By Jules Miller
Originally posted here on LinkedIn on July 7, 2015
Wow, the last two weeks were a wild ride for the venture capital industry. There were public accusations on the record, lots of shocking shakeups, and a seemingly never ending series of blog posts on Medium. New information continues to pour out at a blistering pace, and many are now left with their head spinning.
One thing is abundantly clear: this is a pivotal moment in time for Silicon Valley and startup/investor communities around the world.
Rather than focus on what happened or why, I’d like to focus on what we can do about it. Specifically what I can and will do about it as an investor, entrepreneur and member of the global startup community.
While it’s extremely important to to speak up against injustice and hold people accountable, and I am in awe of the brave souls who have done and continue to do this, I choose to focus on the future. Many of the best entrepreneurs have a bias toward action, and JFDI is my own personal and professional mantra. So as a small step forward in the healing process I am making the public statements below, and holding myself accountable, on what I will personally do to be the change I wish to see in the world.
What the F Just Happened?
For those who haven’t been following, a quick synopsis to get you up to speed:
Just a week and a half ago, The Information posted an explosive story with 6 women - 3 on the record - accusing Binary Capital Managing Partner Justin Caldbeck of sexual misconduct. People had a lot to say about this (here, here, here, here, here, here, hereand many more). A lawsuit was filed by a former employee claiming that she resigned due to the sexist culture and that the Binary partners actively threatened her ability to find new work. Also, while Caldbeck was an Associate at Lightspeed Ventures, Stitch Fix founder Katrina Lake accused him of sexual harassment. Lightspeed’s reaction was to require her to sign a non-disparagement agreement in order to prevent them from sabotaging her next round of funding...a deal that Lightspeed wasn’t even participating in. Thankfully, Binary’s LPs took swift action and voted to dissolve the fund early last week - within just 5 days of the story breaking.
To me, the most disturbing thing was a demonstrated pattern of (alleged) behavior specifically focused on Asian women over the course of 10+ years. This seemed to be an “open secret” known but overlooked by employers, LPs and other VCs.
People seemed to be waiting to see whether this incident would be quickly forgotten as a slight blemish on the VC industry with the continuation of business/bias as usual, or whether it would herald in a real, and desperately needed, change in culture.
Then The New York Times article came out on Friday with several more women naming multiple investors, including high profile folks like Chris Sacca - who cast a pre-emptive strike acknowledging his bad behavior and suggesting ways to make up for it - and Dave McClure - who resigned as GP of 500 startups due to being “a creep,” with more than a dozen allegations of sexual misconduct mostly directed at women of color. There were some truly awful apologists, and a reminder that the degree of harassment matters, with disturbing details.
It’s still early days, but I am hopeful that this moment in time has created momentum that will usher in dramatic, lasting, positive change. We are now in a post-Binary world.
My Personal Experience
For anyone who’s been working in the tech or venture world, this behavior was not a shock. It’s not just Caldbeck or the other investors named recently - unequal treatment of women and people of color is a pervasive problem in the venture capital industry. I’ve been hearing these types of stories and seeing them first hand for the past 13+ years. Most people in the tech industry know it’s a problem and talk openly in private groups but, until now, few have been brave enough to talk about it publicly for fear of it destroying their career, their company, and their ability to ever raise capital.
As a former founder who raised money for my prior company, I have personally experienced two specific incidents of sexual misconduct during the fundraising process, in addition to hundreds of small, daily examples of being treated differently than male founders in a way that I believe was detrimental to successful fundraising. These "million paper cuts" - highlighted often by the brilliant Yin Lin and Lisa Wang at SheWorx - are often worse than the overt examples of harassment and stem from a culture that is not willing to reprimand this behavior. I would often joke that “one day I’ll write a book, but right now I just need to focus on closing this round and building the business.”
I knew that calling out the inappropriate behavior would have been the right thing to do, but there was always a fear of retribution, of getting blacklisted, and of not raising the capital my company needed to grow. So I overlooked it. When you put everything you have – your time, your money, your career capital – into a business, you’re willing to deal with a lot of pain to make it successful. The uncomfortable comments, propositions, discounting of ambition, etc. are just a few of the many painful things women entrepreneurs deal with when building a business. However, I was always very aware that the overt and subtle acts of sexism on a near-daily basis were things that my male counterparts did not have to deal with.
There is solid research that investors treat women founders differently, ask them different questions, talk about them differently, and are impacted by physical appearance. This directly leads to fewer investment dollars going into female founded companies and dissuades many women entrepreneurs from seeking venture capital. It is important to note that this is not just male VCs - women VCs engage in the same damaging behavior (though usually with fewer overt sexual advances). There is also a wealth of data (here, here, here) showing that women-led companies are, in fact, a smarter investment. There is a clear gap in the market.
What I Will Do About It
This type of behavior and the culture that supports it is a big part of why I joined LunaCap Ventures, a NYC-based fund that provides both venture debt and equity financing to early stage companies with women, people of color (POC), and military veteran founders. We also proudly have a team that represents the diversity in which we invest. I’ve dedicated my career to solving the problem highlighted in the news of the past two weeks, not because I think this behavior is atrocious and needs to stop (I do), but because I’ve seen first hand that there is an enormous opportunity to fund exceptional founders who are not receiving funding. These investments offer tremendous potential upside to investors.
“A little less conversation, a little more action please.” -Elvis Presley
The 9 actions I will personally take:
1. Invest in Women:
I will use my privileged role as a professional investor to provide capital to as many amazing women founders as I can within the current structure, thesis, and return thresholds of LunaCap Ventures. I will also invest in women-founded companies as an angel investor in companies outside of the LunaCap thesis.
2. Make More Women Founders Massively Successful:
I will actively help the amazing women founders in my portfolio to grow their businesses by rolling up my sleeves to help them with whatever needs to be done to make them massively successful. This includes actively helping them to raise follow on funding, ideally from funds who hold the same commitment to decency and diversity. I believe that the best way to convince VCs to invest in women is to show them the money to be made. More massively successful women entrepreneurs will also create more women angel investors, VCs and serial entrepreneurs.
3. Remove Barriers:
Many founders who come from diverse backgrounds simply don’t have the same access to investors as the archetypal “Stanford CS bro.” There is generally a requirement to get a warm introduction from someone a VC knows, and generally an extremely high quality senior contact, or the investor will not take a meeting. I believe that this puts diverse founders at a disadvantage since their networks of investors and successful entreprepreneurs may not (yet) be very strong. As a result, I will no longer require a warm introduction to seriously consider an investment opportunity.
4. Create a Whitelist:
A blacklist - such as the one created by Y Combinator - can be helpful to know who the bad actors are, but I think a whitelist of good actors is even more helpful. I will publish a public list of venture capital funds I’m aware of that have a woman General Partner. This can serve as a resource for LPs to know who to invest in, for entrepreneurs to know who to raise money from (why should we be making money for ass holes?), and for other VCs to know who to partner with on deals and/or try to recruit to their own teams.
5. Be Transparent & Report Publicly:
I will report publicly on a variety of diversity metrics for our portfolio at LunaCap Ventures, going beyond simply tracking founder diversity but also a broader list of metrics and “softer” self assessments. This isn’t an exact science and I will learn how to do this better with practice, but I will start.
6. Create Standard Metrics:
I will help to create a standardized framework for VCs to report on portfolio diversity. It’s early days, but the initial work is already starting on this thanks to the self-organized “Inclusion Crew” of nearly 60 investors from the Kauffman Fellows program, where I’ve recently joined the newest class. This group authentically and passionately cares about being part of the solution and is tackling a variety of initiatives supporting diversity and inclusion (add your suggestions here).
7. Provide Support:
I will actively listen to founders who have experienced some form of bias or harassment during fundraising, or in the general course of building a business, and do whatever I can to help.
8. Engage in Dialogue:
I will engage in dialogue with people who do not believe sexism in tech/VC is a problem, normalize it, or acknowledge that they may be part of the problem but don’t know how to change it. I’ve already had several private conversations and welcome more.
9. Stay Woke:
Even when the media attention to this topic dies down, I will continue to make diversity and inclusion in tech and VC a priority.
This is what I’m doing. For entrepreneurs, VCs, LPs, and anyone in the startup community, I encourage you to think about what you can do, commit to do it, say it publicly, and JFDI.