A couple of months ago, I was excited to read that several VC firms were supposedly rushing to support Black founders and investors.
Then I started reaching out.
With each nonresponse, quick dismissal and the general lack of anything resembling useful feedback, my excitement turned to frustration. So I decided to hold these VCs to account for their empty promises by describing my experience.
Since then, I continued to reach out to VCs, specifically those firms who had declared their support of underrepresented founders.
And unfortunately — with a few exceptions — my experience continued to mirror that of most Black founders in Silicon Valley. But, in addition to holding these VCs to account, I want to spotlight the systemic problems that I faced up close so that others can learn from my firsthand experience.
Venture Capitalists And Their Secret Checklists
Whether it’s in their minds or on paper, VCs have secret checklists they use to make funding decisions. And these checklists do not apply equally to every founder they meet. I learned this firsthand, and the data bears it out.
In a survey by Morgan Stanley, 24% of investors said that a confident applicant and convincing pitch is important when considering a women-owned business. Similarly, 23% said an applicant’s confidence and persuasiveness was important when considering a minority-owned business. Yet, only 14% said the applicant’s confidence and persuasiveness were important when considering businesses in general.
Put simply, if you’re a person of color or a woman (or both), you’re on a different, more difficult checklist.
Just as bad, if you’re not fortunate enough to be able to finance an advanced degree from an Ivy League or top-tier school, you’re not on the checklist. Simply having a degree from the same school as a VC — which says nothing about your competence — increases the chances that VC will want to work with you.
The same checklist applies to the market your product targets. For example, one of the VCs who was gracious enough to provide solid feedback told me that many of my competitors say they’re part of the 3-trillion-dollar healthcare industry while I say I’m part of the 10-billion-dollar fitness industry.
Vcs Don’t See Us As Leaders
Despite seeing my business as a fundamentally sound opportunity that would benefit society, the feeling I got from VCs was that they don’t think I can be the one to build and lead a company.
As they virtue signal and self-promote on Twitter and in the press, behind closed doors it’s the same old story — white men founded VC firms hire partners within their own networks, and fund people that look and talk like them.
A married, Black mother of three children, who doesn’t have an Ivy-league degree is a bridge too far. And this is despite the fact that, according to HBR, “Diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns.”
The VC Diversity “Performance”
After contacting more than two dozen venture capitalists and speaking to a handful, my sense is that most in the VC community aren’t just fake, they’re dishonest. One female VC who publicly pushes for diversity in tech passed my deck around without my permission.
Even inside the VC community, they agree that their words and actions in support of diversity are performative. The reality is that most VCs only care about their scoreboard. No one really wants to fund businesses that help society.
If they were working — at least in part — to benefit society, VCs would look to Black and female founders. As PlanBeyond found, companies with female-only founders are more than two times more likely than men-only teams to develop companies that improve society.
On top of that, “Organizations with at least one Black founder are 60% more likely than organizations with at least one white founder to work to benefit society.”
The Fundamental Violation Of Our Social Contract
The irrational and misguided bias against women and people of color in VC is one of many violations of our social contract. As Kimberly Jones explains beautifully in this video these kinds of violations lead to the unrest and violence we’re seeing in America’s cities and suburbs.
The unfair rules that women and POC are forced to play by in every corner of society are violations of our social contract, so why should we be expected to follow these rules?
VCs take public money from large institutions like CalPERS, they don’t report on it and they squander it on businesses run by people like them who went to the schools they went to. As much as VCs would like to pretend it is, the venture capital model does not reward individuals based on talent and achievement. It’s not a meritocracy. It rewards people based on wealth and social class, to the detriment of POCs, women and society.
Parting Words: The Flip Side
I have met VCs who were helpful that provided feedback about how I can fix my pitch deck to match what VCs are looking for. Others have even given my good advice on how to properly raise and who to talk to. Some were even brave enough to tell me about the secret checklists and possible red flags VCs see with a married founder. My point isn’t that all VCs are evil.
But, as a whole, the industry is rife with dishonesty, superficiality, and bias so deeply ingrained and counterproductive that you might mistake it for willful incompetence.
So, like I said before and I’ll say again: VCs don’t need to give us any more lip service, they need to build systemic change within their own companies and use their power to hold other VC firms accountable as well. I don’t want more public statements of support for Black founders. I want access. I want feedback. I want the opportunity to get funding.
Nerissa Zhang is CEO and co-founder of the mobile fitness app startup, The Bright App.