According to some US lawmakers on the House Financial Services Committee, the lack of diversity in the fintech space could be hurting the bottom line for many companies.
In a virtual hearing held Thursday on the issue “Combat the culture of technology”, US lawmakers and witnesses debated the underrepresentation of women and people of color in leadership positions in the fintech sector, including cryptocurrency companies. Massachusetts Rep. Stephen Lynch cited data that only 2% of venture capital funding went to companies where the founders were women, while only 1% went to those with founders of color. , and 1.8% to Latino founders.
According to Lynch and some members of the commission, this trend suggests an “old boys club” culture in companies, including those related to cryptocurrencies, in which many of those in leadership positions are white men. They asserted that many seemingly less deserving companies were able to bring in money more easily due, in part, to leadership relationships.
“While a lack of diversity is a trend in almost every industry that venture capitalists invest in, it’s particularly concerning in the fintech space,” Lynch said. “The largest fintechs, including digital banks, payment processors, and cryptocurrency providers, really do market their products to women and people of color. Yet when we look at the founders and leadership teams, they clearly do not reflect the communities they serve. those who claim to serve”.
“Multiple studies have shown that companies with diverse leadership, specifically with more than one gender and/or one race, are ethically representative, are more innovative and make more money,” California Rep. Maxine Waters said. “I’m assuming venture capital firms are heavily profit-driven, but they seem to be ignoring clear data on how to grow those profits.”
Lynch cited the recent crisis around cryptocurrency lending platform Celsius – whose leadership team is mostly male – as an example that money from venture capital funds doesn’t necessarily go where it’s best used:
“Venture capital firms continue to bet on malinvestments like crypto firms like Celsius, which recently froze all customer deposits, while on the other hand, women and founders of color with well thought out business plans and substantial remain in the waiting room”.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.