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THE FINDINGS

RETURN ON EQUITY The numbers don’t lie: diversity is a competitive differentiator. MICHAEL WHELCHEL

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hile talent is equally distributed by race, gender, and sexual orientation, access to capital is not. This creates an excellent investment opportunity, a potential competitive advantage in identifying and funding talent, ideas, experience, and knowledge that the majority of the venture capital community has discounted and overlooked. Let’s take a look at the factors that contribute to this opportunity.

NON-WHITE TALENT IS DISPROPORTIONATELY OVERLOOKED There is an enormous racial disparity in who is receiving venture capital, the fire-starter of our economy. According to ProjectDi-

ane2018, a biennial demographic study authored by digitalundivided, Black-women–led startups have raised 0.0006 percent of the $424.7 billion in total tech-venture funding raised since 2009. But Black women today comprise the fastest-growing group of entrepreneurs in the US, with over 1.5 million businesses — a 322 percent increase since 1997. These businesses generate over $44 billion a year in revenue. There is a similar disparity regarding gender. Out of the $60 billion that venture capitalists invested in 2017, $1.5 billion went to women-run companies, which is roughly 2 percent of all venture capital invested last year. Studies show that women CEOs in the Fortune 1000 drive three times the returns of S&P 500 enterprises run predominantly by men.

RACIAL EQUITY = RETURN ON EQUITY Global management consulting firm McKinsey assembled a report, “Diversity Matters,” which included a dataset of more than 1,000 companies and measured the effect of ethnic and racial diversity on profitability (in terms of earnings before interest and taxes, or EBIT). Here are the findings: Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. More simply: diverse companies outperform their non-diverse counterparts and competitors. Companies in the bottom quartile for the category of gender and the category of ethnicity and race are

Profile for Conscious Company

Conscious Company Magazine | Spring 2019  

The Q2/Spring 2019 issue of Conscious Company is all about the racial wealth gap, diversity as a competitive differentiator, game-changing f...

Conscious Company Magazine | Spring 2019  

The Q2/Spring 2019 issue of Conscious Company is all about the racial wealth gap, diversity as a competitive differentiator, game-changing f...