Real change doesn’t happen overnight

What’s so unique about #Fundright and why is it here to stay?

“It’s interesting because this month there was a special issue of Harvard Business Review all about diversity and what programs and policies work and don’t work. As I dove into it this weekend, one common theme that stood out is that you cannot impose diversity or inclusion top down.

Especially when it comes to VC firms, they want to have a strong say in who they will or will not invest in. So I think having a self imposed quota and self-driven initiative in this context is powerful. Generally speaking, it’s very difficult to try and make this change happen at all but I think this is one of the best means to get there,” Eva said.

While, the beauty of the #Fundight movement is that it’s created and led by VCs, the drawback, of course, is that participation is on a voluntary basis. But as Eva says,

“We could spend a lot of time trying to convert investors, but I think we’re much better off focusing on those who are committed to change. Later others will follow.

It’s important to remember that #Fundright is a movement, it’s not something that succeeds or fails in one year. Changing diversity in this industry is not something that happens overnight. The industry has been homogeneous for over 50 years. It’s something really big that we want to change so we have to be confident and patient. But with the right attitude, we’ll get there.”

Quotas have been controversial in the past. Do you think they’re necessary to create real change?

“Yes, unfortunately, if you look back to the research over the last 30 years, you’ll see that almost nothing has changed. If we look at diverse hiring and investing, the numbers just haven’t increased. Especially because this is a self imposed quota, I believe there’s a better chance of getting to the numbers we need.”

Tips for VC firms to attract high potential and diverse startups

As Eva said, “Diverse teams and female founders do not just ring your doorbell. You have to look for them proactively. The same goes for potentially successful male entrepreneurs. You have to put in that extra mile.”

Her first tip is to start by looking at your communication channels. “You need to be aware of how you present yourself and your firm. Consider the language you’re using on your website, the pictures you’re displaying, etc. There are many online tools you can use to see what kind of subliminal messages you could be sending.”

Check out our VC guide on addressing unconscious bias in your organization for more info about helpful tools and resources.

Beyond your firm’s communication channels, Eva suggests you take a proactive approach to scouting out new talent.

“Organize inclusive events. List your firm on different network websites for female founders. Speak at an event about your firms’ commitment to inclusion or participate in an interview. There are a lot of seemingly small things you can do that can eventually build up to becoming a more inclusive VC firm.”

Diversifying your team

Don’t forget that one of the keys to creating a more diverse startup ecosystem is hiring more diverse VC teams.

“We posted a job opening a few weeks ago and received over 600 applications. This time we used an assessment program called Test Gorilla with different tests including things like business reasoning, cultural fit, etc. to evaluate the candidates. We didn’t even look at the resumes and we ended up with a long list of 30 candidates that was super diverse in terms of both gender and nationality. We were really happy to see that.

This proves that, if you just take a few simple steps to go beyond your network, you can build a much more diverse pool of candidates.”

How can we remove bias from our startup selection process?

“We’re naturally attracted to people who remind us of ourselves or people in our social circle. I recently read a study that found male VCs with daughters are more likely to invest in women. In fact, the likelihood of investment in a female led team increased with the number of daughters they had.

There’s so much bias that goes into the selection process. and that goes for both male and female investors. I think introducing a checklist or a team assessment that looks at diversity in complementary skills, knowledge, etc. can help.”

At Capital T, they created an evaluation tool based on Eva’s research. Each time they evaluate a startup, they have all founding team members take an assessment so they can dig down deep to see if they have what it takes. And just what is it that they're looking for?

What makes a successful startup team

While you may be tempted to believe that prior experience will spell startup success, Eva’s research found that teams with high levels of experience but average to low levels of passion and shared strategic vision were outperformed by teams with average levels of prior experience and high levels of passion and collective vision.

But one important caveat to remember is that diversity isn’t always a good thing...

While passion is important, diversity in passion can lead to a lack of alignment and ruptures in decision-making. Research conducted by Eva, Melissa Cardon and Svetlana N. Khapova found that diversity in passion amongst entrepreneurial teams, including how passionate different team members are about the venture and what they’re passionate about, can lead to negative consequences for performance.

Read more about her research here and here.