Editor’s note: As Black Business Month comes to a close, WRAL TechWire takes an in-depth look at the rise of “Black angels” who are looking to close the gap in funding for minority owned businesses. This is the third of three parts.
RALEIGH – An “awakening” is taking place across venture capital (VC) and private equity (PE) firms, says Kurt Merriweather, The Diversity Movement’s head of product and partnerships.
In the wake of global racial protests and the Black Lives Movement, he says leaders are motivated like never before to help underrepresented founders and emerging companies gain access to capital.
With less than 1 percent of venture capital going to African American entrepreneurs, however, it’s clear much work needs to be done.
Founded in 2019, The Diversity Movement offers diversity training to organizations seeking to level the playing field.
Merriweather, with The Diversity Movement’s cofounder Donald Thompson, recently co-authored a whitepaper titled “Transforming VC and Private Equity through Diversity, Equity and Inclusion.” They interviewed nine leaders from venture capital, private equity, startup accelerators, and startups to gain their insights into why and how the industry is changing.
The goal: to deliver “triple bottom-line” benefits to people, planet and profit.
Based on the report and the subsequent “roadmap” based on those strategies, he offers a few tips that should help in making changes to the Triangle’s ecosystem. Here they are:
- Be intentional as an early stage investor to cast wide net and to talk to as many founders as possible. This includes being proactive by reaching into communities that may be traditionally overlooked and building more expansive and diverse networks, even if they begin with just one or two people. This will require going outside of one’s comfort zone and building relationships with founders who are affiliated with institutions like Historically Black Colleges and Universities (HBCUs) or associations like Society of Hispanic Professional Engineers (SHPE).
- Guard against unconscious bias, especially when thinking of Black-owned and Latinx-owned businesses. In many instances, investors may perceive businesses that are created by Black and Brown founders as lifestyle businesses rather than emerging enterprises that have the potential for explosive growth. This perception limits the perceived value of building networks with underrepresented founders.
- VC and PE firms should look to build more diverse intern and associate pools, ensuring that these individuals have equitable opportunities to gain experience, build expertise, and advance into more senior leadership roles. For example, HBCU.vc has created an internship program designed to give underrepresented students access to opportunities to learn the fundamentals of investing and entrepreneurship as well as hands-on experience working alongside a group of investors in a venture capital firm.
To access the full whitepaper, go here.