New data shows that Chicago’s venture capital industry is slowly diversifying, with more women and people of color working at local firms.
The data, released Thursday by Chicago Blend, shows that the number of women working at Chicago VC firms has increased from 28% in 2018 to 32% in 2020. When it comes to race and ethnicity, people of color make up about 19% of the local VC industry compared to 14% two years ago.
“The community and ecosystem has started to be more intentional around building inclusive hiring processes,” said Lindsay Knight, the co-founder of Chicago Blend and the director of platform at Chicago Ventures.
Additionally, more women and people of color are being appointed to firms’ executive teams, the data shows. Non-White representation at the executive level has doubled from 9% in 2018 to 18% in 2020. And of all executive promotions at local VC firms, 34% were given to women, even though they only make up 32% of the entire industry.
However, none of the promotions were given to Latinx or Black women. Executive level promotions were only given to White and Asian/Indian women, the data shows.
“We want to understand how people are progressing because you can certainly hire a bunch of underrepresented people at the junior level but are we giving them the tools and the support to advance within the firm?” Knight said.
The data, collected in May and June, includes nearly 600 employees from 92 firms with a Chicago office that manage more than $5 million and have made at least one venture investment within the last two years. The firms encompass family offices, angel investment networks and a handful of other investors. Firms in the data include Chicago Ventures, the Clean Energy Trust and Hyde Park Angels.
Much of the change around diversity is happening at smaller and new funds, rather than Chicago’s more established firms, according to Knight.
Chicago's most notable example of new firms aiming to diversify tech investing is Chingona Ventures, which launched at the beginning of 2020 to back in underrepresented founders. It is founded by former MATH Venture Partners investor Samara Hernandez.
“It’s encouraging to see that newer funds are popping up,” Knight said. “Larger firms sometimes have difficulty diversifying their teams because as folks move up the ladder, instead of making it to a general partner within that firm, they spin out and start new firms, and a lot of those are people are unrepresented in some way.”
Data shows that when women and people of color are making investment decisions, more capital is given to underrepresented entrepreneurs, who have consistently struggled to raise venture dollars at the same rate as their White male counterparts.
To help VC firms continue to diversify their staffs, Chicago Blend is recommending firms regularly review and examine staff demographics, create inclusive job posts and and avoid warm introductions to find candidates that aren’t in existing networks.
“We’re encouraging venture firms to build more inclusive and transparent processes in their hiring practices,” Knight said.
Chicago Blend launched in 2018 and is led by Knight and other leaders at Chicago venture capital firms. Modeled after a similar program in New York called NYC Blend, the group measures “DEI” (diversity, equity and inclusion) in Chicago VC firms and the startups that they back.
Last year, Chicago Blend released data outlining the gender and racial demographics of local startups’ leadership teams. The data showed that among startup board seats, 9.8% were held by women and 10.2% were held by people of color. And among executive-level roles at startup companies, 81% were held by men and 85% were White.
To address disparities at the board level, Chicago Blend created The BlendList, a roster of women and Black, Hispanic, Latinx and Asian board candidates in Chicago and around the country.
“We don’t want this just to be a moment in time,” Knight said. “We want to make sure we’re putting foundation and infrastructure in place for lasting change.”
