Maveron and 9 VC firms join initiative to increase underrepresented investors on term sheets


Alejandro Guerrero, principal at Act One Ventures. (Act One Photo)

A group of venture capital firms today joined “The Diversity Term Sheet Rider for Representation at the Cap Table (Diversity Rider),” a new initiative that aims to increase investor diversity on startup deals.

L.A.-based Act One Ventures is leading the group, which includes Seattle-based firm Maveron. Each firm is committing to include “boilerplate rider language into their standard term sheets” that encourages the addition of underrepresented investors to cap tables.

“This rider will sustain our collaborative efforts as an entire industry to improve access for underrepresented minorities, every single time a deal gets done,” Alejandro Guerrero, principal at Act One, said in a statement. “Through this, we will expand co-investing access, evolve diversity discussions at the cap table and create more diverse deal flow across the industry. As evidenced by research, diverse teams outperform and deliver better returns. Not only is this the right thing to do, but it will have a positive impact on the bottom line.”

Here is the language:

Diversity Rider: In order to advance diversity efforts in the venture capital industry, the Company and the lead investor, [Fund Name], will make commercial best efforts to offer and make every attempt to include as a co-investor in the financing at least one Black [or other underrepresented group including, but not limited to LatinX, women, LGBTQ+] check writer (DCWs), and to allocate a minimum of [X]% or [X] $’s of the total round for such co-investor.

Others participating include Greycroft Partners, First Round Capital, SVB Capital, Harlem Capital Partners, Fifth Wall, Plexo Capital, Precursor Ventures and Equal Ventures.

Firms interested in joining the initiative can sign up here.

A 2018 Deloitte study found that 80% of investment partners at U.S. VC firms were white; 15% were Asian/Pacific Islander; 3% were Black; and 3% were Hispanic. Women accounted for 14% of partners.

There were 54 women who became VC partners in 2019, up from 38 in 2018, according to All Raise. But of those 54, there was only one black woman and one Latinx woman named partner. And 65% of firms don’t have a female partner or GP.

This past June, in response to the protests following the death of George Floyd, SoftBank launched a $100 million Opportunity Fund to invest in minority-owned businesses. Shortly after, Silicon Valley VC firm Andreessen Horowitz announced the Talent x Opportunity Fund, “designed for entrepreneurs who have the talent, drive, and ideas to build great businesses but lack the typical background and resources to do so.”





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