More Proof that Venture Capitalists Don’t Care About Diversity, Equity, or Inclusion | Hacker Noon

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@markhoroszowskiMark

CEO at MovingWorlds. Helping companies scale social impact by educating & engaging employees.

Venture Capital is already known for being remarkably not diverse. Yet despite some investors being blasted for tone-deaf actions in June related to racial equity, most have not taken any lessons from the past, and fewer have updated their investment strategies to acknowledge their complicity in propagating inequality.

Last week, Madrona Venture Group (an early investor in tech giants including Amazon) released a new investment thesis that is shockingly devoid of anything remotely human. It has made clear, with one infographic and a few hundred words of text, that the only thing that matters at this time is funding “next generation software infrastructure” like AI, low-code/no-code platforms, and digital transformation startups. (One can appreciate their addition of a Black figure to the infographic, despite having no such representation on its team.)

While the rest of society is protesting gross inequalities, VC’s like Madrona are issuing statements like this:

“[Our] continued active pace of investment exemplifies … our belief that downturns can be the best time to invest”.

Madrona’s investment thesis mentions nothing about the social, environmental, and political challenges facing our city, nation, and world. The firm makes no statements about trying to increase representation of its non-diverse team. It makes no commitments about removing bias from its screening process, one already known for disadvantaging women and people of color.

To release a statement like this when other top VCs are making headlines for efforts related to social equity and justice is surprising. Last month, the Bay Area’s top VC firm, Andreessen-Horowitz (a16z), was just shamed for its response of creating a donor-advised fund (DAF) that is less than 0.02% of its total assets under management. Leaving behind the fact that DAF’s are mostly tax shelters, what a16z and other venture capital investors fail to realize is that a miniscule philanthropic contribution will never make up for the inequities and environmental degradation they are fueling with their billions in assets. Despite a16z’s claims that it will be doing more to support Black, People of Color, and Women founders, just like Madrona, it leaves these from its investment thesis.

Venture capitalists that invest today will make a lot of money. It’s well known that those with investment capital recover from recessions faster and build more wealth than those without. I can’t fault venture capitalists for deploying capital; in fact, they should be deploying as much as possible to spur innovation and job creation. But while other major players in our economy, like global corporations, are increasing their investments in social and environmental responsibility programs (even Amazon is now making industry-leading contributions), the firms that are funding the future state of our economy are doing nothing to address the social inequities, and in fact, are funding even bigger divides. From individual actions to organizations steps, there is so much we can do to increase sustainbility and equity.

Even small businesses like my own — that do have investors — are taking the long-view on recovery and growth, making investments in more equitable hiring processes and programs that will ensure sustainable recovery for all of society and the planet, not just our shareholders. Certainly, these efforts add more work to our present day efforts, and they might even slow down short-term grow, however the research is quite clear that investing in diversity efforts, as well as environmental and social good, will pay dividends in the long term.

As the CEO of a startup that is growing post-investment, I’m disappointed that more investors aren’t leading the push for a more sustainable and equitable economy. What makes Madrona’s thesis especially worrisome is that it tells future innovators where to spend their time and effort, and what they should be building. Its capital is an indication of the future state of our economy, one that, if Madrona has its way, will widen inequalities, negatively impact the environment, and further erode our social institutions. Collectively, venture capitalists deployed $131 Billion last year, a number almost equal to what all the governments in the world spend on foreign aid. Imagine if even just a little of that capital was being leveraged to tackle the perils facing our society, not fueling them. We deserve better.

Mark Horoszowski is CEO at MovingWorlds, which has recently launched a new social enterprise growth program, S-GRID, to ensure recovery from COVID is sustainable and equitable.

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