Follow the Black Money in Silicon Valley Not Being Invested in Black Companies
Moguldom.com wrote an article discussing the prevalence of white supremacy in technology. The article mentions that about a third of institutional venture capital comes from retirement funds, CalPERS (California Public Employees’ Retirement System), the state of Texas, and the state of Florida. “The money is flowing, and it’s connected to the public. It’s connected to you—working people. Silicon Valley investors—institutional investors—are getting their money from pension funds. They’re also getting their money from public university endowments.” When I read the statistics such as only one percent of (venture) capital distributed is going to people who look like us and started looking at the systemic ways the valley and private equity companies operate, I found a case study in benign neglect.
This year, CalPERS made investments in five different private equity firms, and some of them have divisions that focus on technology. Their commitments are over $4 billion. I am curious to see how many of those firms look at Black-owned businesses who have some success and need funding rounds. We should look at the state pension funds that have high Black employee commitment and follow the money. We should then implement demands for funds we invest in making commitments to their investment strategies, including more capital allocation to Black-owned businesses with ROI potential. Hiring Blacks in positions of power will also increase investment downstream.
In 2020, in a pandemic-ravished economy, the US venture capital market had raised $69 billion. This is a record amount that should translate into a record number of investments in Black start-ups. We need more pressure on the institutional investors who finance venture capital funding. Those who talk about supporting Black founders, such as university endowments (that owe their success to Black students and athletes), family offices, and private individuals—many of whom owe their success to their Black employees and most of all consumers.
We need a watchdog to follow the money.