Venture capitalist Katie Rae spends her days dealing with what she calls “tough tech,” investing in hard-science startups whose products require years of research and development to create technology breakthroughs. But the sweeping anti-racist protests of the past several weeks have amplified an even more difficult, and long-entrenched, problem in tech and VC.
“Racism is everywhere, right? We know this. And so is sexism. It’s internal to us, and it’s internal to the culture,” says Rae, the CEO and managing partner of The Engine, a venture capital firm spun out of MIT.
Only 1% of venture capital dollars go to black founders; only 2.7% goes to women founders, with black women founders getting a fraction of a percentage point. These numbers have stayed basically flat for years, despite mounting criticism, in part because the venture capitalists making the funding decisions are overwhelmingly male and white.
“It is embarrassing to the venture capital community that the percentage of venture capitalists who are black or Latinx is almost not countable,” Rae told me, during an interview at the CB Insights Tech Conference on Wednesday. “You literally think to yourself, ‘Are we serious here? It’s 2020.’”
In recent weeks, major VC firms and their partners have taken various steps to condemn racism, although it remains to be seen how much money they will commit, over the long term, to back up their rhetoric.
“Without confronting it continuously, you’re not going to get results,” Rae says. “I am super proud of what we have done and accomplished at The Engine, in terms of who we’ve invested into and how we’ve grown our team. But we need to do better.”
Her firm, founded four years ago, raised $205 million in its first fund and has invested in 25 startups in sectors including engineering, manufacturing, biotech, and artificial intelligence. A full 80% of those companies have a founder who is female and/or nonwhite, according to data The Engine provided Fortune.
She added that The Engine is “rewriting some of our policies to be more proactive, to hold ourselves to account there” and holding open forums with her community of founders.
“I don’t want to say safe space, because…we don’t know if that’s safe for people,” says Rae. “But I think holding those forums is really important, both for our own team and in our larger community of founders, and step into those uncomfortable moments.”
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