There’s a compelling economic opportunity when more venture capital money starts flowing to women and entrepreneurs of color, says investor and philanthropist Jean Case.
“It turns out that there’s an untold story, which is out there in venture capital land there’s extreme consolidation going on,” says Case, the CEO of The Case Foundation, which has given away $100 million to technology-driven causes and campaigns since its inception.
“When I didn’t know much about finance, the first thing advisors told me was ‘diversify.’ But when we look at venture capital today in America, it is very consolidated in terms of the places it’s going to and the populations it’s going to.”
In 2017, only 10% of venture-backed companies had a female founder, and only 1% had an African American founder. What’s more, approximately 75% of venture capital money flowed to just three states — California, New York, and Massachusetts.
“One thing we know for sure is talent is equally distributed, opportunity is not,” says Case.
Case sees a “powerful economic opportunity” if venture capital diversifies where the money goes.
There are many steps that can be taken to make these changes. One way is to spotlight women entrepreneurs and entrepreneurs of color and share their stories. Another is to begin recognizing things like implicit bias. A recent Harvard study found that some investors looking at a pitch where they knew it was from a woman asked the female founders questions that they wouldn’t ask the men.
Fostering mentorship is another key move. It’s also important to make sure that the partners in the venture capital firms include women and people of color. Presently, women and people of color make up about 9 to 10% of lead partners in the top one-hundred VC firms, according to Case.
“[Venture capitalists] are providing the jet fuel of the next economic success in America. They really are,” says Case, adding, “If we are limiting to just a few we are not taking advantage of the economic opportunity.”
She’s starting to have conversations across the country with venture capitalists.
“I’m feeling that things are starting to change. I think it’s a slow move that’s starting to take place, but it’s a conversation now,” says Case, “We need it to be in more places.”
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.