At a time when the U.S. has been thrust anew into conversations about racial inequality, many Black venture capitalists say they are grappling with their role and responsibilities in a high-stakes industry that generates extraordinary wealth for a select few and helps determine which tech businesses succeed.
Interviews with Black VCs illuminate the difficulty of making a difference in a tech industry that often refuses to acknowledge the problem; the frustrations of seeking to be recognized for their work irrespective of race; and the internal conflict many face over whether they’re doing enough to create opportunities for others like themselves.
The U.S. population is 13% Black, and just 4% of the VC industry is African-American, according to 2018 data from the National Venture Capital Association—compared with 3% two years earlier. NVCA estimates that 3% of the influential general partners, who lead investments, are African-American. Even when these VCs successfully boost the founders from other underrepresented groups in their portfolio, structural forces keep funding for Black entrepreneurs stubbornly low.
Tyson Clark at Alphabet Inc.’s GV, one of the most prominent Black VCs in Silicon Valley, wondered whether he was failing to push his colleagues to support more Black startups because they didn’t fit neatly into the archetype of a successful investment. He has backed two Black founders out of his 11 investments in the past five years, but said he must do better to make a difference. Reflecting on his role in Silicon Valley caused intense soul-searching in the past two months.
“Have I been so complicit that I’ve traded success for not making a difference?” Clark pondered. “Humbly, there are a group of people in my position who want to do something, but feel like we don’t have enough power yet to be influential on this topic. It’s painful for all of us to feel this helplessness.”
Clark thought he had been doing the right thing. He attended tech events hosted by his Black fraternity and judged pitches from budding entrepreneurs. He toured Southern states with other VCs to visit historically Black colleges and build new connections. He invested outside of the San Francisco Bay Area, in places where the startup scene is more ethnically diverse.
But those steps can’t demolish structural forces standing in the way of Black entrepreneurs -- reduced access to capital relative to White counterparts, fewer network connections in the tech industry because of the schools they attended and jobs they previously held. Racism in this setting is particularly insidious, Clark said, because it’s invisible to perpetrators and bystanders.
Even though some of his colleagues funded startups created by African-Americans, Clark said it took him years to feel comfortable in his job and he didn’t have the confidence to try to persuade his partners to invest in some companies led by Black founders, for fear they may have considered them too risky.
“I thought I was too junior to bring on something that didn’t fit the pattern recognition,” he said, meaning an investment that didn’t look like previous bets. “I knew what was the easy sell and what wasn’t.”
Sydney Sykes, a former VC at New Enterprise Associates, said she remembers the pernicious way race seemed to get in the way of otherwise good deals during her short, once-promising career in venture capital, and how no one acknowledged it.
When Sykes introduced talented Black entrepreneurs to her White colleagues at NEA and in her time as an angel investor since, she said she’d feel the “chemistry in the room” sour. The White investors always used the same reason for turning down the startup: they “just couldn’t get excited.”
“You’re always left wondering if that person didn’t get another meeting because they were Black,” she said. Sykes, who left the industry in 2018, co-founded BLCK VC, a nonprofit advocacy group pushing firms to double the number of Black investors to 400 individuals by 2024.
Sykes and other VCs say Black-led startups don’t gain backing because, in general, they haven’t achieved category-defining successes and are viewed as too much of a risk. These types of companies are less likely to have a family-and-friends round when starting a business, which totals about $150,000 on average, and often can’t break through without funding from VCs.