A note from our editor, Elizabeth MacBride:
A Particularly Gross Assumption
Earlier this month, the National Venture Capital Association and the University of North Carolina’s Kenan Institute of Private Enterprise released a report on job growth in U.S. venture-backed firms.
The headline: Employment at VC-backed firms grew faster than employment at non-VC-backed firms between 1990 and 2020. This is like saying the world’s hot-dog eating champion can eat more hot dogs than the average hot-dog eater. (I have problems with argument for venture capital as a broad-based economic development. More about this here).
One of the most terrible assumptions in public economic policy is contained in the report. I want to call it out, not to single out the researchers or the backers of the report in the venture industry. This assumption is widespread, but it needs to be corrected. That’s the idea that the reason that Main Street businesses don’t grow as large as VC-backed firms is because their founders have less or different ambitions.
The controlling fact here is the U.S.’s patriarchal finance system.
Venture capital is the profit-making tip of the capitalistic enterprise. Most venture capitalists are white men, and the people they fund remain predominantly male and white (probably more than 80%). Meanwhile, the broader landscape of business today – the 99% of startups that don’t get venture finance — is dominated by women and people of color.
The reasons some people emerge as “winners” at the heads of big businesses and others don’t are obviously complicated – lack of capital, networks and culture all play a role.
But here’s what the report said, in a throwaway line:
“Our results also reinforce the findings of prior research that young, knowledge-intensive companies increase their labor force more rapidly than other young, so-called “Main Street” businesses which often lack similar ambitions to evolve into large companies.”
The underlying assumption is that women and people of color chose to exclude themselves from the world of fast-growth startups, from big success, and king-sized seats at the table. For that statement to be true, ambition would have to be distributed on a downward scale, with white men at the top.
That’s just gross.
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