62. Diversity in Venture Capital, Part 2 (Christine Tsai)

The Full Ratchet Podcast on iTunesNick Moran Angel List

Today we cover Part 2 of Diversity in Venture Capital with Christine Tsai of 500 Startups. In this segment we address:

  • tsai diversity venture capitalYou’ve said “The best thing women in tech can do is to invest in other women,” Last fall, 500 introduced its 500 Women AngelList syndicate and pledged to invest $1 million in 10 female-led companies in the portfolio. What are the goals and results you’ve seen from this initiative?
  • What other 500 initiatives focused on diversity, whether internally or the startups that are admitted to the accelerator?
  • How do you rate yourselves in-terms of gender and ethnic diversity?
  • We recently had John Greathouse on the program and he talked about how difficult it is to recruit women founders to come speak at events. And I’ve noticed here on the show it’s much more difficult to recruit women than men. Do you think this is common or an anomoly that’s unique to our situations?
  • What are you currently most focused on at 500 startups?
  • If we could address any topic in venture, what topic do you think should be addressed and who would you like to hear speak about it?

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Key Takeaways:


 1- Not the Target Market
We’ve talked about this in the past, but the investor is often not the target market. The objective for the investor is to listen and try to understand markets for products they have little relationship to and may never use. As fun and familiar as it is to see a pitch for something you know and use, the reality is that most disruption is not targeted at the 78% of white male senior leaders at venture firms. This is where traction and due diligence calls to customers can be very revealing. As an investor, if you are in the target market, great. If not, the question is not if you “get it,” it’s if the customer “gets it.”
2- Better Diversity, Better Performance
While Christine doesn’t have hard data on this, her position is that firms with a diverse makeup for their team and the teams that they invest in will be positioned for better performance. Clearly there are large diverse markets with unmet needs that are waiting to be disrupted. And the white male founder likely does not have the founder-market fit to be the agent of change. Those investors ignoring diversity, in this respect, will miss out on massive opportunities in large and growing markets.
3- Supporting Diversity in the Ecosystem
We also talked today about some initiatives and groups that are organized around diversity. Christine had mixed opinions on these. Supporting those that furthering the efforts of diversity and questioning those that are restricting access to only one member type. She also talked about how powerful groups have been for her in networking through the ecosystem and sourcing dealflow for 500 startups. Organized groups and tech meetups are a great way for passionate individuals to connect and support their efforts. If there isn’t a tech meetup or a women in startups meetup in your city, why is that? And if there is an obvious omission and you’re looking to get more involved, why not start a group or create an event of your own. There are many success stories in the industry of folks that started w/ a tech meetup. And from my standpoint, it seems that the mission of the group is more important than restricting membership. If the mission is to support Latino founders, then design the objectives and actions around that instead of closing off the group to anyone who’s not Latino. The integration piece is critical for us all to enjoy the benefits of a diverse perspective.

Tip of the Week:   Checking the Diversity Box