Breaking Through The Concrete Ceiling In Venture Capital 

By Matt Cohen

The venture capital industry has a notoriously bad reputation for its lack of inclusivity and diversity.  This not only applies to the venture capitalists themselves, but the founders they fund.

The venture ecosystem is dealing with a barrier, more well known as a “concrete ceiling.” Oftentimes, social, gender and socioeconomic factors play into this; making it an ongoing challenge for women and underrepresented groups to break through.

Funding the fundamentals

The venture capital and startup ecosystem is also notoriously elusive. From the outside looking in, it’s difficult to break down lingo, frameworks and other insider knowledge needed to succeed. Educational resources and fellowship programs play a crucial role in leveling the playing field in venture. The earlier students can begin learning the fundamentals, the better.

For instance, our firm offers the RippleX Fellowship that provides a free online course for students, ramping them into the world of startup and venture capital. This fellowship helps diverse students who would otherwise have a hard time cracking into this traditionally insular space.

Another program assisting diverse founders and emerging managers to dive into the VC space is Recast Capital’s Enablement Program. It launched the program with the goal to help GPs of venture firms in the early days establish themselves. This is another tuition-free program focused on building community and providing educational services to help new fund managers learn the ropes.

Educational resources are a catalytic approach to advancing these groups’ progress and representation in venture capital. It is not merely enough to provide capital to these founders. If the concrete ceiling breaks, it’s going to be from these diverse entrepreneurs chipping away at it, with the guidance of VCs and their educational resources.

Take a closer look at your talent funnel

Talent acquisition is yet another way VCs can break the barrier to inclusivity in the industry. Who, how and why recruiters hire people to work for a company can play a large role in a company’s team diversity and how the company is perceived overall. Although diversity in VC is starting to see some progression and growth, problems remain.

Another factor that plays into the concrete ceiling in VC is the way job descriptions are worded. A study from the University of Waterloo found that gendered women feel that job adverts with masculine-coded language were less appealing and that they belonged less in those occupations. Conversely, female-oriented language didn’t discourage male applicants from applying.

Additionally, female investors are dramatically more likely to consider the gender of the founders of startups they are thinking about investing in, according to two reports by the Angel Capital Association. ACA’s research found that more than half — 51% — of women feel a founders’ gender is highly important, compared to 6% of male investors.

Fostering a community of culture

A 2016 LinkedIn survey revealed that 85% of jobs are filled through networking. Through fellowship programs and strategic efforts in talent acquisition, venture firms can create a community of founders and funders with unique perspectives and backgrounds. Once these communities are in place, they have the power to become autonomous in their growth.

Matt Cohen, founder and managing partner at Ripple Ventures, was founding investor of Turnstyle Solutions, which was acquired by Yelp in 2017. He is a frequent contributor to Crunchbase News, having written about why more VCs are becoming startup founders and other topics.

Illustration: Dom Guzman

Learn More