What venture capital owes America

What venture capital owes America

We’re experiencing three concurrent crises in the United States. We’ve all acknowledged that the COVID-19 pandemic is both a health crisis and an economic one. However, the third is now impossible to ignore, thanks to communities organizing across the world in response to the murder of George Floyd and to ongoing police brutality. They’ve highlighted the long-running crisis of systemic, institutional racism that has only exacerbated the pandemic’s effects on communities of color. 

I’m a Black female general partner of a venture capital fund. Over the past several weeks, many well-intentioned people in my industry have asked me: “What can I do?” “How can our industry do better?”

I offer the same advice each time I’m asked these questions: Acknowledge systemic racism as the largest market inefficiency of our time and disrupt it by prioritizing the communities who have been overlooked or undervalued because of it. Prioritize solutions that place them at the center and push back against the systems that profit from their exploitation.

The Road Ahead - A Special Report from LinkedIn News

This is not advice for running a charity; it’s a guide for smart investing in a world calling for transparency and accountability. The market opportunities are huge and the companies that operate in this way, in concert with their community stakeholders, will be stronger and more competitive for it. Investments in such efforts will have a better shot at succeeding financially, and their impact on the world will be inherent in that success.

Venture capital should be about challenging the status quo and embracing big, paradigm-shifting innovations. Our industry has prided itself on its ability to accelerate the way toward, and past, the next frontier. The venture capital community must harness that same energy and urgency toward community-focused investments. But our commitment must be sincere and unflinching or we will fail to interrupt the cycle of exploitation at the core of our economy.

After all, talk of “community” is already commonplace in venture capital circles. However, this use of the word “community,” along with terms like “human-centered design,” “network effects,” and “decentralized systems” is underdeveloped and bastardized. It is a nifty sleight of hand: Call a platform a “community” and use other friendly language to distract from a business model that saps data and value from the people who feed and power those platforms.

Unfortunately, this has become a standard playbook. Too many entrepreneurs fail to prioritize real community focus. Many relegate it to a version 2.0 on their roadmap. Others use it only as a marketing ploy or branding strategy. 

I know sincere commitment is possible. Every week, I meet founders whose businesses — spread across models, industries, and geographies — demonstrate how to generate returns and empower historically undervalued communities. As an example, two of my firm’s recent investments illustrate ways we can disrupt systemic flaws and inefficiencies in our economy by prioritizing marginalized communities.

CareAcademy is a workforce training platform in the $100 billion home care and home health market, where the vast majority of care workers are women of color. While the demand for in-home care is skyrocketing, persistently low wages and poor job quality have led to a critical shortage of workers and a crisis for the industry. CareAcademy’s learning platform is built around the recognition that an empowered, well trained worker is more likely to stay and thrive in her job. And that's good for everyone. The senior population gets higher quality of care, and the home care agencies get more business and less turnover. Furthermore, by providing specialized training in chronic conditions like dementia, CareAcademy is creating a pathway for care workers to earn a higher income. 110,000 home care professionals have enrolled in CareAcademy’s courses, including tens of thousands who signed up in the early days of the pandemic. 

There’s also Mayvenn, a virtual salon marketplace in a $50 billion industry. The company launched as a commission-based e-commerce platform focused on the $6 billion market for Black hair extensions. This is an industry with a critical flaw: almost none of that money makes it back to the stylists who install the extensions. These predominantly low and moderate income Black women are trusted experts and extremely effective recommendation engines. But because 95% of these stylists hold no inventory, they have not benefited from the sale of the hair and products they recommend. By building on the relationships stylists have with their clients and compensating them accordingly, Mayvenn itself has generated over $120 million in revenue since its founding while paying out $25 million to stylists nationwide. The company has also given an additional $1.25 million in relief funds since the salon shutdowns due to the COVID-19 pandemic. 

I hope these examples spur us to address the underlying, structural problems in our economy and in our treatment of workers and communities. As James Baldwin wrote, “not everything that is faced can be changed; but nothing can be changed until it is faced.” Our country’s economic engine was fueled by centuries of Black slave labor. Four hundred years later, despite tremendous technological advances and industrial revolutions, we still power our digital platforms and economic progress with workers that receive too little, if any share, of the fruits of their labor.

Our economy has shifted from the field, through the factory, to digital products and platforms. In many ways, the era ahead looks markedly different than any before, but I worry that we’re doomed to repeat the sins of the past. Will we just encode into our “intelligent” networks and operating systems that longstanding logic of resource extraction? Will these new systems, like the old, concentrate wealth and power in the hands of a few?

Our goal should not be just recovery. What we had before was broken. To get to a better place, we have to face, continually, the exploitative systems in which we are all embedded. This is something I struggle with myself and with my firm’s investments — we are far from perfect. Venture capital investors have long committed to tackling difficult challenges, yet it feels as if we have collectively stopped short.

To my fellow VCs out there: When we celebrate human-centered design, are we really supporting solutions that are designed to empower the people who provide the bulk of the labor? When we speak excitedly about the potential of decentralized systems, do we really mean systems that truly decentralize power and economic returns? When we chase network effects, are we really working to create healthy, interdependent ecosystems where participants are valued rather than locked in and extracted from?

Helping to reweave the nation’s social fabric is not outside our domain. As John Lewis reminded us just before his death, “Ordinary people with extraordinary vision can redeem the soul of America” by getting in what he called “good trouble, necessary trouble.” Changing our perspective — reframing who and what we emphasize in our investments — will help us challenge what he refers to as our collective “willingness to profit from the exploitation of others.” This is the sort of disruptive, good trouble that we will need for the next chapter of our economy and our country.

I’m an optimist. I refuse to accept that we’re stuck in some sort of Sisyphean time loop. The United States was built on the firm belief that we could reject systems of oppression, reimagine institutions, and continually reshape ourselves into a more perfect union. 

That pledge is ours to keep as venture capitalists, too. 

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This essay is part of The Road Ahead, a special report from LinkedIn News that will explore how we can chart a course toward meaningful, effective change in response to the pandemic, its economic impact and the protests against systemic racism in the U.S. Share your thoughts with #RoadAhead.

Daiyan Rahman

INTJ-A | MPA Candidate @ LSE

3y
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Chris Chancey

Founder & CEO, Amplio Recruiting

3y
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Kyle Henry

talks about #responsibleai #aiethics

3y

I'm curious for CareAcademy what metric you are measuring that validates your model is optimal. I see that 110k homecare workers have taken the courses which validates, but what about the home care agencies? What type of adoption occurs here?

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Renata Lopes-Merriam, MBA

Scaling Impact Solutions and Partnerships. #Sustainability #Regeneration #BlendedFinance #EcoTourism #MentalHealth #Communications

3y

It's time for change, for solutions, for impact investments, for diversity, for feminine energy, for communities coming together. Everything that contributes to these things will win because we are ready to support this shift. The time to build a better planet is here! TalkPlanet KYF Brand

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Eve Muradyan

Former Silicon Valley Tech Entrepreneur and Investor turned Best Vegan Wellness Brand Owner 2023, seen in GQ

3y

Kesha, I would love to connect. I am an immigrant, I am a woman, I work in Private Equity and VC, and I can’t describe how many times I witnessed inappropriate things in this male dominant industry. I believe that we (women), are more powerful in so many ways. I love my male partners but I’d like to change the game (old white privileged boys club). Looking for likeminded people. Let’s start something new so others can believe they can do so also.

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