September 27, 2017
Holden Page is a Crunchbase News editor and columnist.
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Work, at least in tech, looks monochromatic. White men are overtly over-represented in leadership and technical positions inside the industry. And the lack of minorities in similar roles is a well-documented problem that, despite attention, endures at major tech companies and startups.

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But although tech has a problem, it can still play a part in the solution.

Entrepreneurs are taking it upon themselves to innovate in the recruiting, training, and hiring of underrepresented minorities. VCs, meanwhile, are beginning to see the value of supporting these startups with cash. We find out just how far those dollars stretch.

Breaking The Mold

Many startups and large corporations hire for “culture fit.” And while hiring for a culture fit has its merits, it also may do more harm than good.

An American Sociological Association study that explored the dynamics of culture fit in hiring discovered that “more than half of the evaluators in the study ranked cultural fit—the perceived similarity to a firm’s existing employee base in leisure pursuits, background, and self-presentation—as the most important criterion at the job interview stage.”

In an industry that is dominated by primarily white men, placing such a high emphasis on culture fit as a hiring criteria can lead to a homogenous workplace—negatively impacting the bottomline and reducing a startup’s access to qualified talent. And although the amount invested in startups solving this problem are modest, the problem these startups are attempting to solve are not.

Startups Putting The Culture In Culture Fit

Crunchbase News found nearly a dozen startups that aim to increase diversity in the workplace through hiring and workplace improvements. Collectively, these startups have raised a little over $66 million. It’s a sum that pales in comparison to the overall recruiting sector, which saw nearly $863 million in funding in 2016 alone. But for startups like Pymetrics, it’s a start.

Pymetrics is the best-funded startup in our cohort that aims to increase diversity in the workplace during the hiring process. Leveraging AI, an increasingly popular buzzword for many startups, the company claims to remove bias in hiring by employing “gamification, blind auditions, and fairness through algorithms.”

According to the company’s whitepaper on Methodically Breaking The Glass Ceiling, Pymetrics’ method saw a “30% increase in the percentage of females matched to financial services position.” Such results likely made it easier for the company to justify its $8 million Series A raise announced September 20—bringing the startup’s total funding over $16 million.

Following Pymetrics in terms of total funding is Koru, which also employs its own algorithms to help companies find the right employees. With nearly $13 million in funding, the startup deemphasizes resumes, which can be laden with hidden biases, in favor of measuring “grit, rigor, impact, teamwork, curiosity, ownership, and polish.” It claims that this can help recruiters “efficiently screen and select high quality, diverse candidates.” Backers of Koru include Andreessen Horowitz, Battery Ventures, and First Round Ventures.

But where Pymetrics and Koru tend to focus on algorithms to solve the lack of diversity in the workplace, other startups are taking more overt approaches.

Jopwell, which just raised a $7.5 million Series A on September 25, claims to be “the leading career advancement platform for Black, Latino/Hispanic, and Native American students and professionals.”

With funding from Y Combinator and Kapor Capital, Jopwell has created a platform for underrepresented minorities to lay out their careers. The startup also connects its members to opportunities that may otherwise go unnoticed. The company notes it has over 70 partnerships, ranging from Pinterest and Lyft, two of tech’s unicorns, to more established companies like Adobe and American Express.

According to TechCrunch, Jopwell has already “facilitated tens of thousands of connections between people of color and recruiters at top companies.” And the company practices what it preaches. The company’s workforce is “predominantly female (62 percent), 34 percent black, 28 percent Latinx, 21 percent Asian and 17 percent white.”

PowerToFly, meanwhile, focuses its efforts on hiring women in tech. Following a similar model as Jopwell, PowerToFly has raised a total of $7.5 million to connect women to technical positions within Fortune 500 companies. The company claims to have over 100,000 profiles of women looking for technical roles, and its team will work directly with employers to build a pipeline of diverse candidates.

More Money For Diversity

While funding in startups that focus on diversity looks promising, it’s worth noting that the VCs who back these startups, and the corporations these startups partner with, still have a lot of work to do.

Overall, funding amounts for startups looking to increase diversity in the workplace are paltry. Podcasting startups, which are essentially ignored by VCs, have received over $158 million in funding since 2008—over double the funding diversity-focused startups have received. Meanwhile, large tech corporations that claim to prioritize diversity do not appear to be deploying their CVC’s funds to startups who can help them do so.

To see change, VCs and corporations should continue to put their money where their mouth is.