Mechanisms of Exclusion
There's been a recent re-emergence of the perennial tech industry conversation about how the venture capital industry can stop excluding women from both joining VC firms and from having their businesses funded by VCs. Fred Wilson covered some specifics about what it would take to make an incubator for women-run startups, and ReadWriteWeb's Audrey Watters offered a broader overview of the declining participation of women in the tech industry.
But of course, this conversation comes up every year, and the people who haven't been excluded always say "The tech industry's a meritocracy! Anybody who wants to participate isn't barred from doing so!" So I thought it'd be useful to illustrate exactly how exclusion happens — not through a malicious, deliberate act, but through men not realizing they're doing it.
Here's a Quora question thread asking how one could get to meet ubiquitous tech investor Ron Conway. Quora's heavily populated with tech industry insiders, including many with extensive experience in venture capital. The answer I've linked to there is the consensus favorite, with an answer that begins:
The best way to get a meeting with Ron and the SV Angel team is through referral. In fact, we haven't invested in any company without a referral from someone we know, ie, a fellow investor, an entrepreneur that we know, someone at a big co, etc.
I acknowledge that this is an imperfect filter and may not be the most equitable way, but like many investment firms, we receive a high volume of opportunities and it would be virtually impossible to speak to all the founders without some initial filter. Another filter is sector focus - for example, if someone referred an opportunity in consumer internet, that would be 'higher in the queue' than if the same person referred something in the biotech area.
(One analogy is the NFL draft. It would be virtually impossible to evaluate ALL players who want to play in the NFL - scouts usually look at the same players since the top prospects are known quantities and "diamonds in the rough" are found through word of mouth, ie, referrals. For example, Bill Belichick, head coach of the Patriots, is known to draft only college players that are referenced highly by college coaches that he knows. Sorry, I analogize everything to sports.)
Now, I'm privileged enough to have a lot of access, but just a few years ago, I certainly didn't have a social network that connected to Silicon Valley venture capitalists, despite having a relatively large network. And I still don't know the first thing about sports, so a sports analogy only emphasizes that I'm not part of the cultural assumptions baked into interactions with some parts of the VC world. So even somebody like me who's male, connected and willing to cross cultural barriers can't get in. And that reality isn't just accepted, it's known. Known well enough to be documented by others, in an industry where perception is as important as reality.
How It Works
The best answer for how to get access to the man who's arguably the most powerful angel investor in the tech industry is an example of an explicitly closed network that's illustrated with an implicitly closed analogy to a sport that women are prohibited from playing. "Hey, I'll fund anybody. I meet entrepreneurs in the ladies' restroom outside of screenings of Eat, Pray, Love. All are welcome."
I'm not maligning the person who wrote the answer on Quora — he's accurately describing reality. I'm not maligning Ron Conway — I don't think he intends to exclude. What I am maligning, explicitly is closed networks that, while arguably reducing the number of unqualified solicitations for funding, also serve as de facto mechanisms of exclusion. It's a broken, inefficient, short-sighted system.
Let's look at it like a usability problem, like a website with a front door that has more than 50% of visitors failing to complete the simple task of being able to join the site. Maybe one of the new wave of "super angels" is going to get enormously higher returns by simply ending the process of eliminating half of the potential successes out of the gate. Maybe not.