When the new US Congress meets for the first time next month, it will be the most diverse in history, including a record number of women.
There’s been a lot of talk in 2018 about representation - the idea that if you want to change the status quo, you need to start by changing who makes decisions.
In the tech world, however, progress is moving more slowly. Most of the people getting funding to build the companies of the future still represent a tiny, and wealthy, portion of the global population
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The percentage of startup funding that went to women has remained flat this year, at 2.2%. Black and Latinx entrepreneurs still get less than 1% of venture capital.
Over the past year, we interviewed more than 200 investors, asset managers, foundations, family offices and pension funds – as well as 50 entrepreneurs – to investigate new approaches for investing in entrepreneurs that can yield more inclusive results. The strategies spanned the gamut: from changes at the fund management level all the way down to revising term sheets.
Our report explores three of these ideas in depth, from the way investment decisions are made, to alternative approaches for structuring funds and investments:
- Revenue Share Fund - A revenue-based financing vehicle that could provide a higher return than debt and more liquidity than equity
- Place-Based Multi-Asset Fund - A blended fund that invests in a diverse range of interdependent asset classes in a specific geography
- Peer-Selected Investment - An alternative due diligence model where the entrepreneur has the power to make investment decisions
This report is not intended to be a final statement on alternative investment strategies. It looks to build on the creative conversations and hard work that others have done, and to provide a starting point to building viable solutions. From organizations like the Kauffman Foundation and Omidyar Network, to investors like Adobe Capital and movements like Zebras Unite, people are increasingly looking to change how companies are funded, why they are funded and where they are funded.
In 2018 alone, our team at Village Capital has worked on the ground in six continents, and backed entrepreneurs solving problems as diverse as the communities they represent. We’re excited to continue the conversation about how to bring more perspectives like these into solving the world’s biggest problems.
