I have often heard the saying, "You were probably too young to remember this, but . . ." I can honestly say that I can recall quite a bit from my childhood even though I can't seem to recall what I had for breakfast yesterday. I remember a lot, including some things that I wish were fuzzy.
I know this sounds strange, but I remember my dad leaving. I was barely two years old, so obviously I was at an age when I could not fully comprehend what I was experiencing at the time, but I already knew I missed my dad and I wanted him to come home. Divorce is a topic I am very familiar with, both personally and professionally. There are countless people who seek counseling in various areas of their life and to me; that is just another day at the office. However, my story hits a different type of nerve for me. It is a story that I had processed in my own therapy, but this is the first time I am sharing it with the public, so (deep breath) . . . here we go.
As I mentioned before, my dad left when I was about eighteen months old. Just as I was trying to adapt to these changes as best as a toddler could, I met my dad's new "friend" and her kids. I remember she took my hand and walked me around where she worked. I am sure a lot was going on behind the scenes between my parents, but again I was too young to put things together at the time. Fast forward to age four or five, I was introduced to a new friend: anger! Oh, and nightmares. Plenty of them. One recurring nightmare was my dad leaving me. I would wake up screaming and crying, filled with a mixture of sadness, anger, shame, and guilt. My mom would come running into my room to comfort me as I sobbed against her shoulder.
Looking back now, I realized that the word that truly defined what I was feeling was powerless. My mom decided that she needed to do everything in her power to help me. So, she went to the bookstore and found several books that were supposed to help kids deal with their parents' divorce. She would read them to me, but they often told stories of children that I could not relate to, or they were often telling me how I should feel, rather than allowing me the space to access my own feelings. It was frustrating and overwhelming.
It is fascinating how quickly we can adapt. I started to get used to going back and forth between my two homes. However, it was only for a short period of time that I felt "okay." Fast forward again to around age ten. Just as I was starting to accept all the changes including separate homes, blended families, and different sets of rules, I had to endure a long and terrifying custody battle. I felt like my parents were playing tug of war with me in the middle! The anger that I thought had disappeared came back in full force and even brought additional feelings, including shame, grief, sadness, low self-esteem, people-pleasing tendencies, just to name a few. That voice I was working so hard on developing was silenced as I decided to just say or do what I thought would please my parents as well as others. I not only lost my voice, but I lost myself.
That's when my mom introduced me to a journal. What started out as doodling tiny drawings in a lined notebook became pages and pages filled with my innermost thoughts and feelings as I got older.
I also learned some interesting techniques from my mom. She created "games" for us to play including what we called "give me the bad stuff," which is where I would think of all the different things that were bothering me, shout, "I don't like this," while bundling them up into an invisible ball, and then handing them to my mom who would then pretend to throw them out the door or window.
My mom would tell me that I am just a kid, so I did not need to hold on to all this "yucky stuff" inside. It was the first time in a while that I felt like I had a voice. It was wonderful! I would also scream into or hit my pillow as if it were a punching bag. Pretty creative stuff, right? As my mom always says, "It takes a village," and boy was she right! I lucked out by having such an amazing support system at my elementary school.
My guidance counselor established a support group for children of divorced or divorcing parents, and it truly helped to normalize what I was feeling. I was able to speak to peers my own age going through the same things, which was helpful as many of my close friends could not relate to what I was experiencing. I was given safe, nonjudgmental outlets to express myself, and little by little I felt better.
So why am I sharing my story? Well, today as a therapist, I listen to other children's stories. Divorce is definitely not pretty, but it does not have to be so ugly! Whether the parents decide to "stay together for the children" or go their separate ways, children are getting pulled into the chaos. Sometimes, children will pretend they don't know what is going on or act as if they don't care, but trust me when I say it all leaves an impact.
My book, My Parents Are Getting a Divorce . . . I Wonder What Will Happen to Me, is an interactive workbook that was created by my mother and me during the terrifying custody battle that took place between my parents. I felt it was imperative that I assist as many children as possible to help them explore and uncover their innermost thoughts and feelings regarding their parents' divorce. Within the pages of the book, children are encouraged to write and draw as well as ask questions to get in touch with what is inside that needs to be healed.
Amid the mainstream conversation about inclusion and justice in the workplace, otherwise known as #MeToo, a Silicon Valley venture capital fund considered how they can be more inclusive of the women, minority, and LGBTQ entrepreneurial communities.
Their solution? Ask the CEOs they currently fund to promise to hire senior-level employees from diverse backgrounds.
Lightspeed Venture Partners, a venture capital fund that has investments with blockbuster startups such as The Honest Company, Affirm, and HQ Trivia, has asked its portfolio company CEOs to sign a “side letter" affirming their commitment to consider women and other underrepresented groups for senior jobs and new spots on their board of directors.
Can making pledges— or even hiring a C-Suite level employee to manage diversity efforts— really make an impact on the funding gap for multicultural women-led companies?
Many experts say it's going to take systemic change, not letters of intent.
It is well reported that the amount of investment going to multicultural women-led companies is incongruous to the entrepreneurial landscape and the performance of their businesses. Between 2007 and 2016, there was an increase of 2.8 million companies owned by women of color. Nearly eight out of every 10 new women-owned firms launched since 2007 has been started by a woman of color yet, these businesses receive an abysmal 0.2 percent of all funding. Amanda Johnson and KJ Miller, founders of Mented cosmetics, were just the 15th and 16th Black women in history to raise $1M in the fall of 2017.
The multicultural women who do defeat the odds to get funded receive significantly less than male founders. The average startup founded by a Black woman raises only $36,000 in venture funding, while the average failed startup founded by a White man raises $1.3M before going out of business.
The implicit and explicit bias not only impacts individual multicultural female founders, it could be stifling innovation. For example, companies with above-average diversity on their management teams reported innovation revenue as 45 percent of total revenue compared to just 26 percent of total revenue at companies with below-average management diversity. That means nearly half the revenue of companies with more diverse leadership comes from products and services launched in the past three years.
In our economy today, venture capital is responsible for funding the work of our most innovative companies. Venture capital-backed U.S. companies include some of the most innovative companies in the world. In 2013, VC-backed companies account for a 42 percent of the R&D spending by U.S. public companies.
With a wealth of multicultural women entrepreneurs and evidence to support the performance of diverse companies, why does this funding gap persist?
According to Kristin Hull, founder of Oakland-based Nia Impact Capital and Nia Community, many traditional investors consider women or minority-led businesses as a category in their portfolio, like gaming tech or consumer packaged good. Hull, who focuses on building portfolios where financial returns and social impact work hand-in-hand, argues gender and ethnicity are not a business category and investors who dedicate a specific percent of their portfolio to diverse companies are the ones missing out.
“We are doing this backwards," says Hull. “Adding diverse, women-run companies actually de-risks an investment portfolio."
Hull points to research that has found women are more likely to seek outside help when a company is headed for trouble and operate businesses with less debt on average. What's more, a study conducted by First Round Capital concluded that founding teams including a woman outperform their all-male peers by 63 percent.
Ximena Hardstock, a 43-year-old immigrant from Chile experienced this bias first hand before she raised $5.1M for her tech startup. “How do you get an investor to notice you and take you seriously?" says Hardstock. “White men from Harvard have a track record and investors are all looking for entrepreneurs that fit the Zuckerberg mold. But a woman from Chile with an accent who started a technology company? There is no track record for that and this is a problem so many women of color face."
Hardstock came to the U.S. from the suburbs of Santiago when she was just 20-years-old. Alone with no family or connections in the U.S., Hardstock worked as a cleaning lady, a bartender, and a nanny before she began teaching and working in education. “I had a lot of ideas and Chile is still a very conservative country," she says. “Most women become housewives but I wanted to do something different. So, I moved to the U.S."
Hardstock went on to earn a Ph.D. in policy studies, served as vice president of Advocacy for National StudentsFirst and worked as a member of Washington DC mayor Adrian Fenty's cabinet. Her experience working in both education and government exposed her to a need to simplify the process of connecting lawmakers with their constituents. As a result, Hardstock founded Phone2Action, a digital advocacy company that enables organizations and individual citizens to connect with policymakers via email, Twitter, Alexa and Facebook using their mobile phones.
Because venture capital and private equity are not necessarily meritocracies, Hardstock initially struggled to get in an audience with the right investors despite her company's growth potential, her experience, and her education. In fact, it wasn't until she won a competition at SXSW in 2015 that she could get an audience with a serious venture capitalist.
While it may seem like symptoms of a bygone era, both Hardstock and Hull say the path to investor relationships is forged in places where many women of diverse backgrounds are not – ivy league organizations, golf courses and late night post-board meeting cocktails attended mostly by White men of means.
The history of venture capital has never been very balanced, according to Aubrey Blanche, global head of diversity at Atlassian software development company and co-founder of Sycamore, an organization aiming to fix the VC funding gap for underrepresented founders. “White and Asian men have built the venture system and for generations have been seeking out people like themselves to invest in."
Personal and professional networks are critical for founders to connect with investors, but many multicultural women don't have access to the networks their White peers have. According to a study conducted by PRRI, the average White person has one friend who is Black, Latino, Asian, mixed race, and other races. This common situation makes getting that all important warm introduction to established VCs very challenging for multicultural women founders.
“Is the ecosystem of your network equivalent to your net worth? Absolutely," says Hardstock. “For us, we have to build our own ecosystem and recreate what happens on the golf courses and at the Harvard reunions."
To Hardstock's point, most multicultural women with entrepreneurial aspirations lack that Ivy League network. According to reporting published in The New York Times, Black students make up just nine percent of the freshmen at Ivy League schools but 15 percent of college-age Americans. This gap has been largely unchanged since 1980.
While notable female investors such as Arlan Hamilton, Joanne Wilson, and Kathryn Finney are actively working to close the funding gap for women of color, only seven percent of current senior investing partners at the top 100 venture firms are women. Less than three percent of VC funds have Black and Latinx investment partners. Without an influential network, Hardstock and entrepreneurs like her are left screaming for a seat at the table.
When Black, Latina, and Asian women founders do get in the room with the right investors, they have to work harder to get the investors to relate to their products and services. “Entrepreneurs solve problems they understand," says Blanche. “When multicultural women entrepreneurs present their businesses to a homogenous group of male investors who may not be equipped to understand the idea, they may pass on an amazing business."
Take, for example, the founders of Haute Hijab or LOLA. Founders of both successful startups would have to explain the market for their services to a table occupied mostly by men who may never have considered that Muslim women want more convenient access to fashion and have never considered women might prefer to purchase organic tampons.
This lack of familiarity typically means reduced funding for women and a host of other consequences.
As one recent study pointed out, even the way investors frame questions to women can impact funding. According to the Harvard Business Review, female founders are often asked “prevention-oriented" questions focused on safety, responsibility, security, and vigilance. Male founders, on the other hand, are often asked questions focused on hopes, achievement, advancement, and ideals.
When all of these factors are considered, a side letter may not be enough to begin to close the funding gap.
Both Blanche and Hull say real change can be made by democratizing information and education on impact investing. Both women say educating investors and MBA candidates about impact investing is the best way to overcome current bias.
Blanche's organization, Sycamore, produces a newsletter for new angel investors who want to help close the funding gap while making money in the process. Hull's firm has an internship program for multicultural girls from Oakland to expose them to the worlds of investing, entrepreneurship, business leadership, and financial literacy.
“I'm excited about the changes I see," says Blanche. “I see more firm employing the Rooney Law on an institutional level, an increase in smaller firms looking at underserved communities, and the democratization of institutional funding."
Hull adds that as long as multi-cultural women-led firms continue to show returns and outperform or perform on par with companies founded by White men, the investor community will rethink their portfolio strategies.
This piece was originally published in 2018.