What are some good ways to reduce unconscious bias when analyzing startups as an investor?
Three relatively easy-to-implement ideas:
#1: Take the Meeting.
I’m not 100% sure all of the processes bigger companies are just starting to use, with HR departments, can fully work for most investors. VC firms and angels are just too small, for the most part. If you have a 2 person firm, you need tools and systems to reduce unconscious bias that works for a 2 person company. They are there, but nascent.
But there’s one thing you can do without any process or systems.
Take the meeting.
Not every meeting. As an investor, once you have even the tiniest amount of brand, you’ll get 500+ companies that want to meet a year. You have to screen out a lot. There isn’t enough time.
And don’t take a meeting there is truly a 0% chance you would fund. That wastes everyone’s time. Maybe worse.
But if a company is in the “outer circle of interest” … one that you’d be unlikely to invest in, but it’s not a 100% No, No Matter What … still take the meeting.
Investing will always be the last bastion of pattern matching. But great founders are great founders — period. They can come from any place, any background, any country.
Expand your box a little bit. The easiest way to do this is take the meeting.
You may see something you wouldn’t have otherwise.
#2. Expand Your Network.
Your referrals are 50% of what matter as an investor. Meet more connectors from more diverse backgrounds.
Yes, the world is a small place. But it’s constantly evolving. Meet more folks, doing more new things, in start-ups, entrepreneurship, and angel investing.
They’ll expose you more to things at least in your “outer circle of interest”. See above.
The majority of investments I’ve made have been from founders not from the U.S. Expanding the network was key here.
Your network gets not just stale, but insular over time. That playbook can make you money for a long time. But challenge yourself to grow it.
#3. Give Yourself a KPI.
It’s hard to make progress on unconscious bias without goals. Since by definition, the bias is unconscious 🙂
Make a goal to meet with 50 female CEOs this year. 50 immigrant founders. 50 founders from more diverse backgrounds.
50 is a good starter goal, for now. It’s not enough, but it’s basically 1 per week. It’s a cadence you can meet, and if you get behind, recover from. It’s implementable.
Review the progress each week.
See what happens.