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A new plan for promoting diversity in tech – TechCrunch

Heather Fernandez

contributor

Heather Fernandez is CEO and co-founder of a health technology company solution. She founded Solv to transform the healthcare experience by putting power back to patients, where it belongs.

It is no secret that the tech world struggles with diversity. Women, African American, and Hispanic make up 33%, 8%, and 7% of the entire tech workforce, respectively, and yet only 20%, 5%, and 5% of their leadership evidence of a connection Between diversity and success.

As an industry, tech has succeeded in normalizing the issue of diversity in the workforce, and while the results are slow to come, there is movement and it’s worth recognizing.

But there are other ways we should be thinking about increasing diversity in technology, and that’s on the cap table. The secret is that it’s actually not difficult, but it’s not the norm yet. We did it at my company, and it’s worth demystifying the process so you can do it too.

People like me don’t get hired – or funded

Before we get into that, it’s important to understand something that’s often referred to as “people like me.” People subconsciously relate to, and therefore work with, people who look and think like them. It’s a cognitive bias that’s ingrained in our evolution and extremely difficult to overcome.

Investing in women- and minority-led startups will naturally create more diversity in startup cultures because “people like me” will start to reflect the diversity of the founders of those companies. It is therefore not particularly shocking that, according to Solv’s 2021 EEO report, we are 45% female, including around 33% of our technical teams.

The problem is that “people like me” also affect who gets funded in the first place, not just who gets hired and promoted within a startup. Among the venture capital partners 80% are males and they are predominantly white. Women make up just 13% of US venture capital partners, and African Americans and Latinos make up just 3% each. Unsurprisingly, 40% of new startups had female founders, but they only received 2.2% of total venture capital in 2020.

As it turns out, we don’t just have a diversity issue in tech employment. We also have a diversity problem in technology investments.

It’s time to break new ground

What if the key to achieving diversity in the startup world was expanding opportunities for investing in technology to include more women and minority investors? Let me put it this way: creating space at the (cap) table for those who normally did not have such access enables wealth creation. And with wealth creation comes the ability to invest in other companies and founders, or to become an entrepreneur yourself.

As we closed our latest funding round, I called a longtime friend, investor and thought partner, Kara Northman, to celebrate the moment. I was emotionally done with the fundraising and ready to get back to building my business, but she was direct and unapologetic: “We talked at length about the diversity of the cap tables. You have an opportunity to give some space to women, and especially women of color, in this group. If you say yes, I’ll help you make it happen.” With her push and inspiration, we did just that in 10 days.

We have formed a special purpose vehicle (SPV) focused on female investors. We reached out to the female angel investors in our network via email and text, asking each to invite at least one woman of color who is an accredited investor to invest in our round. Then we held two Zoom meetings and delivered our pitch just like we would for any other investor. When I looked at this group, I saw the people who are actually using our platform and I immediately knew how powerful this approach could be.

To be clear, this wasn’t just a publicity stunt or a token gesture of corporate social responsibility: we raised $3.5 million from this group over the course of those 10 days. Sixty percent of SPV investors were women of color, and a third of them had never made a venture investment before.

Here’s how you can do it too

So the variety of cap tables is important to you and you want to make this a reality? Fine! We’ve already gained some and learned some, so here’s my advice to get you started:

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