VCs Promised to Help Black Founders – My Experience Shows a Different Reality

Any particular instance is not proof of racism. But I suspect VCs as an industry is biased against Black people because of its closed network nature and the lack of black founders in general for the VCs to pattern match. This should be especially acute for early stage investing when much relied on intuition and the "quality of the team".

Venture Capital started out as high-risk, high-reward high technology investments. Genentech, LSI, Teradyne, BTU International, and Apple. As Sam Altman, Thiel et al, and others have noted, VC lost its way since the late 80s and started focusing on widgets and "blitzkrieg" capital. The point of differentiation shifted from proprietary semiconductor or recombinant DNA technology to the ability to deploy large amounts of capital at scale, quickly.

What has mattered has also shifted. Uber's ride hailing solution was a revolution, of sorts, but it was an incrementalist one. The breakthrough that led to the production of synthetic insulin was a transformative one. Uber isn't a sustainable business. Genentech is still alive and kicking.

The personality types that are chosen for to create a business where the only metric of "innovation" is growth and genentech are different. In one, Steve Woz is a viable co-founder. In the other, he simply isn't, and is filtered out actively and implicitly.

There is discrimination in Venture Capital, that much is clear. But this issue makes it far worse. As it creates an ineffable bar that is vague and entirely defined in the VC's head. It is easier to answer the question if someone is a genius. Because genius is genius no matter the gender identity or race. A scientific or technological breakthrough is a breakthrough. No matter the origin. But the ability to "blitzkrieg" a business? Who knows.

When the only metric for success is rapid growth, and the only way for rapid growth to be predicted is for it to happen, it creates a murky set of rubrics and metrics where the number of bad companies by white/asian, cis-male founders who went to Stanford outnumber the number of great ones by people who don't qualify for those checkmarks.

The new system delivers sub-par returns and it is obvious that an alternative is needed. Despite great work being done by people like 1517 fund, Sam Altman's new firm, YC, Founder's Fund, Lux Capital etc, the industry isn't actively seeking out people with potential breakthroughs. It is creating artificial barriers to their success. Personally, the most significant sign that something is wrong with the ecosystem is that a potential breakthrough in phenotypic screening of pharmaceutical molecules wasn't sought out https://www.daphnia-labs.com , but the "Uber for X" by Template Stanford Founder Y will be.

It is also apparent that an alternate financing system is needed for companies that aren't technologically innovative, such as Nerissa's but aren't quite small businesses either. Companies that do fall under the "high-growth potential" label, while lacking the other qualities.

The blurring between VC, traditional PE, and small business banking have led to sub-par outcomes for all involved.

I'd add Harlem Capital there https://harlem.capital/

It seems like the author could search and replace “racism” with “sexism” and put out an otherwise similar article based on her experience having to use her husband’s LinkedIn rolodex to reach these people.

I think it’s shameful that VCs make empty promises to support black founders - but it’s also not surprising. Most of the people paying lip service to racial equity now didn’t give a shit six weeks ago before it was fashionable to do so. But empty promises are par for the course as they’ve been for decades. My experience living in Minneapolis where George Floyd was murdered is that the same people suddenly promising to fix the problem are the ones who created it.

VCs only want to make money. The author raised insufficient evidence that she was a victim of racism. If any unfair discrimination occurred it’s more likely sexism. But the simplest explanation is also the most likely: the VCs just weren’t interested in her pitch.

VCs shouldn’t be the gatekeepers to capital. The game is rigged. Who gets funding is decided by arbitrary metrics, inherent biases, and already established networks. Personally I’m planning on bootstrapping my own business and don’t plan on asking a VC for a hand.