Rockridge Venture Law® is proud to kick off our I-SuiteTM Innovation + Impact interview series with our friend Dimitry Gershenson of Steelhead Peak. Dimitry uniquely transitioned from Honduran Peace Corps volunteer to Silicon Valley innovator, now offering advisory services to social impact entrepreneurs, philanthropic capital investors, and companies with corporate social responsibility governance frameworks. We caught up with Dimitry this week to discuss diversity in venture capital, exciting technology trends, and startup success factors.

From your perspective, are we seeing increased diversity among scalable founding teams (i.e. teams with scalable ideas that are obtaining necessary funding)? If not, why not?

I think founder diversity is generally increasing, albeit too slowly.  There are a few VCs that focus on growing the pie for underrepresented founders, groups like Kapor Capital in Oakland or Elevate in Portland, but these represent a tiny fraction of the total flows of venture capital into startups in the US.  There are also startups and non-profits that are attempting to grow diversity at the top end of the funnel (in financetechnologycareer advancement more broadly, etc), which in the long term will grow the diversity in startup founding teams.  Data on this subject is limited, but here are a few sobering statistics:

  • The average black entrepreneur starts their business with only $35K of capital, approximately 1/3 of the average white entrepreneur (1)
  • Of $85B in VC funding last year (2018), only 2.2% went to female founders.  Women of color got less than 1% (2)
  • A recent report showed that only about 100 black and latino entrepreneurs have raised more than $1M, ever (3)

This is all driven by a few key factors (among many):

  • Becoming a successful entrepreneur is largely driven by one’s privilege:
    • the ability to not earn a salary for some time and pursue something very high-risk;
    • the ability to go to friends and family for early investment;
    • one’s network, both personal and professional; and,
    • one’s education and professional experience (both significantly influenced by bias across one’s entire lifetime);
  • Most VCs are white men, and they largely invest in other white men; and,
  • Founders, investors, and other advisors often undervalue diversity in comparison to other OKRs.

What business and/or technology trends are you excited about in 2020?

I am excited about a few categories of tech innovation:

  • Autonomous vehicles and changing dynamics around car ownership.
    •  I think this trend is generally exciting, although a number of the key players are building business models through highly exploitative practices.  Players like Uber and Lyft pay their “employees” (drivers) wages well below the minimum wage, and then extract even greater value from the data they collect from each ride.
  • Meat and dairy replacement
    • I am very excited about the food-tech space, which is slowly working to replace traditional animal agriculture.  This includes everyone from Impossible Foods and Beyond Meat, to Memphis Meats, to Miyoko’s.  It’s pretty incredible to imagine a future where meat/dairy/alternative consumption can be ethical, low-carbon, and broadly sustainable.
  • Universal financial services
    •  The promise of digital financial technology is universal access, and I’m pretty excited about this one.  Whether you’re unbanked, or run a small business, you should have access to financial services like credit, savings, and digital wallets/payments.  Lots of companies are working on this now, and while there are risks/drawbacks, I think this is a generally positive trend.

Beyond these, I’m also feeling more and more optimistic about the “soul” of the entrepreneurial community.  It seems that people are starting to reconsider their values more, and attempt to align their work closer and closer to purpose and social good.  In fact, there was just a great piece published by one of my favorite VCs, Andrew Beebe, called “A Modern Guide to Lean OKRs, Part 1“.  If this trend continues, maybe Capitalism can save itself from itself.

Obviously, team chemistry is a huge factor in scaling. What common pitfalls do you see early on that limit teams from reaching their potential?

I think one overlooked, but critically important element is values.  People often think of values as a fluffy HR tool, but in reality, defining and operationalizing core values is one of the most important activities a founding team can conduct.  Values enable growing teams to make fast decisions, by creating a simple and actionable framework for making tough choices.  Questions like “Does this goal/action align with our values or does it erode them”? allow teams to ensure that their actions align to broader company priorities and enable long-term sustainable growth.  Not all values are created equally, and I think the hardest part is making sure that when values end up on paper, they are clear, actionable, measurable, and attainable.

In your experience, what are characteristics of early-stage investors you want to avoid?

This is a tough one.  I think there are lots of incredible investors out there that are focused on helping build strong and values-driven companies.  It’s often hard to tell what investors are really like, as they’re particularly good at selling themselves to startups.  Plus they show up with lots of cash; who doesn’t want that?!  My biggest advice for founders on this question is: DO YOUR RESEARCH!  Make sure you know what kind of investors you’re looking for in your round, and then spend time doing diligence on them.  Talk to their portfolio companies, read their blog posts, and ask the investors themselves pointed questions.  The key is to understand how they engage with their portfolio companies, how active they are on boards, how many CEO’s they’ve replaced, etc.

More on Dimitry

Dimitry Gershenson is principal of Steelhead Peak. Dimitry Gershenson has over a decade of experience working with social entrepreneurs, impact investors, philanthropists, community development practitioners, and everyone in between.  His career has taken him from rural Honduras to Silicon Valley, has spanned a variety of impact sectors including cleantech, financial services, and the future of work, and has allowed him to support over 50 startups and non-profits around the world.

Prior to Steelhead Peak, Dimitry was at Facebook for nearly 5 years, managing a variety of social impact programs.  He built Facebook’s Energy Access initiative, which from 2015-2018 deployed nearly $15M in strategic investments across startups, funds, non-profits, and research organizations, directly enabling new electricity access for over 3M people, and unlocking over $250M in new investment into the sector.  From 2018-2020, his work focused on supporting social entrepreneurs leveraging advanced technologies (AI/ML, AR/VR, blockchain, etc) across the world. He designed and managed accelerator programs in the Caribbean and India, built partnerships with VC firms across the world, mentored over 20 startups and nonprofits, and managed a portfolio of philanthropic capital.

More on Steelhead Peak

Steelhead Peak provides advisory services to CEOs of Series Seed to Series C companies looking to raise capital or build strategic partnerships. We primarily work with companies making a positive impact on the world – sustainability, health, education, financial inclusion, affordable housing, and public safety – but are open to any opportunity solving a problem that makes the world a better place. Learn more.