A New Way to Achieve Board Diversity: Announcing Our Founding Partnership with All Raise’s Board Xcelerate Program
Despite the known benefits of diversity in the workplace, and on boards, women hold only 17% of board directorships at global companies in the MSCI ASWI Index, and 21% of board seats in the S&P 500. People of color, and in particular, black leaders are even more so underrepresented on boards. Data from 2019 shows that 37% of S&P 500 firms didn’t have any black board members and black directors comprised just 4.1% of Russell 3000 board members.
While this data shows some improvement from years prior, the numbers are still far too low, and they don’t capture the private company landscape, which likely brings these figures down even further. The challenge to diversify boards is perplexing to us. Numerous studies and plenty of companies with diverse boards show that board diversity is critical to driving innovation and organizational change.
We recognize board diversity is an issue, and we know we can help solve it for the benefit of our portfolio companies, the technology ecosystem and society as a whole. That’s why Sapphire Ventures is proud to share that we have partnered with All Raise, alongside GGV Capital and Sequoia Capital, to launch Board Xcelerate, a brand new program specifically designed to diversify the boards of private, venture-backed companies.
Introducing a Better Way to Uncover Diverse Board Members
One of the most challenging aspects of being a CEO at a high-growth company is ensuring they can successfully anticipate the company’s changing needs, including how to best optimize operations and keep the company ahead of the curve. Leveraging the company’s board is a hugely effective way to do this at scale. And leveraging a diverse board propels a company from good to truly exceptional with fresh perspectives that can unlock key growth and expansion opportunities. Savvy startup CEOs know that their boards are the backbone to their success, so they’re constantly thinking about building and improving them in order to have that additional leverage, helping their companies to break new ground and drive growth.
For private companies and their CEOs, building a board is a process. More often than not, the search to find a qualified board member is narrowly focused on candidates within the board’s existing network, which is why most private boards remain homogeneous. Board members are well-connected, and know plenty of accomplished leaders. Naturally, this becomes the starting ground for new board member searches. Board member searches are also not as immediate as filling c-level operator roles, for example, and typically takes at least or more than nine months to complete.
Board Xcelerate was architected to address these challenges, re-orienting companies to more intentional, efficient and effective recruitment efforts for building private company boards. The program aims to add high-calibre independent directors with diverse backgrounds, specifically women and under-represented groups, to private company boards in record time. With its unique process, Board Xcelerate minimizes disruptions to the CEO’s time and brings together key stakeholders in an optimal way to select the right, diverse board of directors. What’s more is that we know the program works. While in beta over the last few months, Board Xcelerate has added five diverse board directors to private company boards and introduced all finalist candidates to companies within the first 45 days of the search.
A Partnership Between VCs, CEOs & Executives to Bring Diversity to Boards
Board Xcelerate takes a different, yet what we believe to be incredibly effective approach to diversifying boards by focusing on three distinct stakeholders:
- The company CEO
- VC partners who are active board members
- Diverse, board-ready operators
Board Xcelerate starts by bringing together company CEOs and VC partners, aligning them on priorities and holding both parties accountable for finding and hiring diverse board members in order to help grow the company. Board-ready operators who have minimal time outside of their demanding executive roles and who don’t want to be token diversity board hires know that the company they are speaking with is serious about diversifying their board for the long haul because they’re part of this larger program.
At Sapphire Ventures, we believe in moving the diversity needle forward. As a founding VC partner for the Board Xcelerate program, our investors and talent team actively connect our portfolio company CEOs who prioritize diversity with the program. And our sitting partners, in particular play a driving role throughout the evaluation and recruitment process. Sapphire has also been a key force in driving overall awareness around the program, and in encouraging diverse, board-ready leaders to join the program’s network as they look to join boards.
How Sapphire Helped Co-Architect Board Xcelerate
While there is a lot more work to be done when it comes to diversity and inclusion across the VC and tech ecosystems and here at Sapphire, it’s an important topic to us personally. Sapphire’s close working relationship with All Raise dates back a number of years and runs across many of the firm’s initiatives. They’ve known about our commitment to diversity, and so when Pam Kostka, CEO of All Raise approached us about helping to create a unique program aimed at diversifying boards, we knew we wanted to be involved in any way we could. We not only wanted to be part of the program, but we wanted to work in partnership with All Raise, GGV and Sequoia to craft what the program should look like, and, importantly, how it could operate and scale to ensure long lasting impact.
As a co-architect of Board Xcelerate, Sapphire helped All Raise identify the right search partner, specifically 3Forty3, a long-trusted executive search firm. We also connected dozens of diverse, board-ready, C-level executives to the program and brought numerous Sapphire portfolio companies who were ready to prioritize bringing on a diverse board member into the program’s first group of companies. As a result of our involvement, Sapphire portfolio companies, Contentful and InfluxData have brought on two exceptional leaders, including Christine Heckart and Vidya Peters, and numerous advisory roles into their board rooms in record time.
As Pam Kostka, CEO of All Raise notes, "Sapphire Ventures is an invaluable partner to the All Raise Board Xcelerate program. They've demonstrated a deep commitment to giving women and people of color access to opportunities at their portfolio companies. We are thrilled to have placed new board directors at Contentful and InfluxData and look forward to collaborating on even more board searches."
This is Only the Beginning
While Board Xcelerate is just getting started, the program is proven to work, and is in the process of expanding to additional VC firms and private equity firms, which in turn means more CEOs ready to diversify their boards.
There’s also a shift happening within the broader tech ecosystem as the economic and cultural benefits of diversifying boards is more widely understood. Goldman Sach’s announcement in July 2020 is emblematic of this shift as they indicated, “[We] will only underwrite IPOs in the US and Europe of private companies that have at least one diverse board member. And starting in 2021, we will raise this target to two diverse candidates for each of our IPO clients.”
Requirements like these, plus legislation such as those recently passed in California (SB 826 and Assembly Bill 979) to increase diversity, will help to further move the already-strong momentum to diversify private boards forward. We are thrilled to have been a part of the origination of the Board Xcelerate program, which is crucial in helping companies diversify their boards and build companies of consequence.
If you are a CEO interested in diversifying your board or a board-ready, diverse operator interested in exploring board opportunities and would like to learn more about the Board Xcelerate program, please contact firstname.lastname@example.org to learn more.
Disclaimer: Nothing presented within this article is intended to constitute investment advice, and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire Ventures (“Sapphire”). Information provided reflects Sapphires’ views as of a time, whereby such views are subject to change at any point and Sapphire shall not be obligated to provide notice of any change. Companies mentioned in this article are a representative sample of portfolio companies in which Sapphire has invested in which the author believes such companies fit the objective criteria stated in commentary, which do not reflect all investments made by Sapphire. A complete alphabetical list of Sapphire’s investments made by its direct growth and sports investing strategies is available here. No assumptions should be made that investments listed above were or will be profitable. Due to various risks and uncertainties, actual events, results or the actual experience may differ materially from those reflected or contemplated in these statements. Nothing contained in this article may be relied upon as a guarantee or assurance as to the future success of any particular company. Past performance is not indicative of future results.