Thoughts On Women, Minorities, Startups, and Investing

I’m partly afraid to write this for fear of being misinterpreted, but it’s been on my mind and come up in conversation more lately, oftentimes uncomfortably. To share my point of view, I can only share what I’ve observed first-hand, and I realize the role investors play here is critical because often it is funding, an investment, which creates the opportunity for someone else. All this said, what I’ll share is just first-hand experiences and thoughts from roughly three and a half years working at startups, and about two of those involved in funding them (in a small way). I want to share the following not to draw a big conclusion, but rather to start a conversation and get feedback. Thanks for reading and in advance for your reactions, suggestions, disagreements, and everything else:

Work: I’ve been an employee at three startups. All were very small, by headcount. The number of women at those three were, respectively, 1, 0, and 3. In terms of minorities, maybe 1-2 at most. Most startups that don’t start to really scale will likely be quite small. I never recalled hiring decisions taking into account race or gender; in fact, the companies would’ve hired more people regardless of shape or color to fill roles they needed. The Bay Area is a big, big place, and I’m sure for every color-gender blind place, there may be two that try to shape their culture through hiring. A larger question here is how do more and more women and minorities get on a path to be qualified for opportunities, and while the work here can never be over, it does seem like it’s being discussed in a healthy way and being addressed at the educational level.

TechCrunch TV: In 2011, I started a weekly TV show while I was a guest columnist at TechCrunch. I picked every topic and guest myself. It’s primarily startup CEOs and investors. Looking back, there were a small handful of women on the show (though I know I invited many more, but most of them either didn’t respond, or their PR departments said “no”). At that time, I admittedly wasn’t thinking of seeking out underrepresented minorities, too. Looking back, I wish I did, but I was just focused on technology and investing topics.

Sunday Conversations: I started my own video series on investing after TCTV ended, and I did only seven of them (all men), and the last year was just with one guest. Video is hard because not many people watch them. My platform is pretty small. Sunday Conversations is over now, but I’m open to new media ideas.

Post-Seed Conference: I recently was part of a committee which organized a successful conference in December 2013. In our planning meetings (one of the organizers is a woman), we discussed the issue of gender balance on the panels at least 3-4x. I know we all reached out to women investors and we weren’t able to either line up dates or in many cases, we didn’t get a response. A friend who is a woman who used to work in VC emailed me about it, and I tried to explain, but it was clear it opened up a wound. I am not sure what else I could’ve done.

Venture Capital Firms: This is a wide criticism across the industry. If you look at the top 5-6 firms that Limited Partners commonly refer to as the absolute best venture capital firms, and if you look at the general partners (the people who also put up capital alongside the firm and write checks on behalf of the firm), there’s not much diversity. There are two nuanced arguments here: On one hand, that the goal of venture is to deploy capital and generate returns; or on the other hand, that as gatekeepers of capital (and therefore access), capital should be deployed to give any and everyone with promise a chance to carry out their vision and dream. I am not sure what the right formula is. In my work with many different VC firms, I’ve never once seen a partner or an investment decision touch on an entrepreneur’s race or gender. There are many examples of growth startups founded and led by women, though I’d imagine it’s much smaller for underrepresented minorities. Yet, very few people as a total percentage of who try to get funded actually get a term sheet, and those are hard decisions to receive.

Minorities, In General: When I say underrepresented minorities in technology and startups, I’m talking about people of races and ethnicities that we all rarely see at startups, conferences, in venture capital. I’m starting to see more women (versus three years ago), but not many underrepresented minorities. That’s just in the Valley and SF, though I’d suspect other cities and their tech nuclei are getting much more racially diverse by the day.

As A Very Small Seed Investor: I got the idea to write about this after a healthy yet uncomfortable chat with a friend of mine who is a female founder and an underrepresented minority. I mentioned that out of the 60+ investments I’ve made from Haystack, just a few are women. I told I just didn’t see many, and she took issue with that. It was an uncomfortable conversation, and I’ve thought about it a lot since. It’s why I’m writing this. A few weeks have passed, and I think her issue is that “no women or minorities in the pipeline” is too simplistic. Rather, she encouraged me to think about (1) values-based investing, as a means to use my small check and relationships to create positive signals for people who would otherwise not be seen and (2) to pause and think about the fact that women entrepreneurs may not be as comfortable “pitching” male investors.

I am not sure I have any good answers. I don’t want to grandstand with canned outrage or shame others. I invest very small amounts ($25,000) and try to catalyze rounds when I see something interesting that’s very early and raw. I would like to take a more active approach versus looking at the pipeline, though on a day to day basis, I worry about my own survival and am deploying other peoples’ capital. I’m writing this not to put forth any big solutions or great answers — but more as a reflection and to see if any of you have concrete ideas on things I can do in my limited role. I can’t promise I will be able to do all of them, but I will try to find the best ones and see if I can.

Haystack is written by Semil Shah, and is published under a Creative Commons BY-NC-SA license. Copyright © 2018 Semil Shah.

“I write this not for the many, but for you; each of us is enough of an audience for the other.”— Epicurus