Biggest Challenges Faced by a Climate Venture Fellow at Early Stage Venture Capital
Nick's biggest challenge as a Climate Venture Fellow is balancing "unique perspective" with unconscious bias in investment decisions, a critical issue given venture capital's historical homogeneity. The inherent risk is overlooking promising founders from underrepresented groups, resulting in missed market opportunities and a morally questionable outcome.
Venture Capital, Early Stage Investing, Bias in Investing, Diversity in Tech, Impact Investing
Advizer Information
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Nick Rojas
Climate Venture Fellow
Early stage VC
UCLA
University of Michigan, Ross School of Business MBA, School for the Environment and Sustainability MS Sustainable Systems
Environmental & Related Sciences
Climate, Environment, Sustainability & Waste Management, Finance (Banking, Fintech, Investing)
Climate, Environment and Sustainability
Honors Student, Scholarship Recipient, Pell Grant Recipient, Took Out Loans, Worked 20+ Hours in School, Greek Life Member, LGBTQ, First Generation College Student
Video Highlights
1. Balancing personal perspective and bias in investment decisions is crucial in venture capital, as biases can unintentionally exclude promising founders from diverse backgrounds.
2. The lack of diversity in venture capital leads to missed opportunities, as founders from underrepresented groups may possess unique ideas and solutions.
3. Stepping outside one's comfort zone and actively seeking diverse founders is essential for a more inclusive and successful venture capital industry.
Transcript
What is your biggest challenge in your current role?
There are many challenges within early-stage investing. If it were easier, people would have much higher success rates.
A huge challenge I've encountered, and one that seems to be a perennial issue when talking with people, is finding the balance between bringing your unique perspective and where your biases start to kick in. You know why you were hired and brought in to do research, synthesize information, and make recommendations to your team on where to invest.
Sometimes those biases can be helpful, but often they're not. You might see someone who went to the same school as you and think, "Oh, they're a Bruin, I know they're going to be good." You might give them extra consideration based on that feeling, even if there's no real basis for it.
Other times, biases arise because someone is from your hometown, has similar interests, or simply makes you feel good during conversations. It's tough because sometimes that connection is valuable.
You might have businesses where not every piece of the business model is perfected, but they have a founder willing to learn. That can be worth far more than a business with a perfected model but founders unwilling to learn or be good partners.
Finding that balance between what feels right in your gut and what is a bias you need to recognize and check is really important. This is especially true within VC. Venture capital has historically been concentrated with a few elite institutions, with individuals who look like, come from, and talk to the same people from those places.
The problem is that companies being funded often have founders who look, sound, and come from the same backgrounds as those in VC. This means many individuals with great ideas and the ability to solve problems and provide market value aren't getting the attention they need.
We're seeing disproportionately fewer opportunities for women and BIPOC founders. This is not only morally wrong, but it's also bad for the market because we're missing out on valuable opportunities they would otherwise bring.
Therefore, it's crucial to remember the inherent bias within VC. You might need to step outside your comfort zone because great ideas can come from anyone. It's about who has had the resources to support them and can help them reach the next level.