Not-so-news flash: The venture capital community has an abysmal track record when it comes to funding entrepreneurs of color. 

Here’s the backstory in numbers. According to the nonprofit investor network BLCK VC, just 1 percent of venture-funded startup founders are black (that data comes from the Harvard Business School). Just as shocking, although maybe not surprising given the tech industry’s troubled past on diversity writ large, 80 percent of VC firms don’t have a single black investor on their staff. 

Over the past week, big-name firms SoftBank and Andreessen Horowitz took baby steps toward addressing this, but far more needs to be done — especially when it comes to finding and funding climate tech. The specifics:

• SoftBank has created a separate $100 million fund specifically dedicated to people of color: Cool, but that amount is minuscule alongside the $100 billion in the SoftBank Vision Fund. 
• The new Andreessen Horowitz effort is a donor-advised fund launched with $2.2 million (and growing) from the firm’s partners with a focus on early-stage entrepreneurs “who did not have access to the fast track in life but who have great potential.” 

Let’s cut to the chase. These are well-intentioned gestures, but they don’t even begin to address the bias that pervades the VC system, at least the one that exists in the United States.

“Black entrepreneurs don’t need a separate water fountain,” observed Monique Woodard, a two-time entrepreneur and former partner at 500 Startups who backs early-stage investors, during a BLCK VC webcast last week that was livestreamed to more than 3,000 people. (She wasn’t specifically addressing the two funds.) “You have to fix the systemic issues in your funds that keep black founders out and keep you from delivering better returns.”

What’s wrong with “the system”? Where do I begin? One black venture capitalist on the webcast, Drive Capital partner Van Jones, likened getting involved in the VC community to a track race in which you’ve been seeded in lane eight and handicapped with a weight vest and cement boots. “There is no reason we should be having the conversation today that we had in the 1960s,” he said during his remarks. 

Elise Smith, CEO of Praxis Labs, a startup that develops virtual reality software for diversity and inclusion training, tells of putting on “armor” to engage with the predominantly white ecosystem supporting entrepreneurs — where her experience has been questioned repeatedly and her mission described as niche or as a passing fad. 

Smith says one of the biggest issues faced by black founders: the inability of many investors to recognize problems faced by communities of color. “What happens when the problem you want to solve isn’t one that is faced by the people who make decisions about what is funded?”

Or, as Garry Cooper, co-founder and CEO of circular economy startup Rheaply. puts it: “I have to overachieve to achieve.” He adds: “You are running a race twice as hard as your white counterparts.”

He knows firsthand. Rheaply, which makes software that helps organizations share underused assets, raised $2.5 million in seed funding disclosed in March from a group led by Hyde Park Angels. Cooper started speaking with potential investors more than a year ago and was struck by how difficult it was for him even to score an introduction. While he has praise for his “committed” funding partners, Cooper is the only black founder represented in his lead investor’s portfolio. “It’s shameful that I know all the black VC founders in Chicago,” he said.  

Along with some of his allies, Cooper is sketching out what he describes as a “pledge” intended to help expose this issue more visibly. The idea is to encourage hot startups — regardless of the race or gender of the founders — not to seek funding from firms that don’t represent the black community on their team of investors or within their portfolio. Stay tuned for more details as they are finalized, but Cooper says the response to this idea so far has been gratifying.

As a climate tech startup founder, Cooper agreed with my personal conviction that any VC firm funding solutions to address climate-related technology solutions must pay particular attention to the issues of equity and inclusion. And yet, when I’ve asked well-known VCs about their strategy for this, none has offered specific strategies for recognizing the needs of people of color in the ideas they consider. I must admit: I never have asked any of them specifically about their strategies for funding entrepreneurs of color. But this is something I’m going to change. “The problems are so enormous, we need every brilliant committed mind thinking about this,” Cooper said. 

That sentiment is echoed by Ramez Naam, futurist and board member with the E8 angel investor network, which recently launched the Decarbon-8 fund dedicated to supporting climate tech. Naam said investors funding climate tech startups must recognize the intersection between the climate crisis and the crisis of racial justice. That’s why Decarbon-8 will be intentional about seeking entrepreneurs of color.

“We think that means it also makes sense to find entrepreneurs and teams who are minorities that are in the groups that are most impacted themselves. Because if we are going to help some people build companies in this, and they’re going to profit, as the entrepreneurs should, we’d like some of that to go back into those people, in those communities.” 

Truth.

This article first appeared in GreenBiz’s weekly newsletter, VERGE Weekly, running Wednesdays. Subscribe here. Follow me on Twitter: @greentechlady.

When you sit back with a good cup of coffee, you will be engulfed in the warmth, aroma, taste, acidity and body of the brew. Yet, swirling beneath the surface all of the major issues of the 21st century — climate change, globalization, immigration, women’s rights and wealth inequity — are being played out in remote coffee villages around the world. 

How companies behave in the coffee trade has a direct impact not only on the lives and livelihoods of 28 million coffee farming families but on the welfare of the planet itself. Coffee companies claiming to be “ethical” or “sustainable” that refuse to pay a living wage to the farmers are fueling this longstanding human and environmental crisis. 

Changes in rainfall patterns and temperature weaken coffee plants and reduce yields. Climate-enhanced fungi and bacteria decimate coffee plants, leaving families with little or no income for the next five years until new trees can be planted and mature. Larger farm owners must deforest land and plant more coffee to make up for the historically low prices they are receiving from the market. This deforestation inhibits carbon sequestration, which leads to higher temperatures. The cycle is self-fulfilling. 

As a result, coffee production will be greatly limited in medium and lower elevations by 2030 to 2050. When production is reduced, farmers may use more chemicals in the growing process, which harms the soil and water sources, further degrading the planet and human health.

Coffee, poverty and migration are also connected. The largest single group of migrants trying to cross the southern border are from Guatemala, and most of them are from the coffee lands of Huehuetenango province. They are unemployed and landless coffee farming families hoping for a better life. 

The price per pound paid to coffee farmers is based on the “New York C price,” a commodity system that operates much like a stock market. For several years, the C price for coffee has hovered around the farmer’s cost of production ($0.80-$1.10), which means no profit for the farmers. From a high in 2014, prices paid to farmers have plummeted by 70 percent and now dance around $1 per pound. Every pound a farmer sells, and every cup we drink, pushes a farmer deeper into poverty and despair. 

If coffee companies really want to fight the difficulties facing coffee farmers and the environment, they should just pay up.

Companies are not required to base their payments to farmers on the C price, and many of us do not. Organic and Bird Friendly certifications offer a price premium to the farmer. Fair Trade provides a “living wage floor” and many committed Fair Traders pay substantially higher prices. The few real Direct Traders offer real price premiums for limited amounts of high-quality coffee. Many companies hide behind labels, such as Rainforest Alliance or Utz Kapeh, or self-created programs such as “Ethical Sourcing,” which sound good but do not guarantee higher prices. 

Ironically, coffee company profits may be the highest in history. Companies such as Smuckers and Starbucks continue to raise their prices while their main cost of goods (buying coffee beans) has dropped considerably. According to the United Nations, the ratio between what the farmer was paid and what the companies sold their coffee for was 1:3 during the 1970s. Today, it is as high as 1:20, as many consumers are paying $20 a pound. 

In 2012, Starbucks reported its average price for green beans was $2.56 per pound. However, that is the price it paid to the broker, not to the farmer. After backing out shipping, insurance, importer and exporter and mill costs, that price would be closer to $2.20 paid per pound to the farmer. By 2014, Starbucks was only paying $1.72 to the broker (maybe $1.36 to the farmer). By paying the lower amount, Starbucks took $387 million out of the farmers’ pockets. As green prices keep falling, Starbucks has continued to pay coffee farmers less, while charging consumers more. 

So, who is winning this game? Not the farmers, not the public and not the environment. Instead of paying enough to support the farmers, large and small coffee companies contribute lesser amounts to nonprofits for clean water, health and environmental projects under the banner of “corporate sustainability.”

If coffee companies really want to fight the difficulties facing coffee farmers and the environment, they should just pay up. If Starbucks returned to its 2012 broker and farmer prices, it nearly would double family income on most small farms. To family farms in Nicaragua, Peru, Ethiopia and Indonesia, that $1,400 could pay for healthcare, children’s education, proper nutrition and technology to produce higher yields and reduce their need to clear land. Even a 25-cent increase in the price paid to farmers, which would get Starbucks closer to the prices paid by truly committed coffee companies, would bring $150 million back to the farms and its stock price would not even blink.

As an industry, we have lived long and well by treating farmers just like coffee. We see them as fungible commodities instead of true partners in the success of our businesses who are integral to effective adaptation to climate change and other issues of the day. The days of maximizing profits without seriously incorporating farmers’ concerns that bind us all together are over. It is time to pay up.