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/" target="_blank">white families on average are ten times wealthier than black familie</a>s, according to the Brookings Institute. </p><p>"Part of the reason these communities have seen the income gap grow is because they've not sufficiently been part of these two sectors," he said. "It doesn't explain everything, but certainly it is a contributor."</p><p>On one side are founders who raised $133 billion last year and often come from other entrepreneurial companies like Amazon or Google that have historically lacked diversity. </p><p>On the other side is the mostly white venture industry made up of around 1,300 funds that relies on personal networks which often don't extend beyond elite schools or the coasts. </p><p>Gompers adds the most successful venture funds tend to be self-replicating, attracting a top-flight but homogenous group of entrepreneurs who in turn make them more money. </p><p>Trying to crack into either world is tough. </p><p>Brentt Baltimore, an investor at Greycroft, said he broke into the industry largely because he found a mentor who helped him learn the unacknowledged code that exists.</p><p>"Somebody sat me down and helped me understand this game," he said. "There's a certain way that you move and shake here. That's not something you can learn online." </p><p>He and others like Sykes are trying to figure out how to make the industry more accessible for others. </p><p>"It's one thing to get in the door," he said. "It's another thing to build structure in the space." </p><p>Even when black investors are hired, there're often entrenched racial assumptions.</p><p>"When I am in the room, sometimes it's assumed I am the assistant," said Jawhara Tariq, an investor at Moonshots Capital. "I don't know if it's the racial angle or the gender or both." </p><p>It's happened enough times, she said, that she begins to question herself. </p><p>"It's not like the first person who has done it, but the tenth," she said. "It makes me start to feel like I shouldn't be there."</p><p>The cumulative effect of those situations is to place on her a mental burden that her colleagues don't carry. Crystal Clements, a clinical psychologist, said that being the only black person at a company is challenging. "There are common themes that tend to surface," she said. Some black people assimilate into white culture while others push toward perfectionism in order to overcome negative stereotypes. Others ignore the microaggressions, despite the sting believing the merit of their work is the most important metric of success. </p><p>But it doesn't erase the fact that some people just don't see black people as investors, a bias that isn't just shaken overnight. </p><p>Austin Clements, a partner at early stage venture firm OPV and the managing director at Grid110, said he has chosen to ignore much of those experiences. </p><p>"I don't live in a world where fairness is an option," he said. "I am certain that over the time in my professional career there are things that have made it difficult as an African American. I have put so little time in acknowledging those instances because that's what I expected."</p><p>But that milieu may ultimately hurt venture's bottom line. </p><p>Gompers, who looked at the performance of venture portfolios that had more diverse teams, found they achieved better returns than homogenous teams. </p><p>"The importance of diversity is all about making better decisions," he said. "If you all look the same and have the same experiences, you are gonna make the same mistakes."</p><p>That's been Fuller's operating assumption. Last year, he launched a social networking platform for black professionals, Valence, with the idea of building them more access and eventually more wealth. </p><p>The idea came to him after he was sought out — for the umpteenth time — by corporate ventures and others looking for black founders. </p><p>"People build their own personal network that mirrors who they are," he said. "People would say, 'Kobie, you're black. You must know some black people'."</p><p>"I would be lying if there wasn't a bit of tokenism," Fuller said. "But, diverse organizations do perform better."</p><p><em>Editor's note: This is the second in our series examining diversity in venture capital. Read the <a href="https://dot.la/lots-of-talk-but-little-action-how-can-venture-capital-solve-its-whiteness-problem-2646188887.html" target="_self">first</a> and <a href="https://dot.la/calpers-venture-capital-diversity-2646204153.html" target="_self">third</a> stories in this series and <a href="https://dot.la/st/newsletters" target="_self">sign up for our newsletter</a> to get the latest updates.</em></p><em><br/></em><p><em>Illustration by Candice Navi</em><br/></p>
From Your Site Articles
- Navigating the Venture Capital World as a Black Person - dot.LA ›
- a16z VC Firm Launches Fund to Target Diverse Founders - dot.LA ›
- Can Venture Capital Solve Its Whiteness Problem? - dot.LA ›
- Blck VC Group L aunches 'We Won't Wait' Campaign - dot.LA ›
- Blavity CEO Morgan DeBraun Calls for Action After George Floyd ... ›
- Pension Funds Could Be Key to Adding Diversity to VCs - dot.LA ›
- Valence Funding Network Intends to Boost Black Startups - dot.LA ›
Related Articles Around the Web
Read more
Show less