By broadening the scope of founders they actively invest in, and ensuring greater diversity in their sex and racial backgrounds, venture capitalists can play a stronger role in enriching societies while still pushing for the robust returns expected of them.
SEATTLE (PRWEB) July 22, 2020
New research examining the relationship between the race and sex of venture-backed startup teams and venture funding shows a unique twist in the classic story of venture funding under-representation among women and minority-lead teams: women and Black-led teams are more likely to build startups that drive societal and community well-being, but are the least likely to receive venture funding. The findings, summarized in The Bias In Venture Capital Report published by marketing research firm PlanBeyond, highlight the potential lack of impact venture capitalists have on benefiting society given their repeated tendencies to invest in White, male-led teams.
The report shows significant differences in the types of companies created by women and Black founders:
- Startups led exclusively by women are more than twice as likely as male-only teams to benefit society.
- Startups with at least one Black founder are 60% more likely than organizations with at least one White founder to work to benefit society.
However, the report shows that funding is heavily skewed toward male and White-led startups:
- Teams composed exclusively of men raise three times more funding than women-only teams.
- Teams composed exclusively of White founders raise 20% more throughout their company’s life than teams composed exclusively of non-white founders.
The research explored 6,045 companies and 11,672 founders closing seed, early, and late stage funding during the 2019 calendar year. Information was gathered on each founder including race, sex, education, and professional background while each company was analyzed for its ability to have a positive societal impact, defined as having beneficial environmental impacts, giving resources to traditionally underserved communities, promoting education and/or knowledge sharing, improving access to transportation, or supporting general health. Data was analyzed to assess norms in team composition, the differences in which the race and sex of founders and founding teams impact investment rounds and funds raised, and the degree to which founder sex and race impact organizational focus.
The report highlights a unique opportunity for the venture capital community to take a deliberate role in investing in companies that have larger societal benefits. By broadening the scope of founders they actively invest in, and ensuring greater diversity in their sex and racial backgrounds, venture capitalists can play a stronger role in enriching societies while still pushing for the robust returns expected of them.
To read the report’s complete findings and methodology, visit: https://planbeyond.com/bias-in-venture-capital-report
For more information about the report’s findings and implications, contact Laura Troyani at firstname.lastname@example.org.