Kapor Capital Will Start Requiring New Portfolio Startups To Invest In Diversity And Inclusion

Kapor Capital wants its portfolio companies to progress in the areas of diversity and inclusion, which is why it’s launching the “Founders’ Commitment,” a four-part roadmap for startups to foster diverse and inclusive cultures early on.

“Baking diversity and inclusion into a company’s culture early can provide the foundation to build a much more representative workforce in later stages of growth,” Kapor Capital Partner Freada Kapor Klein said in a statement. “We look forward to the day when one of these diverse startups takes off to become the next tech giant.”

The commitment will be a standard term in all of Kapor Capital’s new investment agreements, but existing companies in Kapor Capital’s portfolio are able to opt-in to the pledge.

Here’s what the companies have to commit to:

  • Establish diversity and inclusion goals that are appropriate for the company’s funding stage, employee size, customer base, and core business. Include progress on diversity and inclusion in quarterly investor updates.
  • Invest in tools, training programs, and/or resources that assist with mitigating bias in recruiting, hiring, and employment.
  • Organize volunteer opportunities for employees to engage with underrepresented communities, especially those that reflect the company’s customer base.
  • Participate in diversity and inclusion sessions to learn about what works and what doesn’t. These sessions will be hosted by Kapor Capital and will be made available for virtual participation as needed.

The goal is to make the tech industry look more like the world we live in — a diverse one. Kapor Capital also recognizes that diversity can lead to better ideas, new revenue streams and bigger profits. In fact, ethnically diverse companies are 35% more likely to financially outperform those that are not, according to research firm McKinsey.

The idea for the Founders’ Commitment came from Kapor Capital’s portfolio companies last summer, and the firm hopes that it will inspire similar initiatives in Silicon Valley and in tech as a whole. If other VC firms follow suit by requiring this from their new portfolio startups, the overall impact on diversity and inclusion could be huge.

So far, 52 companies in Kapor Capital’s portfolio have signed on to the pledge. That includes companies like Jopwell, PreK12Plaza, Honor, Birdi, Clever and Bitly.

“By building a diverse workforce, we are not only doing the right thing, but we’re doing the right thing for our business,” Bitly VP of Human Resources Susan Riskin said in a statement. “We truly believe that Kapor Capital Founders Commitment will raise awareness across the tech industry and will provide a path for underrepresented entrepreneurs to succeed and create technologies that are useful to all populations.”