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When megastar Serena Williams recently said she intends to retire from tennis following the upcoming US Open, she added an intriguing curiosity about her future: She will focus on a venture capital firm she quietly founded eight years ago.
Last week’s announcement by Williams, who has won 23 Grand Slam singles titles in a career spanning more than a quarter of a century, has reignited the conversation about how few women and minorities inhabit the elite world. high-risk venture capital, where it is often risky investments are made in startup companies in the hope that investors will reap a significant return.
While Serena Ventures, as her small company is known, is among a small number of VC companies owned by black women, things are changing, albeit slowly, says Sydney Sykes, a partner at Lightspeed Venture Partners, a business venture. VC based in Silicon Valley that invests heavily in the early stages of female-led businesses.
“Nobody is going to look at venture capital and say it’s a success in diversity,” says Sykes. “But I’m more optimistic than I’ve ever been. I think there’s a conversation going on now that it has a tone that [we’ve] never had before “.
There is room for optimism
That optimism, he says, stands in contrast to just six years ago, when he co-founded BLCK VC, a network of black venture capitalists with the stated goal of “connecting, engaging, empowering and promoting venture investors. capital blacks “. Among other things, BLCK VC offers a nine-week program designed to help young professionals get into the venture capital business.
When Sykes started working in venture capital in 2016, he says just 2% of investors in VC’s companies were black. This year the percentage is approaching 3%.
“It’s not a big difference,” he acknowledges. “But what I’m going to say now is that the founders are the ones who turn to investors and say, ‘I want to diversify my capital.’ Or they’re saying, ‘My business can’t be as successful as it looks right now; it’s not diverse enough.’ “
That change is accelerated with the showdown brought by the racial justice movement that took off two years ago, says Melissa Bradley, founder of 1863 Ventures, named after the year of the emancipation proclamation.
Since George Floyd’s murder at the hands of a white police officer, billions of dollars in new money have come from black investors, much of which has been funneled into black-owned businesses, he says.
However, that’s not enough, says Elliott Robinson, a partner at Bessemer Venture Partners.
“We had a lot of discussion about access to capital and the diversity of startups and venture capital coming out of the summer of 2020, a little bit in the post-George Floyd, Breonna Taylor and Ahmaud Arbery conversation,” he says. “But the statistics speak for themselves.”
Harvard and Stanford are channels for the venture capital industry
Part of the problem is that 40 percent of all VC jobs are held by just two universities: Harvard and Stanford, says Robinson, and historically those schools haven’t produced a very diverse candidate pool. “It’s kind of mind-boggling,” says Robinson, who earned his MBA from Columbia Business School.
Bradley, who is Black, says she entered the VC business “after I started my first company and realized there was a lack of access to capital.” As a result, she decided that 1863 Ventures should “really.” [focus] on the black and brown founders “.
Since its founding a few years ago, his company VC has helped more than 3,200 entrepreneurs who have “generated over $ 1 billion in new revenue,” he says. “We focus on how much revenue they generate and [the] possibilities they create, because we recognize that the multiplier effect is in the communities they serve “.
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Williams could help multiply that effect even more given her high profile not just as a top athlete, but as a black female CEO of a venture capital firm, says Robinson.
In the venture capital business, the founders “have to be a little superhuman” to be successful, he says, and Williams definitely qualifies.
Serena Ventures, with her motto “Play to Win,” has funneled money into promising new ventures, raising $ 111 million in external funding for new investments so far this year, Williams says. The company focuses on health, wellness and athletics.
In an essay he wrote for Rowing magazine detailing her plans, Williams – who is married to Alexis Ohanian, a tech entrepreneur and co-founder of Reddit who also started a venture capital firm ten years ago – said 78% of her portfolio VC “seems to be companies started by women and people of color, because that’s who we are.”
“On the other hand, my husband is white, and it is important for me to be inclusive for everyone,” she writes. “Serena Ventures was an all-female activity until recently when we brought our first boyfriend: a hiring of diversity!”
Speaking with NPR Weekend All things considered recently, Sallie Krawcheck, CEO of Ellevest, said that despite the fact that companies run by female CEOs tend to get a very small chunk of the investment in VC, the return on those dollars tends to be higher.
“Having women like Serena … investing in women-run companies is a way to open up the boys’ club,” Krawcheck told host Michel Martin. “We simply haven’t made as much progress with traditional venture capital firms as we would have hoped by now.”
More businesses led by women and minorities could have a big impact
A 2019 report from the Boston Consulting Group, or BCG, estimates that global GDP could have increased by several percentage points, by an amount of up to $ 5 trillion annually, “if women and men participated equally as entrepreneurs.” . And a 2020 Brookings Institution report concludes that the shortage of African American-owned businesses in the United States “limits the employment and development of black communities.”
“Additionally, the under-representation of black businesses is costing the US economy millions of jobs and billions of dollars in unrealized revenues,” the Brookings report said.
Lightspeed’s Sykes says that the fact that financial institutions “have held the wealth of the black community” for so long is exactly why Williams could have an impact.
“Having someone like Serena say, ‘I think it’s important to be an athlete, a strong black woman and a mother. But I also think it’s really important to think about financial institutions and generational wealth'” is a big deal, Sykes He says.
“I think this says a lot to the black community in general and to the next generation,” he says.