Why Are There So Few Black Investors?

Today, some of the world’s most respected and successful figures are those in the tech industry. They include entrepreneurs who have developed innovative products and launched industry-changing companies. An important segment of people who provide capital and (hopefully) assistance to these entrepreneurs are venture capitalists. While the technology sector continues to thrive, it suffers from a lack of diversity, which limits innovation.

African-Americans are Under-Represented in the Good Ol’ Boys Club

The Venture Capital industry in the US (and thus, in turn, Silicon Valley) is made up of nearly all white males. In fact, the National Venture Capital Association (NVCA), the trade group for the industry, has recently acknowledged the lack of diversity in the industry and has recently formed a task force to help tackle the problem. However, even the task force lacks diversity, with 7 of its 11 members being white males and none of the remaining four members being a person of color. Furthermore, a number of tech companies have released their diversity stats, revealing that roughly 2% of the employees at Google, Facebook, Pinterest, LinkedIn and Yahoo are black.

In my quest to determine the true diversity statistics within the Venture Capital industry, I conducted a study of over 200 firms composed of roughly 2,000 investors investigating the current number of black investors working in Venture Capital in the United States. I included only full-time investment team members, so I did not include EIR’s, Venture Partners, accelerators, or incubators. The results demonstrated that the diversity stats are eerily similar, if not worse, than that of the aforementioned tech companies, comprising 1.5%. You can find the data that I have pulled together here — Venture Capital Diversity Stats.

To dive a bit deeper, many of the more visible funds and, by extension, visible investors tend to be those at venture funds with a fund size of $100M+. The stats look even bleaker here with less than 1% of investors being African-American, and only one of which is a woman. Since we love discussing unicorns in the tech world, it is clear that female African-American venture investors are the “real” unicorns. In light of this data, I’m hopeful that there are additional African-Americans in the venture community that were not captured in my study, however, this wish may be inconsequential, as it is clear that there are nonetheless far too few.

A Technology Bias May be the Culprit

With venture capital often functioning as an “old-boys” club (where financiers mostly give to people who are within their network — friends, colleagues, college alumni, etc.), most African-American entrepreneurs lack connections to investors who have access to funds. Other issues that have led to the lack of black entrepreneurs and overall lack of diversity in the tech industry include, but are not limited to, few African-Americans who are studying STEM education and a lack of publicly visible role models for young African-Americans. Despite these obstacles, there is still plenty we can all do to ensure that tech careers are seen as a viable career path. While one would hope that the lack of black venture capitalists would not have any correlation with the presence of black entrepreneurs in Silicon Valley, this is not the case. Instead, there appears to be quite the correlation to the lack of African-Americans in the tech industry today as there is among venture investors.

Finding Ways to Diversify

Despite the bleak statistics, there are, fortunately, a number of individuals and organizations who are trying to improve diversity in Silicon Valley (and across the United States). Code2040 is an organization that I am involved in that connects undergraduate computer science majors with internships at Silicon Valley-based startups, with the goal of increasing minority representation within the tech community.

Other important initiatives to support the career growth of African-Americans who have been able to successfully enter the tech community include developing or growing a black or minority investment community and expanding the network of people whom existing venture capitalists recognize, know and fund. This community could help create more entrepreneurs, resulting in more successful black-led companies who can then go on to fund and help other African-Americans start their own businesses. My close friend Charles Hudson and I have started one such community called Stealth Mode, which hosts quarterly events to bring together African-Americans within the tech community. Please reach out to me if you would like to join our community or learn how you can help the organization grow.

The lack of diversity is clearly a significant issue in Silicon Valley that needs to be addressed, and one that I care very deeply about as one of the few black faces within the industry. I would love to hear other people’s thoughts on the matter and discover more ways to improve the status quo of the venture capital and tech communities.

Everyone Can Live the Luxe Life

As someone who owns a car and lives in a city, I routinely find it hard to find a parking spot and spend unnecessary time circling blocks in search of a coveted spot.  And when I do find a spot, I often end up getting a ticket or paying exorbitant garage rates.  Our latest investment in Luxe (http://luxevalet.com/) solves this problem!  Luxe is changing the parking experience for consumers in cities, and a major reason for their early success is due to vertical integration.  In fact, Luxe isn't really a valet service at all, but rather a full-stack parking solution.

How does it work?

The product provides consumers with on-demand parking via their valets and partner parking garages.  In addition to parking your vehicle, Luxe also offers premium add-ons such as a car wash and fueling up your vehicle for additional fees. The service itself is intuitive and easy. Users simply download the app and request where they would like to drop their car off. A valet then meets them at the designated spot, wearing an easy to identify bright blue uniform.  The valet then takes over, addresses you by name, and verifies their identity as a Luxe employee. You can track your car as it goes from the drop off point to its parking spot.

In addition to providing a great service to consumers, Luxe saves consumers money.  With parking rates in congested downtown areas pushing $50 per day, Luxe's maximum fee is only $15. Not only do they meet you anywhere in their service area for pick-up, but you can also schedule your car drop-off the same way. So, have the valet meet you at work in the morning, and then meet you off-site when you are done entertaining clients or are finished with a dinner meeting. Luxe takes convenience to the next level and does so in a cost-effective manner while saving consumers their most precious asset - their time.

While many people in Silicon Valley believe that car ownership and car usage is going down, it is actually increasing in North America as well as the rest of the world.  In fact, automobile sales are on the rise, 2.5 percent globally, and if this trend continues, the need for parking will become more critical. Circling the block in the morning could leave you late for an important meeting, while paying for a monthly parking spot can be very expensive for those who need ready access to downtown areas. As a full-stack parking solution, Luxe takes the guess work and anxiety out of parking.

Full Stack Integration Builds Trust

As a consumer, you don't want to worry about dealing with multiple vendors for a finished product, and the demand for end-of-line services is on the rise. For example, consider major tech players like Apple. Their vertical integration model of controlling the finished product has made them a top player in the consumer electronics industry. By maintaining quality standards, they have created trust among consumers that other businesses struggle to emulate. This same model applies across other industries, and Luxe hopes to prove it in the parking industry. By taking control of the pick-up and drop-off of cars, they take control of the entire parking equation and offer a full-stack solution.

By leasing under-utilized parking spaces, Luxe ties in the vertical with contracted spaces through alternative parking lots. Working with parking authorities to find and utilize spaces that would otherwise remain empty, Luxe manages to negotiate contracted rates that allow them to turn a profit. This is an example of vertical integration that creates added value for both parts of the service provider equation - the parking company earns more on empty spaces, while Luxe uses their contracted rates to determine cost levels and turn a profit based on predictable expenses.

Just The Beginning

Luxe is currently live in San Francisco, Los Angeles and today the company announced that the next three cities will be Chicago, Boston, and Seattle with more cities to come as they look to continue to rapidly scale the business.  The company has also announced the release of their Android app, feel free to download it here.  Luxe is just getting started on their journey and if you are excited about solving the parking problem and solving problems with tremendous amounts of data, shoot me an email (kerby@venrock.com). The team is looking to make hires across the board.  Feel free to use my invite code: RICHARD26 to take your first ride for free.  Now you have no excuse to not give Luxe a try!  

If you would like to read the company's announcement, which has an awesome infographic of their growth you can see it on the Luxe Blog.

Our Latest Investment - Beckon

Marketing professionals have more data at their fingertips now than at any other point in history. They have more channels to manage, more places to look, more administrative dashboards to monitor, and more decisions to make.

What Current Digital Marketing Looks Like

You have to:

  • Keep up with Facebook insights and the latest algorithm changes to know which post to sponsor or what graphic might receive the most engagement.
  • Check out Twitter analytics to see which hashtag received the most attention and what tweet received the most retweets and engagement.
  • Sign into Google analytics and your website dashboard every single day in an effort to understand who visits your site and what they do when they arrive.

And this is just the tip of the iceberg.

Marketers need to know who their potential customers are and what they are most likely to engage with. In today's world of big data, you have several of choices. You can spend more time than you have looking at the data and formulating a plan for each channel your company uses, outsource this work to an agency, or to utilize a new option known as predictive analytics.

Predictive Analytics Will Transform Marketing

Dashboards like Beckon, a marketing software company that lets marketing professionals put the power of their data into their own hands and take appropriate action faster than ever before, will transform the marketing world. Beckon uses channel performance data, machine learning, and a myriad of business specific data points that can help marketers determine what, when, and where your content will receive the most engagement. The days of using anecdotal or generic data that may not apply to your brand or your followers are over.

Beckon is a dashboard and platform that collects data such as clicks, impressions, likes, and other engagement data and rationalizes that information into trends that can be used to make quick and concise marketing decisions that generate revenue and encourage customer retention. Beckon takes "the mess" out of all the data available to marketers and makes it easier to understand and easier to act on.

With predictive intelligence from Beckon assessing big data that is currently scattered across multiple channels, you'll be able to give your followers, audiences, and potential customers what they want, when they want it. By doing this, you'll increase engagement, build your brand, convert more leads, and increase revenue all while spending less time figuring out the data.

CMO's and other marketing professionals continue to have an increasing number of channels to manage and a growing amount of data to filter through. Predictive intelligence solutions like Beckon will help solve this issue for marketers, and we are excited to be a part of the journey!