BLCK VC Co-Founder Sydney Sykes: Community is now more important than ever
On Thursday, June 4th, something unusual happened in Silicon Valley. It could have been commonplace: A group of venture capitalists and entrepreneurs gathered on a webinar. Each gave a 10-minute presentation. The VC firms were prominent; Greycroft, Google Ventures, and Bessemer. The entrepreneurs were exceptional; One founder raised a total of $96 million in venture funding.
But this wasn’t a typical panel. There were no pitch decks. There were no pie charts. There were no bar graphs. Instead, there were stories. Each investor or entrepreneur shared a deeply personal story of persistence, underestimation, prejudice, and pain: Their story of being Black in venture.
In the venture capital industry — where Black investors made up less than 1% of the industry in 2016, and where only 1% of venture dollars went to Black founders in 2018 — a group of seven Black speakers is unusual indeed.
The event was organized by BLCK VC, a non-profit co-founded in 2018 by Sydney Sykes and Frederik Groce to support Black investors.
It made an impact: An audience of 3,800 listened. $113,000 was raised for activism in just one day. Dozens of powerful venture capitalists made commitments to support the Black community more intentionally.
Still, there is much to be done.
I asked Sykes why Black representation in venture remains so persistently dismal, how the venture industry works, and what you can do to have an impact at any position in the ecosystem. Her answers have been lightly edited and condensed.
Why did you start BLCK VC?
I moved out [to San Francisco] from Boston in 2016 to join NEA. I did early-stage consumer investing mostly, and I was there for about two and a half years, during which time my co-founder Frederik Groce and I started BLCK VC. From the moment we met, we were like, “I wish there was a more built-out network of Black investors.” Instead, everyone would join venture and be like, “Oh wow, there are no Black people at my company. Where are all the Black people? How do I get through this?”
We just felt like we had to bring the group together in a more formal way and create a community that was supportive and empowering, and work towards fighting the lack of diversity in venture. That was the impetus for starting BLCK VC in 2018.
Why are relationships so important in venture capital?
Venture is very much a network-based industry. From finding deals to finding jobs to being on a board with someone, you can ask any person in venture and they will say that the most important thing is your network.
You need people to vouch for you so you can win deals. You need people to show you those deals and make those introductions. You need people to talk to and bounce ideas off of so you can have the best thesis and you can fully understand spaces. If you’re on the entrepreneur side of things, you need people to vouch for you so that investors will trust you and give you their money.
And, one of the bigger things is that most jobs in venture are not posted online. It’s very much a word of mouth way of recruiting. You won’t hear a lot about a formal process, it’s sort of like, “This firm has an opening.” So if you want to get into venture, or if you want to move around within venture, you need to have very strong network. Otherwise you won’t hear about the shops.
Now that’s an issue in and of itself; it probably shouldn’t be that way. But since it is, how do we work within that system? A big part of that is building out your network.
It’s about sitting at the tables that already exist; the small dinners that are happening all across San Franciso in normal times, or being on panels to get your name out there, or being in the Rolodex of investors that other investors contact to work on their thesis or to share deals with. That’s a lot of the industry.
And, with BLCK VC, it’s about having a network with each other. Because honestly, sometimes that’s a little bit easier than getting into this established old boys club of guys who maybe started in venture together, or maybe went to college together, or maybe helped each other get their jobs. That’s one of the big reasons why this network is so important.
In another sense, it’s also about the loneliness that comes with being a minority in a very exclusive space, which is its own challenge. Having that emotional support is almost equally as important as having that network that can help you get those jobs and deals.
How does the structure of venture capital perpetuate exclusion?
You have this triangle: At the top of everything is the limited partners and the high net worth individuals who give money to venture capital funds. Then, you have venture capital funds that give money to entrepreneurs, and then entrepreneurs give money to employees. That’s wealth creation in this industry.
So let’s go bottom-up: The easiest thing you can do to get into this triangle is to become an employee at a startup or to become an entrepreneur. It’s not easy, but it doesn’t require you to get billions or hundreds of millions of dollars.
You have bias at that level. You have entrepreneurs who are hiring employees. Hopefully they’re hiring diverse talent, but if they’re not intrinsically driven to think about diversity, or they’re not being told to think about diversity from their funders, then they may not be thinking about it.
Above that, you have the funders, the check-writing VCs. Remember, you have venture capitalists who don’t have check-writing abilities; generally these are associates, analysts, some principals, and even some partners. So even if you are a VC, you may not have the money or the power to drive wealth creation on your own. You may need to get a bunch of support from a bunch of other people above you.
The general partners are really the ones who have the real check-writing power to control who they invest in, to decide what companies get money, and to drive change within the companies below them. GPs help entrepreneurs think about what is important in driving a strong business, and I personally think diversity is a big part of that.
Then you have the top rung of the ladder: Limited partners and high net worth individuals who can invest in funds. A lot of these are pension funds or state funds. They can push a set of values with their money.
They can say, “We invest in funds of this criteria.” That criteria could be size. It could be diversity. It could be general partner diversity. It could be portfolio strategy. It could be portfolio success, which is the biggest driving line.
Limited partners can push a sense of importance through the entire ladder by controlling where their dollars go. That’s a really important way of thinking about it. Each step on the ladder, the higher up you go, the step controls all the steps below it.
That’s why you can drive a lot more change at the LP level than you can at the VC level or the entrepreneur level.
But people at each step of the ladder can make a difference, right?
I think you can really see the power of employees right now. We’re all in a transition process so we’ll see what happens a week from now or a month from now, but you see employees getting angry and talking back and saying — no matter what the size of the company — “You don’t do enough for diversity.”
Not even just employees, but consumers are saying,“I’m not going to support your business if your business doesn’t support Black Lives Matter.” You see this groundswell that is really impactful.
But at the same time, you need to attack it on both sides. It’s really hard for a consumer to talk to an LP and say, “Change your practices.”A lot of consumers don’t know about LPs and don’t know about the power they wield.
What about entrepreneurs? How can they make a difference?
I think Delane Parnell who spoke on the call is a great example of an entrepreneur that has exhibited his values throughout his company and pushed his VCs to think about the values that he cares about.
I remember when he was pitching his company to NEA, when I was still working at NEA, he voiced his concern about firms that didn’t have black investors. With the company that he’s running now, PlayVS, I know that he’s very involved in all candidate search processes even though he’s the CEO, even though he’s incredibly busy, to make sure they’re looking for diverse talent. It trickles down from the leadership level, so entrepreneurs have power in that sense.
There’s a lot of talk about diversity that turns out to be just fluff. How can entrepreneurs make a substantive impact through leadership?
You have to walk it and breathe it and live it every day. Your HR policies need to reflect a diverse perspective. You have to have diverse leadership in places where they can actually propagate those views to make the business better. You need to really make sure people have resources and feel like they have someone they can go and talk to.
In terms of tactical steps, I think it’s about tracking your numbers, which is what I always tell firms. You need to track your diversity numbers in your company.
And, its about integrating conversations about diversity within your DNA. You need to be bringing up diversity not just when you’re talking about hiring, but when you’re talking about the events you do or which customers you serve. Its about promotions and making sure that there’s the support there to really empower these diverse groups to take leadership positions, and stay, and retain, and feel like they have a place.
That’s as well as just listening. If you have diverse employees they will tell you what they need for support. However, it’s not about pressuring them. It’s also not about adding to their work.
A big thing that’s really going on right now is Black people and people of color feel like they have this extra job to do right now, in addition to their day job, to support these causes, to support Black Lives Matter, or to change the DNA of their company so that it’s more diverse.
If you don’t know how to do it, you can ask for the advice of your employees, but you have to remember that it is not their job.
There are companies that get paid to do this. So pay them to do this. Do not take free labor from your Black and brown employees.
Resources for diversity training:
Links from BLCK VC:
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