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The US could learn a lot from how the UK is crafting DEI policy for venture capital
The U.K.’s Treasury Select Committee last month released a report on the diversity — or lack thereof — of the nation’s venture ecosystem. Black founders there receive less than 0.4% of all venture capital, and women founders receive around 2%, the report found.
The report called such dismal stats “unacceptable.”
Venture capital firms are dominated overwhelmingly by white men and the receipts of venture capital funding are even more unrepresentative of the wider U.K. population in terms of gender and ethnicity. While there have been some improvements, it is happening far too slowly and affecting rapid change should be viewed as a priority by government and industry.
And it’s not just in the U.K. In the U.S., funding to Black founders in H1 fell 40% from a year earlier — of the $75 billion invested in the first six months of 2023, just $565 million was raised by Black founders. And women in the U.S. consistently raise just 2% of funds allocated in any given year. As TechCrunch+ has frequently reported, firms and investors have taken only a few steps to create a more equitable landscape, but financial incentivization and a push from the government could help them go all the way.
Brandon Brooks, a founding partner at Overlooked Ventures, said venture capital is already on the minds of many lawmakers in Washington. He said he was summoned to a hearing in April to discuss the U.S.’ venture capital landscape.
Senators took an interest in the sector after the collapse of Silicon Valley Bank in March, looking to find more ways to impose regulation. During the hearing, some senators had qualms with the lack of funding and opportunities going to their own constituents. “Now that it’s been brought to their attention in a very public way, they’re going to start taking action,” Brooks said of how policymakers are now showing more interest in the industry. “We can now use [the U.K.] report as a guideline to say, ‘let’s do something similar in the U.S.’”
Ladi Greenstreet, the CEO at Diversity VC, was one of the many summoned by the Treasury Select Committee to share his experiences in the U.K. venture ecosystem. The Treasury had already responded to the report, saying it would consider the suggestions of its select committee. “But at the end of the day, it’s politics, so I can understand that a whole bunch of other things must happen for this to be put through,” Greenstreet told TechCrunch+.
Materials Nexus raises £2 million seed to discover clean climate material
Materials Nexus, a deep tech AI and quantum mechanic company, announced Wednesday the close of a £2 million seed round led by Ada Ventures. The National Security Innovation Fund, The University of Cambridge, as well as angel investors Andrew MacKay and Jasmin Thomas also participated in the round.
The company, which was founded in 2020 and based in the U.K., seeks to amplify zero-net technologies, including renewable energy generation and energy storage, in a way that gives higher performance and sustainability at lower costs.
CEO and co-founder Jonathan Bean, a theoretical physicist from the University of Cambridge, and his team worked for the past two years on an AI model that reduces the need to conduct physical tests to discover new materials. This allowed them to build their own datasets and algorithms, accelerating the discovery time, meaning that products could be pushed to the market faster. Materials Nexus works with businesses of all sizes to discover materials that can later be patented, and it hopes to one day build a facility to produce materials to then sell to large companies, like an equipment manufacturer.
Bean says the company plans to use the money to scale its commercial and scientific operations. It’s also hoping to prove the effectiveness of its technology, finding alternatives to materials that are already used in products such as semiconductors and batteries to help innovations like wind turbines and electric cars scale more rapidly and sustainably. In the midst of the AI craze, Bean described his fundraising efforts as “quite fun.”
Bean started looking for capital in October 2022, and said he got a term sheet within five months.
Matt Pennycard, a co-founding partner at Ada Ventures, called Jonathan a “remarkable technical founder and company leader.” “He’s a needle in the haystack that we VCs spend years searching for,” Pennycard told TechCrunch, adding that the company is also an exemplar of using technology for good. “Our strong bet is that Materials Nexus has the potential to play a very significant role in our fight against climate change and be the solution to the damaging addiction to rare earths and unique metal compounds we’ve built.”
With this raise, Bean joins a rare club in the U.K.: the handful of Black people who have been able to raise money. The last official numbers were released in 2020, and it estimated that only around 40 Black founders had ever raised in the U.K., picking up less than 0.4% of venture capital funding in the nation.
Climate change in the U.K. has become a pressing matter, and having diverse perspectives on the issue is imperative for achieving true environmental reform. Bean said he went through the Cambridge database to find people who had experience in materials engineering and called up alumni, asking questions and trying to understand the market.
Bean says his dream is to one day set up operations in the U.S. But for now, there is much work to do in the U.K. After all, someone has to help trail-blaze the “Unicorn Kingdom.”
Cornerstone VC hires Ella Wales Bonner as first female partner
Cornerstone VC, one of the leading funds in the U.K. with a diversity-led investment thesis, announced today the hiring of its latest partner: Ella Wales Bonner.
She will be the fund’s first female partner and will also focus time on building Cornerstone’s mentoring practice to support the founders within the fund’s portfolio. As an investor, Wales Bonner tells TechCrunch she’s interested in consumer products, or “essentially any product or platform that everyday people can use,” she said.
Previously Wales Bonner worked at JamJar Investments and M&C Saatchi and has a history of hosting events for diverse founders within the U.K.’s venture landscape. She believes it’s important for a woman of color like her to be visible in the industry so other underrepresented groups know there is space for them.
“When you don’t have those ties into VC, it can be hugely valuable to get an insider’s view on what can be a pretty opaque industry,” she said. “The more we can help open doors for others, the more this industry will better represent society.”
Cornerstone’s diversity-led thesis is greatly needed in the U.K., where there has been an increased push to back more startups founded by women and people of color. For example, the latest figures show that Black British founders raised 0.25% of all funding in 2020. Women are faring better: all-female-led companies raised 6% of all venture funding last year in the U.K., compared to around 2% in the U.S.
Wales Bonner’s appointment is also important as more women of color rise through the ranks of venture. She joins Cornerstone at a key moment, with the wider venture market still in the midst of a downturn. Wales Bonner said the fund is still in the early stages, so it is less exposed to inflated valuations as it has yet to deploy vast amounts of capital. Still, she sees this moment as a great opportunity.
“The change in the market means we can spend more time getting to know founders through our investment process,” she said. “We are a people-first fund, so having time to foster strong relationships with our portfolio is really important to us.”
Cornerstone invests in pre-seed and seed rounds, with average check sizes ranging from £250,000 to £1 million. It is currently investing out of its £20 million fund, which closed in August of last year. It plans to back up to 40 companies, reserving 40% of the capital for follow-on investments.
Wales Bonner is overall excited about this next phase of life. The U.K. is going through a cost-of-living crisis, plunging many consumers and businesses into uncertainty and changing how people think about their work and lives. People want balance and fulfilment, she said.
“I am still hopeful we will see a new wave of brilliant businesses being born out of the need for change.”
This story was updated to reflect Wales Bonner’s full name.
Cornerstone VC hires Ella Wales Bonner as first female partner by Dominic-Madori Davis originally published on TechCrunch
Bridge 2 Technologies is making it easier for companies to find diverse vendors
Bridge 2 Technologies began with the notion that it should be easier for companies to find a diverse set of vendors. The company formed three years ago with the idea of bringing these two groups together in a two-way marketplace.
Today, the company announced the official launch of the Bridge 2 Technologies vendor marketplace with around 500 corporations and 3000 vendors on an AI-fueled platform. It had been in beta for a couple of years.
Founder and CEO Eric Kelly says that he has been working to bring people together for years, but at a diversity conference a few years ago, he became enamored with the idea of creating a digital platform where corporations could find a curated set of diverse vendors.
It’s really about networking and communications. “If Slack and LinkedIn had a baby this is what it would look like,” Kelly told TechCrunch, but the platform was built with a focus on finding diverse vendors. “It really was the development efforts of the large corporations, the diverse companies, the leaders in that industry, saying what are the things that we need to do to actually connect everyone together,” he said.
Kelly said the idea for the platform was born at a one-day conference in New York a few years ago, which brought together corporate leaders and the leaders from diverse companies. It went so well, they wanted a way to keep these groups connected.
“As we talked about it, [the participants] said we don’t have a way of connecting in a meaningful way to find the corporations that are ready to scale, finding the talent. And so I raised my hand and said, ‘OK guys, I’ll build a platform if you help me build the ecosystem.’ And that’s how it started,” Kelly recalled.
While many companies such as government contractors have a mandate to work with a diverse group of vendors, it’s often a challenge to find and vet them. That’s why it was goal for the platform to be highly curated, so that the corporations looking for vendors would be working with a set of companies that have passed some sort of diversity certification from a vendor perspective, and can handle the needs of a large corporation.
“So that’s why it’s invitation-only. So when they go to the platform, they know that company has already been curated either by them or by one of the large certification bodies that they’ve already done business with,” Kelly said.
The plan was originally to launch with just 250 vendors, but they are actually launching today with over 3000. Kelly said they took a very deliberate approach to building the platform, not taking any venture capital, so that they could take their time and get it right before launching.
The AI on the backend helps deliver the right content to the right person or company, while translating and taking care of other tasks that can make the platform easier to use.
While the platform is intended to help companies find diverse vendors, an altruistic goal to be sure, it’s still a for-profit venture, says Kelly. As such, both vendors and corporations pay for the privilege of being on the platform, driving revenue from both sides of the house. Pricing is still being worked out.
Bridge 2 Technologies is making it easier for companies to find diverse vendors by Ron Miller originally published on TechCrunch
What happens to the smaller VC firms in a more conservative market?
Smaller venture funds are finding a way to manage in the midst of a conservative market.
As with all bear markets, the appetite for risk drops, and although emerging fund managers are often noted to outperform their more established counterparts, some limited partners are weary of bringing on new venture partners. Instead, they retreat to their trusted, established partners.
For some emerging managers, this means the market will become tougher to penetrate. For those with funds that are focused on backing diverse founders who are already working with less capital, the drawback is often the difference between another round or closing shop.
“Risk is also sometimes perceived as anything outside the status quo,” Madeline Darcy, a managing partner at Kaya Ventures, told TechCrunch+. “The pattern-matching we often speak about for founders and young hoodie-wearing Stanford drop-outs has an equivalent in the VC world in the form of spin-outs from large big-named funds who tend to have less diverse teams.”
B. Pagles Minor, a first-time fund manager who launched DVRGNT Ventures seven months ago, told TechCrunch+ the fundraising environment hasn’t necessarily been a walk in the park. They are seeing an increased emphasis on due diligence, with limited partners asking for more metrics and data than Minor expected. Some of these requests have been costly, too.
“For example, certain types of insurances that were not typical before are now being asked for, placing a financial burden on emerging managers who may struggle to afford them,” Minor said. Minor has also noticed a growing trend of limited partners asking to forgo certain management fees or asking for lower carry in the fund, adding more strain on a fund manager’s ability to build and operate the fund, they said.
What happens to the smaller VC firms in a more conservative market? by Dominic-Madori Davis originally published on TechCrunch
Smaller VCs are having an impact on diverse investors and founders
Smaller funds, those that have $50 million or less in assets under management, are helping to usher in a new wave of diversity within venture capital. And the reasons for this are simple.
The latest crop of investors stems from historically overlooked or marginalized communities that are setting up funds and then investing back in those funds. “Small funds operate with a sense of purpose, leveraging their limited resources to drive positive change and foster diversity in the entrepreneurial landscape,” B. Pagles Minor, the founder of DVRGNT Ventures, told TechCrunch+.
Emerging managers often target early-stage companies with diversity in mind, which is important because many of these companies do not last long enough to make it to, say, a Series B. The dearth of later-stage Black companies is in part tied to a lack of early support at the pre-seed and seed-stage levels.
Though many small funds do not explicitly have a diversity mandate, a considerable number of these funds are led by those from underrepresented backgrounds; larger funds, on the other hand, are lacking talent from diverse communities. This in itself creates an opportunity for smaller fund managers to step in and back the founders being overlooked and ignored on a higher level.
Ramzi Rafih, the founder of the London-based No Label Ventures, has a fund that focuses on backing immigrant founders within Europe. He says that the community is still undervalued in the startup ecosystem compared to the U.S., where such immigrants account for more than 50% of all unicorns. “If we can focus on solving obstacles faced by immigrant founders and make them more visible to VCs, we think we can deliver outsized returns to our investors,” he told TechCrunch+. This means often being the first investor in a round and connecting a founder with other investors and corporate clients, as well as helping with visa issues.
“It is crucial to recognize that a wealth of data supports the notion that embracing diversity can de-risk investments and lead to better financial outcomes.” B. Pagles Minor
No Label is trying to fill the gap left by some larger funds, which often don’t support diverse talent and instead leverage the network they’ve built over the years. Many larger funds also simply do not know how to diversify their network, or they don’t know or agree that investing with diversity in mind can create outsized returns.
Smaller VCs are having an impact on diverse investors and founders by Dominic-Madori Davis originally published on TechCrunch
Apple still has a diversity problem
The higher you climb up the corporate ladder at Apple, the whiter it gets. That’s according to data analyzed by the Communications Workers of America (CWA), the union that’s helping retail workers at Apple stores organize.
As some Apple retail workers fight for union recognition and a seat at the bargaining table, the CWA is using Apple’s own data to show how the company falls short in its diversity, equity and inclusion (DEI) efforts.
Despite Apple’s efforts to cultivate a more racially diverse workforce, management positions still skew white, the data shows. Even though Apple succeeded at hiring more people of color, the data indicates the company disproportionately promoted its white workers.
People of color at Apple are far more likely to be working low-level jobs. According to Apple’s own data collected between 2014 and 2021, the number of Black and Hispanic workers has increased by 70.1% and 93.1% respectively. But for Black workers, 85.6% of those jobs have been in lower paid sales or admin support roles; for Hipsanic people, that’s 60.8%.
Meanwhile, the number of white people in sales roles decreased by 24.9%, and the number of white people in the “first/mid officials & managers” and “professionals” job categories grew by 187.2% over the seven year span.
The CWA’s report also found that Apple failed to post year-over-year increases in Black and Hispanic representation in the most advanced job classification, “executive/[senior] officials & managers.” Per Apple’s most recent employer information report (EEO-1), there are 126 employees in the highest job category. From this group of the highest paid employees, 77.7% are white. Only eight out of 126 senior managers are women of color.
Apple says that it does not use these government-mandated reports to measure its progress.
These findings don’t come as a surprise to Sidney Lo, who worked at Apple retail locations in New York City for almost twelve years, climbing up the ranks of store management. When he left Apple, he posted his salary on LinkedIn as a gesture of pay transparency. Following in his footsteps, more than 700 Apple retail employees shared their salaries anonymously, including their gender and race.
“There’s always two sides of Apple: Apple as a corporate entity and Apple as a retail entity,” Lo told TechCrunch. “I think from a decision perspective, some of these [DEI] decisions get lost in transition from corporate down to retail, and retail down to employees.”
Some Apple workers think that a possible explanation for the lack of diversity in leadership is that it’s unclear how to get a promotion, or what metrics are weighed most heavily when considering raises. One current retail employee told the CWA that the path to career advancement feels “arbitrary,” saying it’s “like playing Wordle,” except once you guess the word, the solution changes.
“Apple likes to go by these guidelines of some random form of metrics that we don’t even know about… they don’t go by your monthly metrics, weekly metrics,” another retail employee told the CWA.
A leader of the #AppleToo labor movement, former Apple software engineer Cher Scarlett found similar trends among corporate Apple employees. In an internal survey Scarlett conducted in 2021 with nearly 3,000 respondents, she found that white men have far greater opportunity to advance in the company.
“It’s very striking, not only that women and people of color tend to be in these lower positions, but also, instead of being in hardware, AI, ML or software engineering, they’re more likely to be in service or retail,” Scarlett told TechCrunch.
Scarlett also noticed in this internal survey that even when men and women worked in similar jobs for similar lengths of time, men generally had higher salaries than their female colleagues.
“The white men are making more than everybody else because they are getting the advancement,” Scarlett said.
Apple has a history of shutting down employee-run surveys about pay equity. Though Lo began compiling his data after leaving the company, Scarlett found that Apple was increasingly hostile toward her while she conducted her internal research. She ended up leaving the company after receiving a settlement and withdrawing a complaint she submitted to the National Labor Relations Board (NLRB).
Around the same time that Scarlett left Apple, Janneke Parrish, another #AppleToo organizer, was fired for “non-compliance.” The former Apple Maps program manager was let go for deleting personal files from her phone and computer before turning them over to Apple for investigation. She told The New York Times that she felt she was experiencing retaliation for her organizing.
The same trends hold true at the retail level. The CWA alleged that Apple retaliated against five union organizers in Kansas City, who were fired for attendance-related issues. The workers said that they felt they were being singled out, since firings of this kind had been historically uncommon at the store.
Like many other companies, the coronavirus pandemic brought underlying problems at Apple to the forefront, spurring conversations among employees about union organizing.
“I think what was really challenging was seeing how successful the company was during such a hard time, and we weren’t getting additional pay,” Lo told TechCrunch. “We were just being asked to continue to do more, like your job would expand into different elements of health and safety. I was basically a nurse, as a manager.”
For the first time in the company’s U.S. history, two retail locations in Towson, Maryland and Oklahoma City voted to unionize in 2022, despite Apple’s efforts to dissuade its staff. Before the union vote in Towson, the trillion-dollar company’s Vice President of People and Retail Deirdre O’Brien sent a video to 58,000 retail staff warning them about the drawbacks of unionizing.
Apple retains the same anti-union law firm, Littler Mendelson, that represents companies like Amazon and Starbucks. The NLRB found merit to complaints that all three of these companies have violated labor laws that protect employees’ right to organize. At Apple specifically, the NLRB found that the company illegally interfered with labor organizing at stores in New York City and Atlanta.
In conjunction with the release of its report today, the CWA is calling on Apple to stop working with Littler Mendelson and adopt a policy of union neutrality. Microsoft recently adopted a similar policy, which states that it won’t interfere with employees’ right to organize. This policy helped 300 workers at ZeniMax, a gaming division within Microsoft, to earn voluntary recognition for their union.
When reached prior to publication, a spokesperson for Apple did not provide comment by press time.
Apple still has a diversity problem by Amanda Silberling originally published on TechCrunch
All Raise’s interim CEO is now full-time
All Raise’s interim CEO Paige Hendrix Buckner has now dropped the “interim,” according to the nonprofit’s blog post.
Hendrix Buckner joined the organization, which supports women founders and funders, as chief of staff in early 2022 and stepped in as interim CEO in January following the resignation of former CEO Mandela S.H. Dixon. Prior to joining All Raise, Hendrix Buckner worked with Dixon at Founder Gym, an online training center for underrepresented founders.
As of January, the nonprofit had raised $11 million in funding and was operating regional chapters in New York, Boston, Los Angeles, Chicago, and Washington, DC, and was working on one in Miami.
Since taking the helm, Hendrix Buckner got the Miami chapter going in late January, “relaunched its VC Cohorts program for partner and principal level investors, expanded the VC Champions mentorship program and launched our first national Black and Latinx Media Mastery program,” All Raise said in the blog post.
In Hendrix Buckner’s own blog post, she wrote that All Raise has 24,000 people in its network and that she’s “passionate about building community,” which Heidi Patel, a VC Cohorts volunteer, also noted in All Raise’s blog post, “We needed someone who can break down barriers, build bridges across deep divides, and infuse pure joy into the challenging work we do together. I have been in the trenches with Paige — she brings all that and more.”
As colleague Natasha Mascarenhas noted in her January story, the nonprofit has goals that include increasing the amount of seed funding that goes to female founders from 11% to 23% by 2030, and doubling the percentage of female decision-makers at U.S. firms by 2028.
Hendrix Buckner told TechCrunch that All Raise “is not just an organization, it’s a movement,” and that those “were aspirational goals for everyone in the ecosystem.” In order for the nonprofit to move forward successfully and to grow, All Raise will be operating in three buckets:
- Infrastructure: Building strong internal and external foundations.
- Community and programming: Hendrix Buckner is going on a seven-city tour to visit with community members in all of its chapters and San Francisco, “to be clear about what our strategy is going to look like over the coming years.” There are also active programs currently for VC partners and principals as well as a VC summit coming up in October.
- Storytelling: All Raise is bringing back its newsletter and certain events, both in-person and virtual. “We just launched our ‘Power Conversations’ with several incredible heavy hitters,” Hendrix Buckner said. “Lots and lots of big work in the coming months.”
In addition, All Raise is wrapping up its Checkwriter research and will have new data coming out in a few months, Hendrix Buckner said.
Now that she is in the role permanently, Hendrix Buckner said she and her team of 10 “can settle in and have some clarity about where we’re going to be going.”
“We are really passionate about long-term, intergenerational change,” Hendrix Buckner added. “For us, that means that we are passionate about moving money, changing culture and shifting power. I also get to lean into what I believe my superpower is in building and scaling communities. We will be able to lock arms with our community and get the work done because there’s so much good stuff to do.”
All Raise’s interim CEO is now full-time by Christine Hall originally published on TechCrunch
Warm intros are awful for diversity, so why do investors keep insisting on them?
There are oodles of advantages to having a diverse workforce, but, as inBeta founder James Nash points out, you can’t simply take your homogenous workforce, add diversity, stir and hope for the best.
Often, something subtle gets in the way of diversity at startups: Companies depend on employee referrals in the beginning, but if a startup’s makeup is already not diverse, referrals aren’t going to change that.
That’s for startups. In the world of venture capital, things are more pronounced: A warm introduction is the only way to get in front of investors at many VC funds. That’s great for people who are already hooked into the startup ecosystem, but you don’t have to look for very long to realize that this is not a very diverse group of people.
“We’d love to hear from you. The best way to reach us is through someone we mutually know.” A VC firm's website
For many companies, employee referrals are one of the main ways to attract new talent. That’s all good until you stop to think who your newest hire is likely to know best. It doesn’t take many rounds through that particular mill until you end up with a relatively homogenous group of people with similar education, socioeconomic backgrounds and values.
If that’s what you’re optimizing for, great! Well done. If it isn’t, perhaps it’s time to stop being lazy and question why warm intros are still common practice.
My question has long been: What are you optimizing for by relying on referrals? If you spend some time thinking about that, I bet you’d unearth some uncomfortable unintended consequences.
Let’s talk about what we can do about it.
The situation in VC
If you read any guides about startups or raising money (including my own, although I also try to cover cold emails and cold intros), you’ll find that you need a “warm introduction” to land a meeting with a VC. Given the above parallel with hiring, that’s a problem.
Warm intros are awful for diversity, so why do investors keep insisting on them? by Haje Jan Kamps originally published on TechCrunch