Welcome to Startups Weekly, a nuanced take on this week’s startup news and trends by Senior Reporter and Equity co-host Natasha Mascarenhas. To receive this newsletter in your inbox, subscribe here.
Venture capital bias has been a branding issue for some of the emerging, diverse fund managers just now splashing onto the scene. The othering that happens, from an ever-homogenous group of LPs or even founders who see female VCs as monolithic, has led to some female VCs rebranding their firms altogether so they are seen as beyond their gender. Read my full take on this topic with Rebecca Szkutak on TC+: “For female VCs, bias is a branding issue.”
In other news, Upfront Summit 2023 was a two-day, invite-only event that brought together industry insiders — and celebrities — to talk about the future of capital. AI was the omnipresent celebrity at Upfront. My colleague Ron Miller will have a story up recapping the standout moments during the panel with Salesforce CEO Marc Benioff. He also has a great piece about Adobe’s Scott Belsky and the executive’s take on generative AI.
Better.com has been an Amazon Web Services customer since 2015 and its loan origination system is powered entirely by the software, according to a statement. Still, Better has been through its fair share of struggles that have cast doubt on its future. Must we run through all the filings?
Headline of the week goes to: “Uber is coming for Instacart.” Applications are open for the TechCrunch Startup Battlefield 200. If you missed Startups Weekly last week, catch my last issue here: “AI’s hype isn’t going to be simply star-studded.”
TechCrunch is coming to Boston on April 20. I’ll be there with my favorite colleagues to interview top experts at a one-day founder summit. Book your pass ASAP! Speakers include Techstars’ Kerty Levy, Construct Capital’s Dayna Grayson and NFX’s James Currier.
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The oh-so-biased branding risk in venture capital
Venture capitalists and startups are always looking to create a brand and identity for themselves. It is essential for startups to differentiate themselves from their competition, gain recognition, and attract customers. However, branding can come with a significant risk of bias in venture capital, potentially resulting in negative consequences.
At its core, venture capital is about investing in people and their ideas. Because of this, investors are naturally drawn to individuals who share similar experiences, backgrounds, and perspectives. This is where the risk of bias comes into play – investors may be more likely to invest in people who look or think like them, creating a homogenous group of founders and companies.
The lack of diversity in venture capital has been making headlines for years. According to a 2018 report by All Raise, only 11% of decision-makers at venture firms are women, and only 8% of decision-makers at venture firms are individuals from underrepresented backgrounds.
With such a lack of diversity, it is easy for investors to miss out on potential opportunities to invest in individuals and companies with different perspectives, experiences, and solutions. This can result in missed opportunities for both the investors and the companies.
Furthermore, biased branding can lead to negative consequences for startups, primarily concerning Social Media. Branding is often done through social media, which can make or break a startup’s reputation. Biased branding can perpetuate stereotypes, perpetuate inequality, and offend certain groups of people. As a result, startups may miss out on potential customers, partnerships, and investment opportunities.
So, what can be done to mitigate these risks? Firstly, investors must recognize the importance of diversity and inclusion in startups. The venture capital industry must acknowledge the lack of diversity and work towards correcting it by actively seeking out underrepresented founders and investing in companies from diverse backgrounds.
Another solution is to make branding an objective process. Investors can create a standardized set of branding criteria to evaluate startups that are applied across the board, rather than just relying on personal biases. This will enable investors to evaluate startups based on objective criteria unbiased by preconceived notions about founders or their backgrounds.
In conclusion, biased branding is a severe risk in venture capital, and it affects both investors and startups negatively. A lack of diversity leads to missed opportunities for investors and companies, and homogenous branding can perpetuate stereotypes and offend many groups. It is essential for investors in the industry to recognize this risk, work towards correcting it, and make branding an objective and standardized process to create diverse and successful startups.
