Venture capitalists (VCs) dominate the boards of venture-backed private companies today. In a 2017 study that looked at more than 26,000 such boards over three decades, researchers found that VCs took 50 percent of total board seats. That fraction is the result of many things: VCs requirement to take board seats as a condition to funding, limited planning for the most effective board composition, and a lack of concern for what type of background board members need to best serve the organization. It reflects what happens when companies follow the currently accepted practice of distributing one or two board seats to the lead investor in each funding round.
For most people, the thought of a smart device sharing their intimate conversations and sending those recordings along to their acquaintances is the stuff of dystopian nightmares. And for one family in Portland, it’s a nightmare that became all too real when their Amazon Echo sent a recording of a private conversation to a random contact in their phone book.
A shorter version of this piece originally appeared in Forbes.
In the mid-17th century, the average Chinese farmer knew the exact size of his market. China had been cultivating staples like rice and buckwheat for thousands of years, honing planting, harvesting, and distribution down to a precise science. So when European traders showed up with an exotic new tuber from South America they called the “potato,” many established farmers probably expected that the new crop would take over some fraction of the existing market for rice.
This March, Alpha Edison launched the #StartWithEight initiative, challenging our colleagues in VC to join us in taking meetings with eight women from outside our usual networks during the month of March. As we noted then, the statistics about women in venture capital are dismal. In 2017, only 2 percent of venture capital funding went to female founders, and only 8 percent of partners at the top venture capital firms were women. Meanwhile, Only 18 black female founders had raised more than $1M of venture capital for their startups, ever.
These numbers aren’t a secret; it’s widely known that women and minorities face prodigious barriers to entry in VC, but so far, a solution to correct the inequity has been elusive. The #StartWithEight campaign is a first step in correcting the historical imbalance and opening up pipeline access. The next step focuses on the other half of the equation: addressing and reducing bias.
In 2018 the concept of credibility itself is under siege. No one put it better than Alexander Nix, the then-CEO of Cambridge Analytica, in a recorded conversation with undercover reporters released on March 19. After bragging about how his firm can entrap political candidates in bribery schemes and prostitution rings, Nix said something that is relatively obvious to anyone who has been following election news over the past year: “these are things that don’t necessarily need to be true as long as they are believed.”
Of the companies that pitched us in Q1 of 2018, more than half came in without a well thought out financial model. Some brought no model at all, expecting to focus the conversation on narrative and vision. Others presented models that were shallow or incomplete. They missed an opportunity.
Our culture teaches entrepreneurs that the day they leave the company that they founded is the day they’ve failed. We’re trained to believe that a successful founder is a decisive, emotionless commander who takes charge, heeds the advice of few, never makes mistakes—and is carried out of his corner office in a casket. But is that really what entrepreneurial success looks like?
The statistics about women and venture capital have been widely documented. Only 2% of venture capital funding went to female founders in 2017. Just 8% of partners at the top venture capital firms are women. Only 18 black female founders have raised more than $1M of venture capital for their startups (ever).¹ The data highlights a critical issue, but so far solutions and tangible action have been insufficient.