California measure aims to halt investor sexual harassment
SAN JOSE, Calif. — Appalled by the recent spate of sexual harassment allegations shaking Silicon Valley’s venture capital community, a California legislator is introducing a bill that would, for the first time, lay out explicit legal penalties for investors who harass founders.
California State Sen. Hannah-Beth Jackson, a Santa Barbara Democrat, on Thursday unveiled plans to update the state’s existing civil rights law to specifically prohibit sexual harassment in the investorfounder relationship. In so doing, Jackson hopes to help break down some of the barriers women face when trying to enter the tech industry — which she calls the “crown jewel” of the state’s economy.
“We have seen and heard a number of reports over the last weeks of the unwanted sexual advances, comments and retaliation against women who sought funding for their ideas and innovation,” Jackson said in an interview with The Mercury News. “And these interactions between male investors and female entrepreneurs have an inherent power imbalance — and there are too many of these men abusing their power against women who are looking for funding for their ideas, as these women try to break into an industry that is overwhelming dominated by men.”
Jackson’s bill would update a section of the Unruh Civil Rights Act that already prohibits sexual harassment between people who have a business relationship but don’t work for the same company — including harassment by attorneys, landlords, teachers or physicians.
“We are simply adding the word investor into this prohibition,” Jackson said.
The bill addresses an issue that has become a hot-button topic in Silicon Valley this summer. In June, venture capitalist Justin Caldbeck resigned after six women accused him of making unwelcome advances — ranging from late-night test messages to groping — sometimes as they were seeking funding or business advice for their startup. In July, David McClure, founder of startup accelerator 500 Startups, resigned after he was accused of hitting on a female job candidate during the recruiting process. After he stepped down, another woman published a blog post accusing him of pushing her into a corner and trying to kiss her after a work-related gathering. Last month, Frank Artale, a Seattle-based managing director at Ignition Partners, resigned after he was accused of unspecified misconduct.
Other men also have been publicly called out, including retired investor and “Shark Tank” personality Chris Sacca, who openly apologized, saying he “contributed to the problem.”
Jackson believes it’s already illegal for a venture capitalist to sexually harass a founder under the Unruh Civil Rights Act, but because the relationship is not specifically stated, it creates a perceived gray area.
Employment law experts say female founders often are unsure of where to turn when they experience harassment by an investor. Since they aren’t employees of the venture capital firm, they can’t just walk down the hall to the human resources department. And many Silicon Valley venture capital firms don’t have policies that explicitly prohibit the harassment of founders.