Yesterday, the technology news site The Information released a report on diversity in venture capital it termed the Future List, which was compiled in partnership with noted Silicon Valley investor The Social + Capital Partnership (FYI, you’re not supposed to say the “plus”) which further branded their underlying Google Spreadsheet as VC Diversity.org. (Thankfully, neither publication was called the “Minority Report”) 1)“Minority” because venture capital invests in minority stakes in its portfolio companies as distinct from majority control private equity…wait, what do you think I meant?.
Modeling the Model Minority Model
This research also somehow resisted the urge to drag in data scientists or deep data algorithms and instead relied on hand tabulated demographics for every investment professional across 71 venture funds (552 total investment professionals). As an aside, just five of the analyzed funds were based beyond the Coastal hubs of Silicon Valley, New York, Seattle and Boston speaking to an issue of diversity too often overlooked 2)Those five Flyover Land funds are the Foundry Group in Boulder, NEA in Washington DC, Greycroft and Upfront in LA and Pelion in Salt Lake City. Indeed, over 80% of the funds listed are based in Silicon Valley and San Francisco, which helps explain something of the lack of diversity.
Silicon Valley is undiverse. I don’t mean just in terms of investor and engineering jobs, but the actual, literal population. There are just 50,000 black and 120,000 Hispanic residents in San Francisco and its surrounding county (which has actually declined over the years). By comparison, black and Hispanic populations represent fully 50% of Chicago and its surrounding Cook County populations — thats 2.6 million inhabitants!
While Coastalism is inevitable when measuring the elites of venture capital (as that is where venture capital is congregated), the disappointing lack of diversity should not be. According to the Future List:
“Ninety two percent of the senior investment teams at top-tier venture capital firms are male and 78% are white. Nearly a quarter have all-white male managers. These results are way worse than the diversity breakdown at major tech companies, where 23% of leadership teams are female and 77% male.”
Is Diversity in EdTech Any Better?
We can probably assume this dismal record is consistent across a broader list of venture capital funds spanning the Rockies, Midwest, Mid-Atlantic and Southeast. But I could not help wonder if it extended to investors in edtech, a sector where the data on gender diversity is at least encouraging (see related articles on Fast Company and Forbes). EdSurge notes teaching is “a profession with over 70% women” and in a further indicator among the industry’s start-ups:
“At the ASU+GSV Summit, which draws 2,000 entrepreneurs and investors in the ed-tech industry, 29% (52 of the 179 who responded) of the companies are led or founded by a woman; 75% of them have a female on the executive team. It’s far from parity, but it’s a promising sign.”
Yet no one has surveyed the actual edtech venture investors. As I make it my job to track and connect with the 200+ institutional investors who have invested in edtech, I realized I may have the best data set available. That being said, as a white male with minimal academic or political training, I may be a bit heavy handed in my definitions of diversity. To that end, I have tried to borrow upon the aforementioned work and have focused on gender and racial (and ethnic) diversity 3)Without a detailed survey, I can not consider diversity in terms of sexual orientation, gender identity or socio-economic background. I also do not have the data to consider under-represented Southeast Asians nor even differentiate Latinos from Latin Americans. .
While judgement calls abound in the creation of subjective lists like EdTech Investors (here’s my past post on the “Most Active”), I ultimately focused on venture-oriented institutional investors with a primary, stated focus on for-profit education start-ups and have either a) multiple limited partners or b) tens of millions of dollars available to invest. This leads to a database of over 50 investment professionals 4)I included several hybrid impact oriented family office / foundation investors like Emerson Collective, Kapor Capital, MSDF, and Zuckerberg Education Ventures, however, I did not include Charter School Growth Fund or New Schools Growth Fund. I also did not include corporate venture outsourcing firms like Atrium (Follett Knowledge Fund) or Touchdown (Apollo Ventures)..
Populating my own Google Spreadsheet (contact me with suggestions), I found 75% of the investment professionals focused on edtech were male and 25% female, which is indeed better than the gender diversity at Silicon Valley’s elite funds. In fact, women make up a slightly lower percentage of the edtech investment professionals based in Silicon Valley as compared to the rest of the country (and a lot less if not for Reach Capital!). EdTech investors are fairly well geographically distributed, with just 42% clustered in Silicon Valley, 21% in New York, 15% in DC-Baltimore, and 10% in Chicago. They are also fairly young with an average age of 41.8 (and that includes just 3 junior professionals).
However, across the country, racial diversity in edtech investing does not offer quite as much promise: as with the Silicon Valley elite funds, whites and Asians are well over-represented, with 74% of edtech investors white and 20% Asian and Indian (with a further “ethnic” breakdown of 12% East Asian and 8% Indian). At the same time, just 6% are black and it would appear none are Hispanic (one partner from Reach Capital appears to hail from Latin America).
Of course, with just 50-something edtech investors, this is not the most robust data set and is highly susceptible to the smallest of moves in hiring or investment theses. For example, no less than three edtech venture funds hired female Asian associates this past year — removing two of those funds from the ranks of 100% White Male 5)Now, if Vistria Group were to follow University Ventures and Sterling Partners into earlier stage edtech investing, that would double the number of black venture investors in edtech. Though with the number of all white male funds in private equity, even in education, their unique perspective is all the more needed in later stage investing.. Moreover, Reach Capital single-handedly improves the picture of diversity across all of edtech venture capital, which speaks to the value of institutions like New Schools Venture Fund in seeding the market for education innovation, including future investors, and maintaining its Diversity Principles all the while.
Over-representation of white and Asian investors within edtech (and broader Silicon Valley) venture capital comes at the expense of black and Hispanic perspectives so important to this nation’s educational problems and opportunities. Moreover, any such work as that from Chamath Palihapitiya (@chamath) or presented here needs to ultimately disaggregate the data to undercut the model minority model: visible diversity within certain minority populations obscures the raw data proving fundamental issues of access. The same diversity found within our classrooms and school and district offices is clearly lacking across our investor’s offices. For education technology to truly close the achievement gap in our nation’s schools, our investment decisions need to reflect the same diverse voices as in their everyday use.
I hope that this quick analysis at the very least continues the conversation.
References [ + ]
|1.||↑||“Minority” because venture capital invests in minority stakes in its portfolio companies as distinct from majority control private equity…wait, what do you think I meant?|
|2.||↑||Those five Flyover Land funds are the Foundry Group in Boulder, NEA in Washington DC, Greycroft and Upfront in LA and Pelion in Salt Lake City|
|3.||↑||Without a detailed survey, I can not consider diversity in terms of sexual orientation, gender identity or socio-economic background. I also do not have the data to consider under-represented Southeast Asians nor even differentiate Latinos from Latin Americans.|
|4.||↑||I included several hybrid impact oriented family office / foundation investors like Emerson Collective, Kapor Capital, MSDF, and Zuckerberg Education Ventures, however, I did not include Charter School Growth Fund or New Schools Growth Fund. I also did not include corporate venture outsourcing firms like Atrium (Follett Knowledge Fund) or Touchdown (Apollo Ventures).|
|5.||↑||Now, if Vistria Group were to follow University Ventures and Sterling Partners into earlier stage edtech investing, that would double the number of black venture investors in edtech. Though with the number of all white male funds in private equity, even in education, their unique perspective is all the more needed in later stage investing.|