If you want to see more people of color in VC, “look to the people at the top,” says Lo Toney – TipsClear

Last week, we suggested that for a truly diversified enterprise industry, limited partners who provide investment capital to VCs – institutions such as universities and hospital systems – would have to start incorporating diversity mandates into their work. Says that a venture firm wanted to secure a commitment from the University of Texas System; This would require writing a certain percentage of their capital in advance to startups set up by underpresented groups.

Given how fragmented the world of institutional investment is, the idea may seem impractical. But lo tony, A small but growing number of black patriarchs in Silicon Valley suggests that this may indeed be inevitable. He says, for example, pension funds such as the California Public Employees Retirement System, which manages assets of 1.6 million employees, many of whom “look like me”, Tony says. Imagine that if they are managing their money, they can start asking more questions.

It is not that Tony is waiting on this development. He is not needed as a former partner at Comcast Ventures, then GV, Tony was able to secure the alphabet as an anchor investor at his own investment firm, Plexo Capital, whose first vehicle is financing venture organizations, as well as direct startup investments. Now with renewed attention to the shortage of people of color throughout the startup industry, Plexo has knocked on its door again, and Tony’s plan for that second fund includes not only his current fund managers Helping but also helping more investors of color. Their own venture firms.

This is an extension of work that is already in progress. Plexo, which closed its first fund last year with $ 42.5 million – including Ford Foundation, Intel, Cisco Systems, Royal Bank of Canada and Hampton University – already has stakes in 20 funds, including Precursor. Ventures, Ingressive Capital, Kindred Ventures. , Equal Ventures, Boldstart Ventures, and Work-Bench.

Almost all – with exceptions like Boldstart Ventures and Work-Bench – are run exclusively or partially by people of color. Meanwhile, at the work-bench is Jessica Lynn, a former Cisco female cofounder System manager. “We have enough reports from Harvard and McKinsey of the world that show us diversity at every level,” says Tony. “We see better performance with diverse boards, public companies with diverse management teams; When there are diverse managers, we see better performance. “

With his second fund, he hopes to turn the dial even further. More specifically, he says, in Plexo’s first fund to better assist those GPs and fund more black GPs, the aim is to “develop a Y combinator of the type” that transitions them. Helps to understand some of the nuances of being. Great investor to be a great fund manager. “

Part of the idea is to institutionalize the work that Palexo already does in an ad-hoc manner to help managers prepare marketing materials, give their strategy to both high-net-worth individuals and institutions, And manage LP communications following an investor base. has been established. He says that there are three aspects of many elements of fund management that Plexo can help with.

Plexo is also putting a strategy in place [to] Help these young GPs with working capital to be able to afford the expenses of starting a fund [given that] It can take an average of one million dollars. ”He adds,“ Considering the salary, travel expenses, service providers, and money that a general partner typically has to kick in for its own fund, ”he says.

This was a model that Plexo felt it could use to move things around faster than it was investing in individual companies.

Nevertheless, Plexo cannot do this alone. Nor are its friends and associates, some of which include Elliot Robinson of Bessemer Venture Partners, Frederick Gross of Storm Ventures, and Sidney Sykes of retail startup Doll Kill, which separately operate a youth organization called LLCK VC that promotes black enterprise Works to add and forward. Investors.

Tony is particularly concerned at some people of color in large and later-stage venture firms – investors who might otherwise have a network and they know how to support black entrepreneurs as their startups. This is a valid concern. According to a 2018 report in The Information, the then 102 venture firms had just seven black decision-makers over $ 250 million under management, and those numbers are relatively unchanged. This shortage is especially frightening for black investors, who are women.

The industry may, gradually, over time, include less homogenous and more inclusive groups. But it would occur faster if the funds of institutions or public employees accepting federal funds would be managed to focus more on the issue. In fact, there is the notion that their constituents – including donors and employees through their pension fund contributions – may insist at some point.

“In fact, there is often not a collective sense of power and influence, which can affect changes in our asset class,” says Bonnie. “I have my doubts – and I don’t know that, and I’m not part of any initiative – which we’ll see more of [pension] Money takes a stand, and that [this shift] Their employees will come from the base to the bottom. “

It may not take long for the ball to roll. “They can put pressure on our industry, even just asking questions [including]: ‘How many black companions do you have? Many how many women do you have? “What does the structure of your portfolio look like?”

“Even asking those questions as a first step – that in itself will affect further change,” he says, “because who wants to look bad while answering those questions?”

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