Startup founders deserve formal protection from sexual harassment by investors. Yet despite the clear power imbalance between these groups, traditional harassment law does not adequately shield founders because they are not technically employees of the venture capitalists. To fill this gap, venture capital firms should adopt formal investor/founder sexual harassment policies that can be consistently enforced.
To support the creation of these policies, a diverse group of whistleblowers, entrepreneurs, funders and activists have collaborated to create a template for founder/investor sexual harassment policy. Today this group published the template on TechCrunch with the goal of facilitating the creation of comprehensive and enforceable policies by all venture firms. If you haven’t read that yet, check it out first.
During the process of working with this group of contributors, TechCrunch discovered a consensus around four critical concerns regarding the implementation of these policies and the long-term cultural shift against harassment.
Preventing a chilling effect on appropriate fundraising meetings in informal settings
Investing in a startup requires a deep level of trust between a VC partner and a founder. Developing this strong relationship can require bonding in settings outside of a sterile office.
The push to eliminate sexual harassment around fundraising holds the opportunity to vastly improve the condition of being a female founder, reduce attrition among women in the startup industry and increase the number of female founders who are funded.
Yet these gains could be offset if male investors, instead of simply acting appropriately around female founders in all settings, seek to avoid the risk of exhibiting bad behavior or any perception of misconduct by refusing any meetings in informal settings. Some VCs would rather only accept meetings in formal office settings, in some cases only with a female member of their firm present.
The intention is to ban harassment, not the places where it can occur. Both VCs and watchdogs must understand there is nothing inherently inappropriate about meeting over dinner or drinks to discuss potential investment or operating strategy. Otherwise, the necessary elimination of sexual harassment surrounding fundraising could come at the unfortunate cost of reducing funding for female-led startups.
Creating or signing on to an investor/founder sexual harassment policy is not enough. Firms must diligently and consistently enforce these policies. This requires training VC staff in the policy, establishing specific consequences for different offenses, developing clear processes for facilitating complaints, swiftly reviewing infractions without bias, administering strict punishments to violators and their enablers, protecting those who are harassed and whistleblowers from retaliation, proactively surveying portfolio companies about their treatment and more.
Principled founders, limited partners and potential hires should demand official policies and strong enforcement from the VCs they work with. If VCs risk losing deal flow, funding and talent, they will be compelled to institute proper sexual harassment policies.
LPs, especially, wield an out-sized amount of leverage over VC firms in the current Valley structure. Many more LPs are women than are partners at VC firms. Many LPs already do due diligence —extremely stringent kinds in some cases, on VCs they choose to invest in. Encouraging LPs to require harassment policies and adherence to these policies is an important facet of creating a structure that breeds results, not just talk.
Need for outside mediation
Because complaints may be disputed by VC firms or not properly addressed internally, people subjected to harassment need access to independent third-party mediation assistance. This is especially important in the case of smaller firms where there may be few partners to report complaints to beyond the perpetrator of harassment, or when the perpetrator is the leader of the firm.
Firms could demonstrate their commitment to good behavior and fair review of complaints by setting aside money to pay for this independent mediation. By earmarking a set sum or percentage of their management fee to cover mediation costs for the duration of each fund they raise, they can ensure mediators aren’t beholden to side with the firm because their paycheck is guaranteed either way.
Fair resolution of complaints by independent mediators at no cost to those who are harassed could remove barriers to speaking up about abuse.
The overarching fight against all forms of discrimination
While it’s critical that the tech industry harness the momentum around sexual harassment policy, there are many other forms of discrimination that must be addressed. Despite longstanding laws designed for the employer/employee relationship, sexual harassment still occurs within startups. Meanwhile, sexism systematically blocks women from being hired, promoted, given raises or entrusted with the responsibility they deserve.
Discrimination against LGBTQ members of the community persists. Racism is finally receiving more attention thanks to published diversity reports, but the situation isn’t improving fast enough. Ageism bars highly qualified workers from startup jobs where leadership teams are more likely to be younger. And many tech companies don’t put the necessary effort into recruiting or designing workplaces for those with different accessibility needs.
Businesses flourish when their teams have a broad set of perspectives and skills. Discrimination leads to lost opportunities.
The responsibility to foster a diverse and inclusive industry, and prevent discrimination, harassment and hostility in tech needs to fall on everyone. That responsibility cannot solely fall on marginalized groups. As a cis, white male, I hope to use my privilege to stand as an ally to those who’ve been discriminated against.
If progress can be made on sexual harassment policy, it demonstrates that the tech industry may finally be ready to face up to all the worst parts of its culture.
This op-ed draws from the input of the contributors to “A template for investor/founder sexual harassment policy“