I have worked in the venture capital industry for over two decades, I have long had concerns about the behavior of some investors toward female founders. Unfortunately, more than 50 percent of female founders report inappropriate conduct and misbehavior by potential investors.
Recently, one founder decided to fight back. Elizabeth Giorgi, the founder of Soona, which operates studios customers can use for online content creation, experienced sexual harassment and bullying from potential investors and met dozens of other female founders with the same negative experience. Giorgi decided to do something about it: She created a new clause to be used in investor documents. Called the "candor clause," it requires all investors in her company to disclose any prior allegations of discrimination or sexual harassment.
Giorgi believes that investors wield an enormous amount of influence over startups and their executives. For that reason, it is critical to address potentially toxic personal dynamics up front. Her investors, 2048 Ventures, Matchstick Ventures, and Techstars Ventures, were quick to sign off on documents including the candor clause.
While many in the startup world have blogged, tweeted, and pontificated about Giorgi's clause, it is still too early to know if it will become widely adopted. From those funds' statements on Twitter and in the media, it appears that they strongly support the candor clause, and I expect to see it appearing more and more often. I know that our fund, Ryerson Futures, is very sensitive to this issue--not because we have some toxic history, but because we often invest in female founders who are quick to share stories of toxic investors.
Giorgi's candor clause is a great start, one that I hope will become widely adopted. But I also think we can do better, not just between investors and founders, but with regard to all stakeholders involved in startups.
One way to do better is to establish a code of conduct for all stakeholders (not just investors). Techstars, the world's leading startup accelerator, has done just that. David Brown, CEO of Techstars (an investor in Giorgi's Soona and hundreds of other startups) tells me that Techstars takes a strong stance against harassment and discrimination. "We make it clear in our code of conduct (item 17) that we will not tolerate these behaviors," Brown says. "Having a published code of conduct that we ask our employees and network participants to sign allows us to enforce a set of behaviors that we believe are true to our core values and basic human decency." You can read the entire Techstars code of conduct here.
Most accelerators have now adopted a code of conduct. But no matter which route you follow, clause or code, sexual harassment has no place in the startup industry, and as a founder, you can do something about it.