For shame: 40% of VCs attended the same two schools

Richard Kerby has done the digging to understand a Silicon Valley truism about the lack of diversity. It goes like this: Entrepreneurs who are male, Asian or white, and graduates of Stanford have an unfair advantage when it comes to getting funded. And now there’s some factual basis for this perception. “After going through ~1,500 investors, I found that 40% of venture investors have attended Stanford or Harvard. Just TWO schools!” Kerby wrote on Noteworthy.

This pie chart shows that 40-percent of venture investors attended either Stanford or Harvard. (Image credit: Richard Kerby)

40-percent of venture investors attended either Stanford or Harvard. (Image credit: Richard Kerby)

Kerby, who describes himself on Twitter as an “investor of time and occasionally money,” explains the cause of this: “Everyone wants to work with those they are most similar to, and education, gender, and race are attributes that allow people to find similarities in others.”

According to two years of data Kerby collected and analyzed, the VC industry is overwhelmingly white and male, but slowly, it is making measurable gains to increase its diversity.

These pie charts illustrate that Racial minority representation in the venture capital industry increased from 26- to 30-percent from 2016 to 2018. (Image credit: Richard Kerby)

Racial minority representation in the venture capital industry increased from 26- to 30-percent from 2016 to 2018. (Image credit: Richard Kerby)

These two pie charts show that Female representation in the venture capital industry increased from 11- to 18-percent from 2016 to 2018. (Image credit: Richard Kerby)

Female representation in the venture capital industry increased from 11- to 18-percent from 2016 to 2018. (Image credit: Richard Kerby)

Combined, these pie charts show that educational pedigree can present as great a hurdle as race and gender.

“With 82% of the industry being male, nearly 60% of the industry being white male, and 40% of the industry coming from just two academic institutions, it is no wonder that this industry feels so insular and less of meritocracy but more of a mirrortocracy.” –Richard Kerby

One immediate consequence of this sameness is what Kerby calls “a lack of cognitive diversity.” The venture capital ecosystem consists of a bunch of like-minded people thinking in a like-minded way and predisposed to work with those entrepreneurs who are similarly like-minded. According to Kerby, “It is no surprise as to why the demographics of most venture-backed startups also reflect the demographics of the venture capitalists that fund these companies.”

This has troubling implications for the broader tech ecosystem. It chokes off capital for people who may look and think differently, limits the types of problems that technology might solve, and restricts the beneficiaries of tech to small subsets of the general population. Since talent is equally distributed, it is time for opportunity to be so, too.