LinkedIn Tech Report Reveals Investors, Founders Care Least About Diversity
Here is why diversity in tech will never get better despite all the talk, media reports and conferences about inclusion and bridging the investment and employment gap: investors and founders don’t give a flying fudge about it!
In fact, my take away from a new LinkedIn report is that they are hostile to the concept of diversity and resent being forced to even make it a priority.
We know the numbers.
Female founders received just 7% of the $60 billion in venture capital deployed last year while Black male founders received 2%, and Black Female Founders less than 1%.
Still, a very tiny percentage of venture capitalists are concerned about the absence of diversity in their portfolio companies.
Less than 5% of investors LinkedIn surveyed rated diversity as a “top concern” when considering startups to back compared to other concerns like macroeconomic conditions, raising capital, hitting revenue targets, or hiring the right people.
In fact, they didn’t care if the founder had a commitment to a diverse team because over half surveyed ranked it as the least of their concerns when considering whether to invest with a founder.
You cannot correct a diversity deficit in funding when the ones lending the money don’t prioritize it, can you?
Several respondents told LinkedIn that they hire the most qualified candidates, regardless of gender and race.
That response is quite telling. It is the classic resistant and knee jerk response to any slight mention of diversity.
There is subconscious hostility there as if diversity is the problem.
It also reveals an unawareness of how unconscious bias actually gives those who “look” the part of a typical tech founder an unfair advantage whether they are qualified or not.
It shows an unwillingness to acknowledge that other unspoken factors such as deeply entrenched personal positive and negative perceptions are at play as well.
Others outright said they believe hiring with diversity in mind creates unfair preferential treatment to certain candidates.
This response shows that they feel it is problematic to be forced to acknowledge the value that women and people of color may bring something to the table.
So it comes at no surprise that those who control the money look like those who they’re funding: 98% of VCs on senior investing teams are white or Asian males.
There is data that shows that diversity leads to better results and helps companies make more money.
LinkedIn’s data is based on over 600 responses from startup investors and founders from across industries who self-identified their gender and race to share their experiences and opinions on the shortage of diversity in venture capital and startups.
As LinkedIn summarized:
What the numbers showed is stark: a world of difference between how women, minorities and white men see their situation and how VCs see themselves; a massive gap between attitudes toward diversity and prioritizing any action; and a massive barrier of entry to the venture capital world for both female and non-white founders.
And because diversity is not a concern, investors are making zero effort to help balance out the ratio a bit.
About 75% of investors said that their firms are not supporting any initiatives to increase diversity among founders in their portfolio.
Founders are also uninterested.
Nearly 80% of founders reported that their startups are also not supporting initiatives to increase diversity among employees
I find it laughable that despite the fact they rank diversity at the bottom of their concerns and state they are not making any effort towards inclusion, the investors and founders surveyed somehow believe that in 5 to 10 years, their teams will be diverse.
Huh!? How sway!?
Respondents say they have plans to diversify eventually.
Investors surveyed estimated that within five years, 31% of their portfolio will be composed of female-founded companies and that 34% of their portfolio will consist of companies who are founded by racially diverse teams. Startup founders projected they will hire roughly 50% female, 50% racially diverse talent in the future.
That will happen. I won’t hold my breathe.
To be fair, the numbers may point toward an upward trajectory for women at least.
Another recent LinkedIn analysis discovered that 27.8% of new hires in the venture capital and private equity industry were female, a 15.3% hiring change from 2008.
LinkedIn asked tech leaders like Project Include’s Ellen Pao and Homebrew’s Hunter Walk to help explain the numbers and provide possible solutions.
Read about it in the final report here.