The Advantage of Having Venture Backed Friends
I’ve made over 100 investments in my career and nearly half of those went into diverse teams.
I’ll be the first to back up the notion that diverse founders have just as much ambition, drive, intellectual horsepower, creativity—you name it—than anyone else. In fact, you could make the argument that, because of their lack of advantages in other areas, the ones who make it to a venture pitch actually have more of these raw ingredients because they’ve had to in order to make it to the same destination as their straight white male counterparts.
There is, however, an advantage that some founders have over others that I hate to admit exists—but one that I would very much like to solve for.
A founder who has a handful of venture-backed friends—successful ones who have raised multiple rounds of capital and who have grown their companies through different stages—has a huge advantage over one that doesn’t. This group of close connections can not only introduce them to capital but can give strong referrals based on years of shared history. It also provides a built-in set of advisors that can be called upon along the way.
You can tell when a founder has a goto set of people in their network to ask all the dumb, remedial questions about hiring, fundraising, deal doing, PR, etc. No one expects a founder to know all of these things at birth, but when you can go to breakfast with a close friend and say, “Explain to me how you ran your fundraising process…” or “Tell me how you successfully hired for marketing” that means they’re going to hit the ground running on every single aspect of growing their company and being a CEO. They just know what the job is supposed to be and what level they need to be performing at because they’ve seen examples of it up close and over time.
Now ask yourselves the question, “Who has a close-knit group of venture-backed friends?”
We all know the answer to that. Because of where venture dollars have historically flowed, and because most people’s networks look like themselves, people who are well connected to other venture-backed founders are disproportionally straight, white, males.
The reasons why are plentiful and probably overlapping. We can argue about the why, but the fact remains true that not only are capital networks highly segregated, but so are the networks of successful founders themselves.
This has really bothered me—because as much as I believe that everyone has an equal shot at success once given the opportunity, it’s hard for me to argue with the notion that these networks are themselves an advantage—one that is not evenly distributed.
It’s also not something you can fix overnight, either. There are all sorts of well-intentioned mentoring programs, networking events, etc. that stick a bunch of people in a room once, or for a couple of meetings—but that’s really different than spending two years of an MBA program together, including all the side trips, having your kids go to the same school, playing on softball teams together, etc.
It’s something to think about if you think that entrepreneurship will be in your future. Ask yourself, “Am I an island?” Are you a standout, unique within your network, disconnected from people who have lots of experience doing the things that you would like to be doing? Or, are you well connected—friends, even—with people a couple of steps ahead that you can learn from?
It’s also something to think about if you’ve gotten that venture backing—and what kinds of networks you’re participating in. If you’re going to make an impact on building a thriving, diverse ecosystem, showing up at a networking event once isn’t going to forge the kind of relationships where you can really go to bat for people and pass on your knowledge over time. How can you open yourself up to deeper, more authentic relationships over time with people who come from different backgrounds?
