Clean Energy Ventures: Diversifying Access to Investment

Clean Energy Ventures (CEV) is a Boston-based venture capital firm. It has developed an inter-linking DEI strategy across four focus areas: the pipeline of deals, current portfolio, community at large and its team. This work began three years ago when the staff looked around and saw that they were primarily white and male. They knew that they were missing voices in the room and were uncomfortable with the status quo. A first step was to hire an outside consultant who took the team through a Learning Action Journey. They explored different aspects of DEI and what they could accomplish as venture capitalists. Through the process the team developed a strategy and recommendations for how to move forward. The strategy prioritizes racial equity in recognition that communities of color are the most underserved by government and the business community, and most impacted by climate change. The plan also embeds a bias for action, seeking to direct investment and climate innovation to where it is most needed.

To diversify their pipeline of investments, they first had to understand if diverse founders were applying and whether they were being screened out of the process and why. But when they started they had no visibility into the demographics of their applicants. To address this, Clean Energy Ventures revised their funding application with optional questions about founder and leadership diversity. There is an explanation to applicants about the information so they understand why it is being collected and that it is blinded in the screening process so it cannot be used to discriminate against them or create bias in the screening process. The data collected from this process is used in two ways. First, it is used to understand the current diversity of the pipeline to direct enhancements to deal flow sources and startup outreach. Second it lets staff know when a diverse founder was screened out to create an extra opportunity to provide mentorship so they have a more successful application in the next round, where applicable. This data is made public through Clean Energy Ventures’ impact report. To diversify the applicants applying, CEV has created partnerships with venture firms, accelerators and incubators focused on serving diverse founders with the goal of being their go to source for climate tech funding.

To support companies in its current portfolio, CEV provides a lot of coaching and is hands-on with their companies. They ask all of their portfolio companies to complete an annual DEI survey so they can get aggregate data across their entire portfolio. They also use it to help companies identify where they have gaps and to give them support to address them. CEV is now conducting a second round of the survey. Fifteen companies participated last year and they hope to increase participation this year. CEV also created a DEI playbook that aggregates information about how to embed a focus on DEI at an early stage in a startup. CEV’s term sheets all have a DEI clause that requires: at least one woman and/or member of an ethnically underrepresented group within the Company be formally interviewed for any open position; a policy of equal pay and benefits regardless of gender and ethnicity or other protected group be in place; and an inclusivity plan be in place to educate employees on unconscious bias and to promote an inclusive work environment.

For its work in the community at large, CEV is a strong supporter of Browning the Green Space (BGS). One of CEV’s partners, Dan Goldman, is a co-founder and on the board. Another staff member, Ted Dillon, is co-chair of the BGS marketing and communications team.

In its team, CEV is working to diversify its staff and is working with their sister organization of angel investors, the Clean Energy Venture Group, to create a fellows program for the venture group to broaden access and exposure to angel investing in climate tech. The staff also talk about DEI overtly. Having more data about their pipeline and the companies in its portfolio help guide these conversations in a meaningful and actionable way. They sought certification by Diversity VC and joined the Talent Working Group in the trade organization Impact Capital Managers to be able to connect and share more with other VCs.

Learn more at: https://cleanenergyventures.com/diversity-equity-inclusion/ or contact Ted Dillon at tdillon@cleanenergyventures.com.