Limited Partner Buy-In Is Key for Making Diversity a Priority

LPs inhabit a unique position to encourage VCs to invest in more diverse-founded companies.
Mar 5, 2021 10:35 AM ET
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The past year has seen only a modest increase in VCs’ perception that investing in companies with women and/or multicultural entrepreneurs is a priority to their LPs, from 55% in 2019 to 59% in 2020. To change investing behavior, LPs must fully and openly embrace the importance and financial benefits of investing in more women- and multicultural-founded companies. Equally important, LPs who feel strongly about making diversity a priority should convey that expectation to their VCs and consider setting concrete targets for investing in women- and multicultural-founded companies.

Read more in Morgan Stanley's report: Venture Capital and Racial Equality