Ulu Ventures changes access to capital by following multiple strategies.
- We invest in diverse founding teams ourselves.
- We’ve built a methodology to help us do that by reducing bias in our decision making process.
- We educate limited partners in our industry, and that has had a real impact.
For example, when we have done diversity training, with Illumen Capital, the Impact Experience, and our limited partners, we’ve seen our investors go on to do great things. They’ve created social networks of limited partners who are committed to meeting diverse managers in all asset classes. One network in particular, supported by Ulu limited partners, now has 350 limited partners in the US that are looking at and meeting diverse teams, some of them for the first time. Another investor has gone on to develop their own diversity statement, and to make their first investment in a diverse manager. Some are replacing managers with higher performing diverse managers they’d overlooked the first time around.
The most important thing Ulu can do to increase investment in diverse founders is to have successful companies in our portfolio. We’re looking to educate those companies about issues of diversity. We’ve done that through programs that include Illumen Capital’s Impact Experience, last year and this year, we have launched a program with Praxis Labs, one of our own portfolio companies that’s in the diversity training space. It is evidence-backed by research developed at Stanford University. We will make it available not just to our founders, but also to limited partners to try to impact both founders who get access to capital, and limited partners who are investing in teams that incorporate diverse managers, because diverse managers tend to invest in more diverse founders.
We know that women VCs, for example, make 2x the number of investments in women entrepreneurs than men do. We think something similar will happen when we have a critical mass of people of color making investments.
I believe that Ulu has both been helped and hurt by the events of the last year. What we saw happen in the market was that some LPs were very much focused on increasing access to capital for diverse founders. And they recognized that diverse managers tend to make more investments in those communities. Our internal research at Ulu Ventures indicates the top 50 firms that made investments in underrepresented minority founders in the last five years, all had an underrepresented minority founder. Those 50 firms were responsible for about two thirds of all the investments made in the country in diverse teams.