By CultureBanx Team
- Only 1% of VC-backed startups have black founders
- African American buying power is projected to be $1.1 trillion a year
Andreessen Horowitz invests in some of the biggest innovative companies in the world, yet internally when it came to elevating employees the firm operated like it was in the stone age. This seems to be changing now as they recently decided to do away with a rule for promoting workers to general partner, only after the person was a CEO at some prior point.
Why This Matters: The venture industry tends to have a sheep flock mentality, which has proven to be unsuccessful for black investors trying to climb up the ranks. Andreessen Horowitz’s portfolio of companies is impressive and includes brands like Airbnb, BuzzFeed, Facebook (FB +0.46%), Lyft, Groupon and Pinterest. All of these businesses cater to large diverse audiences, but inside the halls of the VC fund all of the general partners were male and mostly white.
While 13% of the U.S. population is black, only 1% of VC-backed startups have black founders, another 12% are Asian, and 87% are white, according to CB Insights. There are clear benefits to diversity perspectives in the VC business including, better decision making on both pre- and post-investment decisions along with helping to eliminate groupthink in order to deliver superior returns.
When it comes to venture partners people typically invest in what they know. If these companies don’t have diversity at this level, it means black entrepreneurs have to do extra work in educating investors rather than simply selling them on the opportunity.
Situational Awareness: Other venture capital firms like Lightspeed Venture Partners has pushed its diversity approach to the host of companies it invests in. They have asked their portfolio companies to agree that “at least one candidate from an underrepresented background be considered for every open leadership and independent Board member position in the company,” according to Recode.
CBx Vibe: “Bad Company” ASAP Rocky