‘We have to change who the investors are’: How women VCs are working to fund Black and female founders

It’s sadly no shock to anyone in the industry: The amount of venture capital dollars that go to female and Black founders is dismally scant.

In fact, according to a recent PitchBook report, VC funding for female founders just hit its lowest quarterly total in three years. But there are forces working to change those statistics in the traditionally male-dominated arena.

Sarah Kunst, managing director at Cleo Capital, Steph Mui, co-founder and general partner at the 2020 Fund, Leyla Seka, partner at the Operator Collective, and Alexa von Tobel, co-founder and managing partner at Inspired Capital, are all on the front lines working to get female and minority-owned businesses the startup funds they need. And that task is formidable: Kunst notes that the vast majority of VC funding doesn’t go to Black and Hispanic founders, and “even when it does, it tends to disproportionately go to Black and Hispanic male founders.”

“There are so many brilliant, amazing Black women starting companies and not nearly enough capital for them,” Kunst said at Fortune‘s Most Powerful Women NextGen conference on Wednesday.

According to Inspired Capital’s von Tobel, changing that reality largely needs to come from the top—from those holding the checkbooks. “When you have different archetypes at the top of a firm and you have different investors out there, … you simply have different deal flow,” she said. “So we have to change who the investors are.”

Ensuring that who writes the checks is representative of the potential founders can help change who the cash flows to, von Tobel argues. (For her firm, she says about 40% of their founders are female, while Operator Collective’s Seka says her firm’s new initiative, Black Venture Institute, is aiming to graduate 300 people in the next three years that are able to write those checks.) And that’s certainly one piece of the puzzle.

But Cleo Capital’s Kunst offers a reality check: “You certainly don’t have to be diverse to invest in diverse founders,” she said. “If you are a woman of color, … [and] you can’t wait for the investor world to get more diverse, I don’t think that means you can’t go out and raise,” she says. “I think it’s understanding that there’s a saying in the Black community that you have to be twice as good to get half as much.”

While that axiom is obviously unfair, instead of feeling dismayed at that prospect, Kunst offers that founders should “flip that and internalize it as, you get to be twice as good. How many times in your life can you look around and you’re like, ‘I’m so upset that I’m twice as good as everybody else around me’?’ Indeed, therein lies the upside, Kunst argues: “If you are a person of color, if you are a woman, when you do get funded, you should feel pretty good that you probably are better statistically” than the average white man raising funding.

Tips for founders

For those female and Black founders dealing with the VC landscape as-is, investors at Fortune‘s panel have a few tips: Cleo Capital’s Kunst suggests founders get “really, really active on social media. It’s a great place to get noticed by investors.”

And for investors on their 200th pitch, 2020 Fund’s Mui offers: “It’s a numbers game, so just keep pushing,” while Operator Collective’s Seka puts it this way: “If you don’t like selling your stuff and yourself, think again, because it’s all you do.”

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