Sarah Millar, US Director of Diversity VC and Principal at City Light Capital, joined us for a recent episode of Startup Success. We discussed the ways Diversity VC helps venture capital firms embrace and implement DEI policies for a more equitable future.
“If we can make venture capitalists reflect society, then we can make the people who get funded reflect society as well.”
— Sarah Millar
On the show, Sarah covered:
- The Diversity VC Standard – A DEI Action Plan and Certification for VC Funds
- The Future VC Program – An Internship Program for Portfolio Companies
- A Diversity Resource Library & Research on Current Diversity Funding
What is Diversity VC?
Diversity VC began as a research project in 2017 to study the representation of women and people of color in the venture capital ecosystem throughout the UK.
The organizers quickly realized that examining representation wasn’t enough; action was needed. This realization spurred today’s Diversity VC, an international non-profit organization promoting diversity in Venture Capital with a team of fifty volunteers throughout Europe, Canada, and the United States.
“We started this organization on the back of a research project and realized that the research wasn’t enough, and we actually had to take action.”
— Sarah Millar
The Diversity VC Standard
When Diversity VC surveyed funds on their diversity policies and practices, they found mixed results. Some funds had some DEI policies, but more funds only had them in theory or didn’t have any in place at all. The organization realized VCs needed tools and guidance to implement DEI policies.
“The Diversity VC Standard was launched on 9th September 2020 pioneered by 15 leading funds across Europe and Canada to provide VCs with the tools and recommended practices they need to open their networks and make funding available to underrepresented founders, as well as the resources needed to cultivate an environment where founders and colleagues from all backgrounds feel they belong in the industry and the ecosystem.”
— Diversity VC
The Diversity VC Standard was introduced to provide funds with a real road map to implement and benchmark DEI policies. It gives a firm confidence that they’re moving forward and not just paying lip service to DEI.
The Diversity VC Standard Includes 3 Stages:
A guided run-through of a fund’s current policies and practices
Curated advice and recommendations on next steps according to fund targets
To Level 1 (setting a benchmark above industry average) or Level 2 (leading the way on changes to D&I policy)
“The Diversity VC Standard is an assessment and certification process that sets a benchmark for best practice on Diversity and Inclusion (D&I) in VC and sends a signal that a fund follows best D&I practices to the rest of the ecosystem.”
— Diversity VC
How to Earn a Certification from Diversity VC
Most venture capital funds have similar DEI goals, but DEI isn’t a one-size-fits-all solution. The Diversity VC standard is designed to adapt to different funds while remaining supported by the same four core pillars.
Diversity VC certification is an audit of:
- Funds, policies, and practices when it comes to recruiting
- HR practices
- Deal flow practices
- Portfolio management
Diversity VC asks: “How are you incorporating DEI in each of these areas?”
To be certified DEI-compliant, a fund must have at least one forward-thinking policy or practice in each of the four areas outlined above. More than sixty funds have already completed the Diversity VC standard, providing new VCs with a valuable benchmark to see how far ahead or behind their firm might be.
VCs subscribe to an annual plan which offers evaluation and support as needed throughout the year. It is not a one-time assessment that leaves firms on their own to figure things out afterward. Take maternity leave, for example. A firm may not have a maternity leave policy, not because they’re against it, but simply because the situation has never arisen before. They don’t know where to start. With a Diversity VC subscription, the firm can reach out to learn what other funds are doing, receive example policy templates, and get help figuring out the best solution. Diversity VC’s approach to compliance isn’t prescriptive. It’s about helping funds with implementation and making sure the solution works for them.
Future VC Program
What about future talent? How do you ensure you’re making an effort to develop a diverse team at your VC firm?
This is where the Future VC Program comes in.
The Future VC program came from firms asking Diversity VC questions like, “We really want to hire more diverse talent, but we just don’t know where to find it. How do we go about finding diverse talent?”
The issue isn’t the pipeline. The talent is out there. The challenge is connecting firms to talent, and the Future VC program does just that. Diversity VC has partnered with a variety of student and young professional organizations to build a large and diverse candidate pool for VC funds. Funds do not see any identifying information before thoroughly evaluating a candidate, supporting an unbiased and diverse selection of interns.
“We’re firm believers that the pipeline is not the issue; the diverse talent is there. It’s making that connection that’s very difficult.”
— Sarah Millar
Diversity VC also places interns into location-based cohorts with classes and networking events. The classes provide a comprehensive crash course in venture capital. Diversity VC recognizes that most funds won’t have time to handhold interns through financial modeling, sourcing, due diligence, professional networking, and all the hard and soft skills necessary to work at a venture fund. The organization has developed a robust curriculum to teach these topics, featuring expert VC instructors.
DEI Resource Library & Future Research
In addition to the Future VC program and the Diversity Standard, Diversity VC continually incorporates new research and resources into their program. A library of DEI resources for venture capital firms is in the works and will launch soon. This library will be a continuously updated resource of additional information and help for firms. Diversity VC is also undertaking a new research project to understand the results of recent investments in diverse founders.
Listen to the full interview with Sarah to learn more about Diversity VC’s programs and research.
“Venture Capital is funding the future. The decisions made by VCs filter through to the whole community and we have a responsibility to ensure the right decisions are being made. We need the industry to be free from bias.”
— Diversity VC