Seven venture firms and organizations focused on diversity within tech have announced the Diversity Data Alliance, a commitment to standardizing the way that data is collected and shared.
Data transparency remains a pressing issue within venture for people looking to better track where and to whom money is allocated. Many firms already privately compile background information on their founders, but that data can be skewed when publicly shared without insight into how the data was collected.
The Alliance hopes to simplify this process by creating a framework that firms can use to gather information about founders and funders. It hopes to also work toward creating a centralized data pool to better track and understand funding trends in the industry. This is especially important for marginalized founders, who still receive little to no venture funding.
The Alliance told TechCrunch that it hopes to look at this data to find ways that could help increase capital allocation to underrepresented founders, with the intention of releasing a report with centralized data. It is building out privacy and security measures, in addition to fundraising for a database that can store this information.
The firms and organizations that have signed on to the Diversity Data Alliance so far include All Raise, Diversity BC, BLCK VC and Somos VC, though more can join. The group started working on the standardization process last fall and started implementing it this spring.
“Each of us has tried to do this on a small scale and with extremely limited resources,” said Sarah Millar, COO Of Diversity VC and a founding member of the Diversity Data Alliance. “By pooling our efforts for data collection and analysis on this specific piece, we can spend more time on the programming and projects that demonstrably move the needle for our communities.”
The standard data collection process will ensure that all firms are using the same optional contact intake form for all founders. This means asking the same five questions about basic information, such as knowing a founder’s name, preferred pronouns, email, location and LinkedIn link. Firms will also ask the same questions about race, asking founders to check what they identify as and asking them to simply select their date of birth. It will ask a founder what gender they identify with, sexual orientation, education, disability status and military affiliation.
Until now, firms have been asking similar but quite different questions. For example, some firms did not ask questions about disability status at all, and others used more in-depth language about race or gender than others, like asking whether a founder was Middle Eastern, while others did not have the option for founders to check off at all.
Diversity Data Alliance is the latest effort within venture to push for more data transparency. Next year, California is set to implement a law requiring firms operating in the state to report a demographic breakdown of the founders in whom they invest, aiming to better understand the haves and the have-nots in the funding world. The Alliance said it is in contact with the legislators working on the California bill and hopes to share learnings as both rollouts continue.
The Alliance hopes that other firms and organizations will sign on to join the data collective.
“We cannot change what we don’t measure,” Paige Hendrix-Buckner, CEO of All Raise, told TechCrunch. “By uniformly collecting demographics data, we can more deeply understand the landscape of the venture and startups ecosystem to ultimately drive more transparency and powerful storytelling about the characteristics of thriving venture capitalists and up-and-coming stars in our industry.”