Investing in a More Inclusive Innovation Economy
Since the beginning of modern venture capital investing — a relatively nascent asset class — the industry has been biased toward funding what it knows best: founders with familiar demographics (white, male) in familiar geographies (Silicon Valley). Despite the recognition of bias and calls for change, systemic inequities unfortunately persist. Case in point: only 1% of 2022 VC dollars went to Black founders, a marked decrease year over year. And while many venture capitalists rely on pattern recognition as a tried and true investment tactic that can and has delivered returns, it is also a model that perpetuates a history of opportunity gatekeeping.
On the heels of 2020’s Black Lives Matter protests, we recognized our role in leveraging the Rise of the Rest platform we built to be more explicit about leveling the playing field — not just in terms of place, but also in terms of people. As COVID kept us off the road, we launched a Rise of the Rest Equity Tour in partnership with Morgan Stanley’s Multicultural Innovation Lab, Opportunity Hub, and 100 Black Angels & Allies. We sourced and received applications from hundreds of Black, high-growth startup founders from all over the country and held workshops and discussions about the challenges they face, all of which culminated in a virtual pitch competition. In the end, we selected three winners and, to initiate more widespread change, we partnered with more than 100 venture firms nationwide who agreed to senior-level meetings with the entrepreneurs. Ultimately, we were so impressed by the finalists’ pitches that Rise of the Rest invested in six of the companies.
All three winners of the pitch competition, Kanarys, Rheaply, and Zirtue, have gone on to scale their businesses and raise additional rounds in which we participated and even led, proving to be needle movers in their industries and our portfolio.
- Kanarys has helped hundreds of employers improve workplace inclusion and equity with holistic, data-driven DEI assessments, benchmarking, and solutions.
- Rheaply has diverted tens of thousands of lbs of waste from landfills by enabling organizations of all stripes to create sharing economies through its technology solutions.
- Zirtue has driven financial inclusion by empowering thousands of people to lend and borrow with those they trust through its relationship-based lending app.
One event held by a few investors focused on Black founders is clearly not enough. Rather, this update is an acknowledgment that funding diverse founders across the country isn’t just the right thing to do; it’s the smart thing to do — in terms of spurring game-changing innovation and financial returns.
We hope Black History Month and the months, years, and decades that follow prove to be more equitable for entrepreneurs everywhere.
