Why diversity? Cold Hard Cash

We've all seen the stats: Women get less than 3% of venture capital dollars—while women of color get a measly 0.2%. But it doesn't have to be that way.

Consider Aspect Ventures, the VC firm founded by Theresia Gouw and Jennifer Fonstad: About 40% of the firm's companies were founded by women, and 30% were started by minorities. And while some might be tempted to write Aspect off as a small ball, fringe player on the Valley scene: The firm just announced its second fund, a $181 million round that includes limited partners Melinda Gates and Cisco Systems.

It's no accident that these LPs—a.k.a the investors in the investors—chose to put their money behind a diverse fund that invests in diverse startups. "In many ways, the venture and startup ecosystem is still a boys' club—one that all too often excludes, disadvantages, and mistreats talented women who want to contribute to it," Gates says. "The data tells us that's harmful to society and bad for business."

Indeed it's not just Gates and Cisco who are concerned with the repercussions of sinking their cash into firms that are still in the thrall of the mostly male, mostly white founders who have long been the toast of Silicon Valley.

So, why are investors suddenly starting to heed the calls for diversity, after many ignored them for so long? The answer appears to come down—as it so often does—to cold, hard cash: Companies with greater diversity have better business results and lower rates of sexual harassment. And at a time when, as one VC puts it, an act of "unacceptable behavior" can "blow up" a whole firm, there's serious money on the line.

To read the rest click here:  Fortune