Investing in change
Synchrony aims to diversify venture capital with $15M allocation
Synchrony is trying to tackle the lack of diversity in the venture capital community with a $15 million commitment to Black, Latinx and women-led firms.
“We take diversity extraordinarily seriously. It’s part of our DNA and culture. We not only talk about this, but take true action, to make a difference. I hope it encourages others to do the same.”
Trish Mosconi, Synchrony executive vice president
STAMFORD — A year ago, in the wake of the murder of George Floyd and ensuing nationwide protests, the country’s largest private-label credit card provider pledged to ramp up its diversity, equity and inclusion efforts.
Today, it continues to launch initiatives to support that commitment.
Stamford-based Synchrony is allocating $15 million to several venture capital funds led by Black, Latinx and female partners. The consumer financialservices giant said that the funding reflects its support of minority and women entrepreneurs and underrepresented communities, while the firms it is supporting praised the company for backing their investment strategies and confronting the lack of diversity in the venture capital community.
“We take diversity extraordinarily seriously. It’s part of our DNA and culture,” Trish Mosconi, Synchrony executive vice president and chief strategy officer, said in an interview. “We not only talk about this, but take true action, to make a difference. I hope it encourages others to do the same.”
Tackling a lack of diversity
Compared with their share of the American population, women and minority groups are starkly underrepresented as recipients of venture capital dollars and as leaders of venture capital firms, which are one of the most important sources of funding for new
and emerging companies.
“The absolute number of funded companies with a female founder has doubled in the past five years compared to the previous five years. However we see sluggish growth in proportion year over year,” Crunchbase, a provider of private
company “prospecting” and research, said in a report last year. “The ratio to female-only founded companies has been stagnant with that segment raising 2 or 3 percent of venture (funding) for eight out of the last 10 years.”
In the announcement of their new initiative, Synchrony officials also cited another Crunchbase study reporting that since 2015 Black and Latinx founders in the U.S. have raised more than $15 billion — but only about 2 percent of total U.S. venture capital raised during that time.
They also referenced a report published in March by professional-services firm Deloitte that found that 65 percent of venture capital firms had no female investment partners and that 93 percent of firms had no Black partners.
“Venture capital has been network-based,” Samara Mejia Hernandez, founding partner of Chicago-based Chingona Ventures, one of the venture capital firms in which Synchrony has invested, said in an interview. “Historically, they’ve come from very similar networks — based on schools and geography — and the decisionmakers look very similar. That directly translates to the founders who are getting backed.”
Hernandez said Chingona, which was founded in 2019, offers a different perspective. The firm’s name is a Spanish-language term, with its website defining it as “a woman who is intelligent, fearless and can get things done. Also see ‘Boss’ or ‘Badass.’”
“We, at Chingona, come from diverse backgrounds,” Hernandez said. “I’m a Latina immigrant (from Mexico) to this country. I grew up in the midwest when I came here, and I’m also a millennial mom. Many times, our founders say it’s refreshing talking to us and not having to explain, for instance, why women have to use a specific product in the case of female technology.”
Chingona’s mission made it a good fit for Synchrony, whose own venture capital group has invested in 12 companies since 2017 — half of which have founders who are women and/or people of color.
“This partnership with Synchrony is going to provide us with a lot more capital and help our companies grow to the next stage,” Hernandez said. “But this partnership is about so much more than just capital. In our portfolio, we have about 35 percent in financial technology — so that’s an example of an area where there’s a lot of alignment with Synchrony.”
In addition to Chingona, Synchrony is also supporting Bostonbased Seae Ventures and Washington, D.C.-based Zeal Capital Partners with its $15 million commitment. Those three firms cumulatively support a number of early-stage startups across the financial technology, health care and “future-of-work” sectors.
Synchrony did not disclose the specific amounts it was allocating to each firm.
With the $15 million allotment, Synchrony plans to support additional firms, which will be selected later this year.
“We decided as a corporate VC that we wanted to be much more thoughtful and purposeful in how we make a difference when you look at those percentages (related to women and minorities),” Mosconi
said. “When we looked at that VC community, the best way to do that was as a fund investor, which we had not yet done.”
‘Approach the ecosystem from different angles’
Synchrony, the No. 170 company on last year’s Fortune 500 list, is also supporting women and minority professionals through a number of other initiatives.
Earlier this month, it announced an approximately $50 million plan to support higher education, workforce training and financial literacy for its workforce and underserved communities.
The company’s foundation, meanwhile, has committed $5 million to help fund small-business grants through community organizations for minority- and women-owned firms.
In addition, as a member of the National Minority Supplier Diversity Council, Synchrony said it is identifying and using diverse suppliers whenever possible.
“If you approach the ecosystem from different angles, then you’ve got to believe that you’ll change the trajectory,” Mosconi said. “These are all parts of a holistic approach, internally and externally, around diversity.”
At the same time, other large companies are making major investments aimed at supporting more diversity in venture capital. Chingona is receiving a portion of a $50 million investment in eight Black- and Latinx-led funds announced last year by PayPal.
In turn, those investments have reinforced Chingona’s ability to invest in a broad range of companies. More than 80 percent of Chingona’s 24 portfolio companies have CEOs who are women and/or “racially diverse,” according to Hernandez.
“When I look for founders, they might not fit your traditional mold. They might not be from Stanford or Harvard or have worked in big tech or be in Silicon Valley,” Hernandez said. “They might be here in the midwest and might be an immigrant founder and have really unique experiences and address the problems in a market in a very different way.”