Navigating the Tension Between Under-Acknowledgment and Over-Acknowledgment of Race in Venture Capital

This article was generated by Hadiyah Mujhid in collaboration with ChatGPT, based on a thoughtful conversation about race and identity in venture capital talent evaluation. You can read the full conversation with prompts and responses by clicking here.

In venture capital, where relationships, networks, and access are central to success, the way race and ethnicity are acknowledged in hiring and founder evaluation plays a crucial role. There’s a nuanced tension between under-acknowledgment—where cultural differences and systemic barriers are ignored—and over-acknowledgment—where candidates are reduced to their identity, rather than being evaluated holistically for their skills and capabilities. This balance is critical for building inclusive, equitable teams and supporting undervalued founders and communities in the startup ecosystem.

This blog post, based on a conversation with ChatGPT (link), explores the tension in acknowledging race and ethnicity in venture capital talent and funding decisions. We also dive into practical steps investors can take to build authentic peer relationships with historically excluded communities, rather than reinforcing power dynamics. Finally, we examine a new approach to bias reduction that prioritizes systemic awareness and culturally inclusive evaluation frameworks.

The Tension: Ignoring Identity vs. Over-Focusing on It

In venture capital, there’s often a push-pull dynamic when it comes to addressing race and ethnicity in talent and founder evaluation. On one hand, under-acknowledgment happens when cultural differences are overlooked. This is when the hiring process or founder assessments are done without considering the systemic barriers and unique contexts certain racial and ethnic groups face. When VCs fail to take into account how exclusion has shaped access to capital or networks, they often perpetuate inequities, limiting opportunities for historically excluded communities.

On the other hand, over-acknowledgment can occur when race or ethnicity becomes the dominant narrative, overshadowing the candidate’s capabilities. This happens when well-intentioned firms place an overemphasis on identity—resulting in tokenism—where identity is highlighted, but the skills, resilience, and innovations of the individual are secondary.

A balanced approach is critical. Rather than either ignoring or centering race and ethnicity too heavily, firms need to embrace a systemic framing that considers the broader context of opportunity and systemic barriers while valuing the individual’s professional abilities.

Practical Steps for Building Peer Relationships

Building authentic, peer-level relationships with organizations that represent historically excluded groups—like HBCUvc, BLCK VC, or Somos VC—requires thoughtful, non-transactional engagement. Here are a few ways investors can create genuine connections without reinforcing hierarchical dynamics:

1. Show Up as a Participant: Investors should attend events hosted by organizations such as BLCK VC not as sponsors or speakers, but as active participants. This allows for relationship-building without positioning themselves as the authority figure. When attending, it’s important to check if the event is open to all or intentionally reserved for Black attendees or other specific communities, to respect the space’s purpose.

2. Collaborate on Thought Leadership: Instead of always focusing on diversity-related topics, investors can collaborate with leaders from undervalued communities on subjects relevant to venture capital trends, due diligence processes, or emerging technologies. This builds intellectual partnerships rather than centering identity as the only topic of relevance.

3. Quarterly Check-Ins: Regular relationship-building efforts, such as quarterly check-ins with community leaders, help maintain ongoing dialogue and mutual growth. Investors and community leaders could co-author newsletters or share observations through platforms like Substack, promoting thought leadership collaboratively.

4. Serve as a Connector: One of the best ways to support these communities is to be a connector. Sharing speaking or visibility opportunities with members of BLCK VC, HBCUvc, or Somos VC allows them to grow their platform without simply funneling job listings, which can often feel transactional and discouraging if not followed by genuine advocacy.

Hot Take on Bias-Reduction

My personal take on bias reduction diverges from the idea of blind recruiting, particularly in venture capital. Relationships are foundational in this industry, and identity can be an important part of those relationships. Rather than removing identity from the equation, I believe it’s more important to help investors become conscious of their biases and work toward unlearning them. This includes understanding how systemic barriers shape candidates’ and founders’ paths.

Investors should focus on mapping the cultural and skill gaps on their teams, looking not just for technical or sector expertise but for team members who bring strong connections to undervalued communities. Similarly, they should assess the cultural gaps in their portfolios, although this can be more challenging. Tools like structured interviews and scoring rubrics—supported by AI for detecting bias—can be useful in making these processes more equitable.

Additionally, culturally inclusive evaluation frameworks should go beyond traditional metrics of success and consider characteristics like resilience, problem-solving in constrained environments, and community impact. These traits are particularly important for founders who have navigated systemic barriers.

Creating Belonging in Small Teams

Creating a sense of belonging, especially in small teams, is challenging without formal Employee Resource Groups (ERGs). However, embedding cultural appreciation into the organization’s core values and regularly checking in with team members about whether those values are being upheld can go a long way in fostering inclusion. Formal partnerships with organizations like HBCUvc, BLCK VC, and Somos VC also demonstrate a firm’s commitment to cultural values, both internally and externally.

Conclusion

Finding the balance between under-acknowledgment and over-acknowledgment of race and ethnicity in venture capital hiring and funding processes is not easy. By building authentic relationships, adopting culturally inclusive evaluation frameworks, and focusing on bias awareness and reduction, VCs can foster a more equitable environment for both their employees and portfolio founders. Ultimately, this shift requires a deeper understanding of the systemic forces at play and a commitment to long-term change.

For a deeper dive into these ideas, check out the full (and unedited) conversation with ChatGPT (link).