The numbers tell the story. US venture capital firms have $444 billion under management, including $121 billion in “dry powder” waiting in reserve—all in pursuit of the next “unicorn” startup that will grow to be worth billions. But about three-quarters of the industry’s cash goes to support software innovation—a habit that’s looking particularly short-sighted at a time when the nation is facing its worst public-health crisis in a century.
On top of that, most of the people who allot venture cash are white men, and they mostly fund startups led by white men. Fully 65 percent of venture capital firms have no female partners, and 81 percent have no Black investors. Only two percent of the cash distributed by venture firms in 2017-18 went to women-led startups, and over the period from 2013 to 2017, only one percent of venture money percent went to Black entrepreneurs.
For the July issue of MIT Technology Review, financial journalist Elizabeth MacBride took a hard-hitting look at the venture industry and its successes, failures, and blind spots. This week on Deep Tech she talks about why the mystique of the VC cowboy with a nose for huge profits is mostly a fabrication, and why it’s hard to disentangle the industry’s bias toward funding white, male, Ivy League-educated entrepreneurs from its bias toward the software industry, where it’s easiest to obtain outsized returns.
Episode graphic by Nico Ortega.
