Investors should all care about diversity

Only 3% of venture capitalists surveyed by LinkedIn rate diversity as a “top concern” and only 14% of venture capitalists rate diversity as one of their top 2 concerns, when compared to macroeconomic conditions, raising capital, hitting revenue targets, or hiring the right people.

59% of venture capitalists say that their firms do not support any diversity initiatives for founders, while an even greater 69% of founders report that their startups do not support any diversity initiatives for employees

If you are a smart investor, and you are good at seeing the future, then take a good hard look at what people are expecting in the years to come. These are two statistics to think about that came out of a recent survey done by LinkedIn.  I find these stats insane considering the overwhelming data that has shown that companies with gender diversity have better returns on investment (ROI).  That most companies and investors don’t seem to care about diversity issues is plain stupid.

Everyday we are reading about bad behavior of a new powerful man.  Each generation has a different reaction to this because older people have witnessed this for years and perhaps have become numb where as people in their 20’s are incredulous that this behavior exists.  Let’s focus on the 20 year olds.

What is unique about start-ups is that they are generally ahead of their time.  Successful start-ups are creating companies that are filling voids for the future.  Great investors get where things are going and the hope is that by betting on that company, they will see growth and engagement in a very different place three to five years down the line.  When most people begin to realize that a particular product exists, people in the start-up world have seen it years ago.  

It is mostly the youth that make up the majority of these companies workforce and many times it is the youth that start them.  This generation is not ok with bad behavior and they not only believe in equality, diversity and gender balance they don’t see the world without it .  

That says to me that VC’s should care very deeply about hiring the right mixture of people to  work in their investments.  They should be supporting diversity by making it a top priority for all the companies that they invest in including the firm they work in.  The importance of making diversity a top priority now, just like investing in start-ups, is the payoff will be 3-5 years down the line.  

So let’s make this clear of where we need to be.  Bad behavior is unacceptable and companies where powerful men sexually harass women will be taken out of the equation immediately.  Nothing will be swept under the carpet anymore.  A myriad of faces is what people who work in companies want to see including new hires.  Diverse companies will have it easier recruiting good people. Diversity is expected in our workplaces and the C-team must be gender balanced.  Those are the companies of the future because it is not just about a good idea and a tenacious founder, it is about a culture that can execute on that vision and the culture of the future is a very diverse workforce.  

These stats tell me that too many institutional investors are not doing a very good job when it comes to thinking about the future and if I were a limited partner I would not be considering those VC firms a very good investment.  

I wrote about this on LinkedIn