Kapors to spend $40 million on tech diversity initiatives

Mitch Kapor, one of the co-founders of Lotus, and his wife, Freada Kapor Klein, have been a force in recent years in the effort to diversify the tech industry.

Today, as part of the first White House Demo Day, the couple announced they will spend $40 million over the next three years on three family initiatives that tackle what they see as structural inequities that make it hard for African-Americans and other groups to become and thrive as tech entrepreneurs.

Chief among the initiatives is that Kapor Capital, the family’s venture firm, will invest $25 million in technology startups. At least half of the companies will have founders from “historically underrepresented communities,” Mitch Kapor said in an interview.

In addition, tech entrepreneurs who are part of the fund will have to create a “diversity plan,” he said. Kapor Capital is hiring a portfolio services director to help companies. Currently, Kapor Capital, which focuses on the seed level of investment, has about 60 companies in its portfolio, all of which had to have a “social impact plan” as part of their business plan.

The move comes as other prominent fund have made similar commitments. Intel Capital has started its own diversity fund to invest in “diverse” companies, mostly later stage ones, as I reported.  Comcast Ventures has its own $25 million Catalyst Fund, which focuses on seed-stage startups.

As part of the White House Demo Day, other organizations and firms have announced plans to tackle diversity. The National Venture Capital Association made a “diversity pledge,” according to USA Today. Forty firms, including Kleiner Perkins, have agreed to an annual industry-wide survey.

Box, Amazon and other companies also are making their own announcements at the event, says Wired.

In addition to the venture commitment, the Kapors also said the Level Playing Field Institute, one of their organizations, would spend $6 million to expand its summer STEM program that works with African-American, Latino and other teens who are underrepresented in tech. And the Kapor Center for Social Impact will spend $3 million “to promoting a more diverse tech ecosystem where our team lives and works, the Bay Area.” The organization has been working on a new building in Oakland, which is expected to open in early 2016.

Kapor said his commitment to helping create opportunities for underrepresented minorities comes from his own childhood experiences of being bullied.

“My personal experiences gave me a way to connect with those who have been systematically excluded by race, gender, ethnicity and sexual orientation,” he said.

(Photo of Mitch Kapor talking to SMASH student Breanna Thomas at Stanford in 2011 by LiPo Ching)


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    Has a study ever been done comparing returns achieved by the type of fund Kapor is contemplating versus those that do not consider “social justice” issues?


    Several days ago, I informed the Kapors (via their attorney Alex Medina) of the illegal and discriminatory nature of the plan. Specifically, I wrote :

    Yesterday, just as I was about to send you settlement business proposals, much to my chagrin and indignation, I encountered the following article in USA Today. Under the heading of “Kapors pledge $40 million investment in tech diversity” it stated, among other things: “Mitch Kapor and wife Freada Kapor Klein will invest $40 million over three years in a set of initiatives designed to give women and underrepresented minorities a better shot at becoming technology entrepreneurs.” The article further stated that ” Kapor Capital will make more than $25 million in investments in technology start-ups working to narrow the achievement gaps. At least half of the companies will have founders from underrepresented groups.” (See story http://tinyurl.com/p33dxlx )

    My understanding is that any and all non-profit and for-profits companies operated in the State of California are deemed to be “business establishments” that come within the purview of Civil Code Section 51 known as The Unruh Civil Rights Act.

    Be advised that the plan by the Kapors and Kapor Capital to “make more than $25 million in investments in technology start-ups working to narrow the achievement gaps. At least half of the companies will have founders from underrepresented groups” runs afoul of The Unruh Civil Rights Act which reads: “All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.”

    In other words, Kapor Capital’s plan to pick and choose “founders from underrepresented groups” (based on the article, women and “underrepresented minorities”) is unlawful. If you or your clients disagree, please forward an explanation. Otherwise, I shall await word from you that there has been a change of plans.