Why There Needs To Be More Allyship Among Investors To Diversify Venture Capital

Anyone who pays attention to the world of investing knows of the disparity between different demographics of founders when it comes to raising. For example, women-founded startups got just 1.9% of all VC funding in 2022, TechCrunch reported, a figure that was down from the previous year. Founders of colour have also seen their share of funding decline from an already low starting point, according to research conducted by BLCK VC and Silicon Valley Bank. That’s an issue, not only because it means entrepreneurs receiving funding don’t represent society’s makeup, but also because it means VCs are highly likely to be missing out on the best deals — it’s proven that more diverse founders are more successful.

That’s where the concept of “allyship” comes in. It’s a concept that has evolved over time, from the idea that those in the same self-identified minority group support each other and only each other, to something much broader — ”now the expanded definition includes those from the majority being ‘allies’ to the minority”, Deepali Nangia, Partner at SpeedInvest told me. Allyship is a way for investors to ensure the distribution of funding is more equal across demographic groups, and also to ensure they can find the best businesses out there.