In recent years, there has been a growing emphasis on investing in underrepresented founders within the venture capital ecosystem, highlighting diversity as not just a moral imperative but also a strategic business advantage. Ladi Greenstreet CEO, Diversity VC However, despite achieving record levels of investment in underrepresented founders in 2020, it remains a fraction of what is invested in white, cisgender men. Recent trends and discussions point to a troubling trend: a reduction in funding to these diverse groups, re昀氀ecting a persistent perception that they are riskier investments. Despite efforts to change these perceptions, the industry often reverts to traditional investment models during economic downturns. The Atomico First Look data report illustrates this setback, showing a decrease in the percentage of overall investment allocated to female founders compared to the previous year. This regression underscores a reluctance to embrace the undeniable economic wisdom that diversity in leadership leads to better business performance. We had hoped for a more solid transition from rhetoric to action, considering the long-term nature of venture capital invest- ments. Unfortunately, the shift towards recognizing the tangible returns of diversity has been hampered by economic and politi- cal turbulence. This setback not only impedes progress but also fuels arguments from detractors who claim that diversity initi- atives fail to deliver a return on investment or, worse, result in negative consequences due to 昀氀awed execution. This situation is particularly disheartening when we observe the widespread recognition of diversity’s value in other sectors such as media, sports, entertainment, and 昀椀nancial services, where diversi昀椀ca- tion is a well-established strategy. It is puzzling why the venture capital industry would deviate from this proven approach. The recent reduction in funding for diverse founders represents a regressive step that contradicts the well-documented bene昀椀ts of diversity. It is crucial for the venture capital industry to resist the temptation to default to what may seem like ‘safe’ patterns and instead acknowledge the long-term value that diverse founders bring to the table. 97 | Companies