VC Guide to address unconscious bias

With so many startups dependent on VC funding to grow, survive and thrive, we VCs have a major influence on what the Dutch Startup ecosystem looks like now and in the future. That’s why having this conversation with your team is essential. However, it can be a sensitive topic, so doing it in a safe environment is important.

In this guide we’ll provide insights and links to resources that will help you address unconscious bias in your firm in a way that’s open, honest and inclusive.

Everyone is biased

Sometimes there’s a tendency to think, “We’re not a sexist/racist/prejudiced/homophobic organization, if someone has the skills needed to get hired or get that promotion, they will.” But when you look at the numbers, it becomes clear that there’s something wrong.

Being biased doesn’t mean someone is sexist or racist. Because, the truth is, from a neurological standpoint everyone is geared towards bias.

Every moment our brains take in 11 million pieces of information. But we can actually only process 40 pieces at a time. That’s why we rely on shortcuts based on past experiences to help us quickly register and understand our surroundings. This can help us in some cases, like when we’re about to get something from the oven and quickly think ‘hot’ or if you see a bear and think ‘danger’.

But it can also lead us to make mistakes and close our mind to things we haven’t experienced. For example, in the riddle above, because we’ve traditionally seen more male than female doctors portrayed on TV, in literature and in our own lives, when we think of the word ‘doctor’ our brain automatically tends to conjure an image of a man in a lab coat.

This can cloud our expectations.

A few common types of bias

As we mentioned, ‘unconscious’ bias means that we’re not even aware when we make biased decisions. So how does this work in practice? Here are just a few common types of bias to put it all into context:

Similarity bias

Whether it’s someone who reminds us of ourselves when we were younger or someone who went to the same university, we’re naturally inclined to prefer people who are similar to us. Yes, it’s important that we get along with the people we hire or the founders we work with but, being surrounded by similar people limits the amount of fresh ideas being generated and can ingrain certain ways of thinking.

Halo effect

Often working hand in hand with similarity bias, the halo effect occurs when we have an overly positive view of a candidate, clouding our ability to see potential drawbacks. This often happens when we have a ‘hunch’ about someone. Their startup may not have as much potential on paper as another startup you’re reviewing, but there’s something about the founder that you really like but you just can’t put your finger on it…

Confirmation bias

Sometimes we think we’re going into an interview or listening to a pitch with an open mind, but, no matter what, we will always have some preconceived notions about a candidate beforehand. Confirmation bias happens when we look for signals that confirm the preconception we had already formed in our mind.

For example, a team of researchers at TechCrunch Disrupt NYC found that male-led startups raised five times more funding than female-led startups. When they dug deeper, the team realized that VCs were asking male founders more questions about their potential for revenue gains and female founders more questions about the potential for losses. This created what the researchers termed a promotion orientation towards men and a preventionary orientation towards women.

Remember that diversity and inclusion are two very different things. Everyone may be in the room but who actually gets a seat at the table?

The same goes for investing.

Even if you have a number of diverse startups in your portfolio, is the amount of funding given to diverse vs non-diverse startups equal? Are you providing the same amount of business opportunities, connections and exposure to all your startups?

Actions you can take

Have the conversation with your team

The first and most important step is to have an open, honest conversation with your team about unconscious bias and how it can impact diversity and inclusion in your firm.

But, keep in mind, this can be a highly sensitive topic. If not framed in the right way, you could get a range of different reactions from indifference to defensiveness.

To avoid this, you need to create a safe environment in which people know they’re not on trial and won’t be accused of being sexist or prejudiced. Bias is inherent in everyone and can prevent us from reaching our goals. The question is, what can we as an organization do to overcome it?

Check out this great talk about unconscious bias from Google’s Director of People Analytics: Unconscious Bias @ Work | Google Ventures (2014)

If you don’t feel prepared to lead this discussion yourself, consider inviting a professional speaker.

Institutionalize Diversity & Inclusion

It’s not just about a one-off discussion. According to a study by inclusion platform Crescendo, 79% of diversity and inclusion staff said their D&I program didn’t work because it wasn’t integrated into employees’ day to day.

Now that you’ve joined the #Fundright Movement, why not integrate your diversity targets into your team’s KPIs? This will send a clear signal that your commitment to bringing greater diversity and inclusion isn’t just a nice to have, it’s a bottom line priority.

Finally, keep the dialogue going. Create an environment in which people feel safe speaking up when they experience bias in the workplace. Employees and new hires need to know that they won’t receive backlash when voicing their experiences. These resources can help you:

Platform: Why do diversity and inclusion programs fail?

Article: How to Speak Up If You See Bias at Work (HBR, 2017)

Attract more diverse candidates

Rethink the messages you’re sending on your website and through your job ads. Whether we realize it or not, studies show that the language we use can either attract or discourage potential candidates from even applying. The same goes for the images we’re using.

Check out these tools that can help you remove biased language from your website and recruitment materials:

Textio

Gender Decoder

Along with inclusive language and images, don’t forget to remove any physical barriers that may prevent candidates with disabilities from pitching or applying for a job at your firm. Read more about how to create an inclusive work environment for people with disabilities here:

Article: Disability inclusion in the workplace: removing the barriers to finding top talent

Use structured/standard processes for assessing candidates

Whether you’re hiring new talent or you’re interviewing potential startups for your portfolio, one way to help you overcome bias is by using a structured interview process.

This will help you stay objective and eliminate ‘hunches’ as much as possible from your decision-making process. Want to find out more about how other #fundright members are doing this?

Help your portfolio companies improve diversity & inclusion

While you may have introduced diversity and inclusion metrics into your own organization, have you considered how you can help the startups you invest in become more diverse and inclusive?

A great resource for improving diversity and inclusion in the startup world, Project Include, also has some recommendations for how VCs can make an impact.

They suggest setting diversity targets for portfolio companies and helping them create more inclusive recruitment and hiring processes (particularly at the senior level). Read more here.