These men in suits invest private funds to a promising company with the hopes it will become profitable in the future and make them rich in the process.
And when we say they're men in suits, we mean the men part literally (not necessarily the suits).
The National Venture Capital Association just released its "census," or overview of its members based on a survey of 600, and it's alarmingly homogenous.
White, American Males Control the Money
95% of members members are American, 87% are white and 21% are female. Among those surveyed, only 11% of investing positions are held by women, while they make up two-thirds of VC communications and marketing jobs. NVCA President Mark Heesen recognizes the homogeneity and is quoted in the press release as expecting the industry to undergo a sizable demographic shift in the future. He asserts that ideally, the NVCA would like to see "a professional base that reflects the entrepreneurs in which [they] invest, one that is robust and diverse in terms of gender, ethnicity, nationality and age."
Change is Slow, but Present
Well-managed company and industry diversity is proven to have a positive effect on both performance and the bottom line. The NVCA has only released its census since 2008, but it boasts of its increasing ethnic diversity by pointing out that 88% of the industry was white in 2008 ... and three years later, it's all the way down to 87%. Not so impressive.
More impressive, however, is the depiction of the new guard. Among members of the industry who have been in the business for five years or fewer, only 77% of the respondents identified as white, down from 82% in the original 2008 survey. Likewise, this same group is 17% Asian (compared to the 9% of total respondents) and has a slightly higher percentage of African-Americans, Hispanics and those of mixed race than the industry as a whole.
It looks like the new wave of venture capitalists shows a commendable increase in ethnic diversity, but we have a question: Where are the women?