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Issues for Consideration
Key VC Public Policy Considerations
Some firms in California’s venture capital industry are participating in the NVCA’s Diversity Pledge. There are even new California based funds (Intel’s $175 million Intel Capital Diversity Fund) that have a primary goal to place investments in portfolio companies that promote diversity within California’s venture capital ecosystem, by featuring women and underrepresented minorities in founder and executive teams.
As stated previously, CalPERS and CalSTRS are some of the earliest institutional investors that have undertaken efforts to diversify internal staffing (including but not limited to fund managers), and encourage diversity on the corporate boards of their portfolio companies. Public policy may represent an additional method to increase inclusiveness for women and underrepresented minorities in California. Below are possible recommendations to help focus the discussion and inspire creative, yet practical next steps. These ideas are not intended to be adopted in total, but rather to offer suggestions about how these issues may be addressed.
Access to Networks - Women and underserved minority entrepreneurs need access to the personal and professional networks that make up the venture capital industry. Entrepreneurs in geo-graphically underserved communities need access to the industry, too. Hiring practices at venture capital firms should reflect diversity goals. With so few women and underserved minorities in analyst, associate, and partner roles at venture capital firms, it is reasonable even though unintended, that women and minority groups have had difficulty accessing venture capital. Creating career paths for women and underrepresented minority groups to venture capital investment and management should enhance parallel efforts to promote science, technology, engineering, arts and mathematics (STEAM) career pathways for those groups, too.
Institutional Investor Influence - With CalPERS and CalSTRS encouraging the use of emerging fund managers, California’s large institutional investors influence venture capital firms to pursue more diversity and inclusiveness across their investment portfolios. The University of California, Stanford University, and the Betty and Gordon Moore Endowment are examples of other institutional investors that could place diversity requirements downstream on venture capital firms before funding new rounds, or partnering in the launch of university spun out companies.
Entrepreneurial Education & Employment - Nascent programs to directly connect women and underserved minorities with work opportunities in venture capital funded companies exist in California. Examples include the Hackbright Academy, Code2040, and the Kapor Center for Social Impact. These types of programs can play a vital in expanding the number of women and minority entrepreneurs that create great new ideas, and seek venture capital funding to launch great new businesses. The Governor’s Office of Business Development (GO-Biz) has created iHubs across California, in an effort to connect entrepreneurs to capital and other resources. iHubs could also serve as a launching place to expand programs like Code2040 into more communities throughout California, pushing venture capital initiated industry efforts into the network of local and regional workforce development centers, or federally identified Promise Zones.