The State of AAPI in Venture Capital: Overlooked Challenges Facing AAPIs in Venture Capital

The importance of Diversity, Equity and Inclusion (DEI) in the workplace has never been more critical in today’s public discourse. There has been increased awareness of structural discrimination on grounds of gender, ethnic, religious and socioeconomic background, age, disability, among others. This social and economic push has catalyzed a collective initiative to address structural and cultural barriers for the diverse members of society from various backgrounds. Yet, much more work remains to be done to promote diverse communities, improve access to resources and create inclusive environments for members of society that belong to various minority or disadvantaged groups.

DECODE’s mission is to democratize knowledge and opportunities around the future of work in tech and entrepreneurship, and we firmly believe that DEI will be an integral aspect of the next generation workplace. Beyond the notion of promoting fairness, plenty of studies have already suggested that promoting diversity carries tangible competitive advantages. Diverse teams at work have been suggested to outperform homogeneous teams in various ways, from cultural dynamism, sense of belonging, innovativeness, and even observed financial outperformance.3 Businesses and investors alike are placing greater emphasis on DEI when building teams or evaluating opportunities. Such practical considerations aside, promoting DEI is a laudable ideal and empathetic end that we strongly stand for.

While it is heartening that various organizations’ collective push for greater DEI efforts has progressed towards raising awareness and engendering social change, proportionally greater attention has been paid to gender diversity and diversity for Black and Latinx members, while rarely does the Asian American and Pacific Islanders (AAPI) community get included in that dialogue. For instance, when Crunchbase released its diversity spotlight feature in 2020 as part of the company’s ongoing commitment to promote DEI, its accompanying report focused on Black and Latinx startup founders, highlighting key statistics of and challenges faced when raising funding.4 However, AAPIs have been notably excluded from these important DEI studies and reporting.

We consistently witness the relative lack of attention paid to the representation of AAPIs not just in the various professional settings where structural barriers and unconscious discrimination may occur, but within DEI discourse and initiatives themselves. Even though AAPI professionals face many similar challenges to other minority groups, AAPI has unfortunately garnered relatively less attention within DEI initiatives.

Our purpose is not to discount existing DEI efforts and the importance of focusing on Black and Latinx communities. We celebrate those critical initiatives. However, we are worried when AAPI representation is missing from the discussion. Even further, it is alarming when AAPI participation is explicitly excluded from DEI efforts. Our goal is to bring forth the importance of full inclusion in discussions about diversity in this country. We need to ensure that voices from the AAPI community are heard, and make known their struggles within the advancement of a wider DEI agenda. With this partnership with DECODE, Asian American Association for Investment Managers (AAAIM) and UC Berkeley Sutardja Center for Entrepreneurship and Technology (SCET), we set out to conduct a deeper study on the state of AAPI representation in venture
capital (VC).

We found that despite the strong representation of AAPIs in VC by headcount, AAPI may still be
underrepresented and face structural barriers in career progression and fundraising from Limited Partners (LPs), through other less obvious ways. Our report aims to shed more light on the state of AAPI in VC in a more nuanced manner than previously done, by investigating the lived and personal experiences of AAPI in VC. We believe that this approach to the research would yield revealing insights on the real challenges that AAPI face on the ground, concerning equity of opportunity and inclusion at the workplace.

Through this report, we hope to provide a more inclusive perspective: that AAPI is and should be acknowledged as an underrepresented minority group to be included in the DEI agenda for VC, and certainly beyond VC.