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Legal Talent & Inclusion

New research finds some progress for DEI in venture capital and private equity

Rangita de Silva de Alwis  Associate Dean of International Affairs / the University of Pennsylvania Law School

Rangita de Silva de Alwis  Associate Dean of International Affairs / the University of Pennsylvania Law School

New research ranked top venture capital and private equity firms and examined their individual statements about diversity and inclusion pledges made in the wake of 2020's social unrest

Building on the global public reckoning in the wake of the social justice and Black Lives Matter (BLM) movements in 2020, there has been an explosion of interest in the diversity pledges made by venture capital firms.

A year later, our study analyzed how much diversity, equity & inclusion (DEI) has evolved since the Summer of 2020. By researching approximately 50 venture capital (VC) and private equity (PE) firms based on a variety of ranking systems, including top firms by assets under management and top firms by status, the team was able to identify the top 35 VC firms and the top 15 PE firms. From that list of 50, we found 23 had made public statements, and from there, specific categories were analyzed to assess progress, specifically:

      • who signed the statement and in which medium was it released?
      • mention of any specific target groups;
      • concrete action pledged by the firm;
      • internal commitment to employees, the board, or the firm’s own best practices; and
      • financial commitments declared.

Influencing factors

We believe that true commitment to DEI requires a holistic approach across an organizational ecosystem: financial commitment, development of internal programs, a diverse team and board, and diverse investments. Therefore, we find each of these categories to be important, because if all are present, they reveal a holistic commitment to diversity and inclusion.

Specific highlights of our research include:

      1. We found that a statement signed by a CEO or senior executive to be more valuable than a statement unsigned or signed by a DEI chair because the former shows that the leadership is committed to diversity.
      2. Addressing intersectionality or multiple groups and their unique experiences within the context of social justice and the BLM movements would be most desired in a statement.
      3. We value concrete follow up action steps because they show the firm’s intent to make structural change.
      4. Internal commitment is an important component of a statement because it reveals that the firm is interested in improving their own spaces as well as external spaces.
      5. We find value in a pledged financial commitment because it is an easy yet powerful step to measure.

Out of the top 50 VC and PE firms, 26 made statements and 17 made financial commitments. Ten made statements by executives, and 20 followed up their initial statement by publicly reporting progress, one year later.

After sourcing and reviewing each diversity statement, we have analyzed that every firm took a different approach to their action on commitments to DEI, but in general, most firms either took an internal approach (developing programs, hiring a diverse workforce, etc.) or an external approach (donating money to racial justice organizations). For example, internally, standout firm Andreessen Horowitz created the Talent X Opportunity Fund, which is designed to help entrepreneurs that historically lack the resources to be successful. Additionally, Bain Capital pledged to create an economic development initiative in Boston to focus on supporting minorities and women, in addition to improving their own diversity in leadership and expanding employment opportunities.

Out of the 26 statements we analyzed, five pledged to match employee contributions and four committed to donating a specific amount of money, with two of those committing to matching as well. Andressen Horowitz pledged $2.2 million plus $5 million of matching funds, Bain Capital pledged $100 million and 2:1 matching. Sequoia Capital pledged to match employee donations 2:1; and Mayfield pledged 1% of their management fee and carry every year to DEI. Techstars created an employee matching program and continued to donate through the Techstars Foundation, and Intel Capital pledged to double their current $70 million investment in Black founders. Many of the firms mentioned getting involved with social justice organizations like the NAACP, but did not give details on their involvement.

Progress is slow but it is heading in the right direction

More commitment is needed to advance DEI and to increase access to opportunity to underrepresented individuals both in terms of founders receiving funding and VC and PE firms increasing representation at senior levels internally within their own organizations, but things are headed in the right direction. In terms of funding founders of color, funding to Black entrepreneurs in the U.S. hit nearly $1.8 billion through the first half of 2021 — a more than four-fold increase compared to the same time frame last year. Led by funding to early-stage startups, this year’s half-year total has already surpassed the $1 billion invested in Black founders in all of 2020 and the $1.4 billion invested the year before that.

Likewise, progress has been made internally at the senior and junior investment professional levels. According to the biennial VC Human Capital Survey, “diversity among investment partners have largely been driven by the hiring and advancement of female investors, while there has been little progress in the equitable representation of Black or Hispanic investment partners.” However, there is greater diversity at the junior level professionals with wider adoption of diversity-focused talent management and recruitment practices.

What we need is more of the systemic changes pledged by the Carlyle Group to ensure 30% diversity on the boards of their companies, and a $4.1 billion fund linked to financing board diversity. As Reggie Van Lee, Partner and Chief Transformation Officer of the Carlyle Group, said: “Diversity is a measure of our competitive advantage.”


We thank Natalie Runyon of the Thomson Reuters Institute for her partnership and May Scott Douglas and Govind Nagubandi for research assistance.

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