It’s almost the end of October. Leaves are beginning to fall. Temperatures are dropping precipitously. And we can finally run to our neighbourhood coffee bar for our occasional dose of pumpkin spice latte. At H20 Capital, October also rushes in our annual Partners’ Summit where this year we hosted the event for the first time in Mexico City. At this, our 3rd annual invite-only event, we convened 150 people including the likes of unicorn founders such as Loreanne Garcia from Kavak and Bin Chen from Stori; fintech experts such as Maurico Schwartzmann, CEO of Mastercard Mexico; and founders of portfolio companies such as Angela Acosta from Morado. Despite what many attendees remarked as an A+ event with respect to content, knowledge sharing, and networking; after all is said and done, it’s hard for us as a team not to self-reflect and understand where we can improve for next year: Diversity.

In planning the event, we made a conscious effort to highlight the best talent in the venture ecosystem, but we also were very conscious to ensure that this “best talent” included a strong representation from women. In the end, 34% of our panelists were women, however women only represented 40% of the total attendees. So, the question is, “how can we do better for next year”?

In our view, it’s impossible for us as a team to think about increasing diversity at our events without first thinking about increasing diversity in the overall funding environment within the LATAM VC ecosystem. By this time, we all should have heard about the positive returns that diversity has on venture and private equity returns, a quick statistic by McKinsey mentions that diverse companies outperform their less diverse counterparts by 35%. But if we know this, why is it that less than 5% of global venture dollars continue to go to minority groups? At H20, we don’t proclaim to know the answer to this complex question as it's not a venture capital construct. For years, diversity imbalance has permeated many aspects of Latin American life from the corporate boardroom to entertainment to arts and culture. Indeed, there are centuries of cultural norms that must be addressed in order for us as a society to breakthrough. However, we do believe that we can continue to help push the conversation forward to a point where we are not only talking the talk, but also walking the walk and ultimately putting our money where our mouths are (both literally and figuratively). So here are few thoughts on what we believe needs to happen to push the tide in favor of diversity-balance in the LATAM venture ecosystem:

1. Amplify our perception of diversity. 9 times out of 10, our definition of diversity is solely focused on decreasing the gender divide. Without a question, we need to place immense levels of energy on getting more women funded and stacking the C-suite with a higher proportion of women executives. After all, 68% of our people are women. However, we also need to use some of that energy to promote the inclusion of indigenous groups, racial minorities, LGBT members, and folks with physical disabilities which is currently representing. Often times we don’t want to discuss other types of diversity because of the emotional baggage that we as a society carry due to decades of historical missteps. However, we need to give opportunities to all of our society so that one day those difficult conversations will be no more.
2. Set diversity goals and make it a priority. It’s very common to hear an investor or founder say, “I wasn’t looking for a diverse candidate, she just happened to be the best for the job.” In part, this statement is a way to avoid any doubts around the qualifications of the person. But in reality, it could have the unattended effect of making us believe that diverse teams will naturally be created. Just as in everything in business, we must implement strict diversity KPIs and ways to measure those metrics otherwise it would be easy to revert to the status quo.
3. Money makes the world go around. In an ideal world, we all would do the right thing. And by any measure, ensuring that all segments of our population have a level-playing field to partake in the economic benefits of technological innovation should be our gold standard. However, most of us, need incentives and there is no bigger incentive in the VC world than access to money. Historical precedents show us how effective investor conditions can be in bending society’s will to do what’s right. Divestment from South Africa helped end the Apartheid regime; trade embargoes are one of the West’s most powerful political weapons; and asset managers are leading the charge advocating for climate smart investments. In LATAM, we have begun to see some institutional LPs such as IDB, IFC, and the Visa Foundation requiring diversity metrics to be eligible for fund commitments. On the fund side, there are investors such as Amplifica Capital, EWA Ventures, and Iluminar Ventures who have proactively created their investment theses around getting underrepresented founders funded across LATAM. And then on the acceleration / networking side there are groups such as Amela which are leading the way. While we at H20 don’t currently have a diversity thesis, we do proactively track, measure, and advise our portfolio companies on how to right-size their diversity balance sheet.
4. Live one Teach one. It’s hard to aspire to something when we don’t have folks who look like us in those positions – tough for a young Mexican girl to dream about becoming president when there are no examples of women Mexican presidents; hard for an afro-Brazilian to dream about becoming a founder of a billion-dollar company when there aren’t prolific examples; hard for young Colombian LGBT woman to long to become a fund manager when not many have come before her. Examples matter but highlighting those examples matter even more so that people can be inspired. On the other side of the equation, we need to have more structured and informal mentoring programs where we give the necessary tools to the next generation of diverse entrepreneurs and investors. But it’s going to require us to go beyond our network and tap into groups of talented, ambitious people that otherwise would have no way of connecting with a unicorn founder or tech executive. We need to find ways to truly support marginalized diverse groups of people who don’t have any access to the building blocks of entrepreneurship.

After any event, self-reflection is important. Over the past few days, we have seen great commentary from many speakers and participants regarding their main takeaways with respect to the content and insights shared. But for us, as investors who are continuously thriving to be forward-thinking, it’s important to also address the points that often go unspoken. As always feel free to send us a message to info@h20capital.com or post a comment on our Linkedin  post to engage with us in the conversation.