Venture capitalists play a decisive role in shaping the future of technology, and with it the future of our economies, politics, societies and our human rights. And yet there is woefully little effort by VC firms to ensure they are not investing in companies whose products and services may be causing or contributing to human rights abuses.
In the first comprehensive look at the human rights responsibilities of venture capitalists, Amnesty International surveyed all the firms on the Venture Capital Journal’s list of the 50 largest VC firms, as well as three leading tech accelerators (Y Combinator, 500 Startups and TechStars). Amnesty International found that none of the ten largest firms – who together have raised more than $82 billion over the last five years – had adequate human rights due diligence policies in place. In fact, of the 50 VC firms and three tech accelerators surveyed by Amnesty International, we found that only a single firm (Atomico) had human rights due diligence processes in place that potentially met the standards set forth by the UN Guiding Principles on Business and Human Rights.
Failure to carry out adequate due diligence is a failure of the corporate responsibility to respect human rights. The vast majority of leading VC firms are failing in their responsibility to respect human rights under international standards on business and human rights, including the globally-endorsed UN Guiding Principles on Business and Human Rights.
“Our research has revealed that the vast majority of the world’s most influential venture capitalist firms operate with little to no consideration of the human rights impact of their decisions,” said Michael Kleinman, Silicon Valley Director of Amnesty Tech. “The stakes could not be higher – these investment titans hold the purse strings for the technologies of tomorrow, and with it, the future shape of our societies.”
Grading the world’s largest VC firms
This report examines 50 of the world’s largest VC firms as measured in total funding raised over the last five years – together, a total of $164 billion dollars – as well as three high profile startup accelerators. For this report, Amnesty International reviewed publicly available information on each VC firm’s human rights due diligence processes. We also sent numerous letters to each firm, requesting additional information.
As mentioned above, none of the world’s top ten largest VC firms have sufficient human rights due diligence policies in place. Eight of these firms (NEA, Tiger Global Management, Sequoia Capital, Lightspeed Venture Partners, Andreessen Horowitz, Accel, Index Venture Partners and General Catalyst) showed no evidence that they checked whether their investments could be linked to human rights abuses. Two of the firms (Insight Partners and Norwest Venture Partners) do conduct some level of human rights due diligence, although not to the standards set out in the UN Guiding Principles.
Amnesty International’s research highlights the fact that VC firms fund companies whose products are sold to repressive governments and cause or contribute to human rights abuses. For instance, VC-backed technology companies provide spyware equipment to the Chinese government, which forms part of the dystopian surveillance infrastructure monitoring the Uighur population in Xinjiang.
VC firms also invest in companies whose business models undermine human rights. For instance, Amnesty International in our Surveillance Giants report explained how the surveillance-based business model of social media companies including Facebook and Google undermines our right to privacy. Yet venture capitalists continue to invest in companies like TikTok with similar surveillance-based business models. Companies relying on app-based or “gig workers”, such as Lyft and Uber, also receive critical funding from venture capitalists, despite employees often facing exploitative and abusive work conditions.
Further, the lack of human rights due diligence by VC firms dramatically increases the risk that they fund companies developing new and “frontier” technologies that have a significant negative impact on human rights. For instance, the application of increasingly powerful artificial intelligence / machine learning (AI/ML) tools across a wide variety of sectors risks amplifying existing societal biases and discrimination.
“A lack of human rights due diligence means venture capitalists are turning a blind eye to whether their investments are contributing to human rights violations,” said Kleinman.
“VC firms cannot act like they are above the law. Like all companies, they have a responsibility to carry out due diligence in order to identify, prevent and mitigate any adverse human rights impacts of their investments.”
Lack of diversity
Investment teams that are predominantly white and male are less likely to fund startups led by women and Black, indigenous and other people of color. In turn, this lack of diversity means the new technologies that receive investment are less likely to consider their impact on women as well as minority and marginalized communities.
For instance, a recent survey in the US conducted by the National Venture Capital Association (NVCA), Venture Forward and Deloitte, found that women comprise only 23% of venture capital investment professionals – those involved in deciding which startups to fund – while 65% of firms did not have a single female investment partner. This lack of representation has a direct impact on start-up investment – in 2018, all-female founding teams received just 2.2% of all US-based venture funding.
The numbers are even worse for racial diversity. According to the same NVCA, Venture Forward and Deloitte survey, only 3% of VC decision-making investment staff in the US are Black, and 4% Latinx. Black and Latinx founders also received less than 2.3% of VC funding. The problem is even more glaring from an intersectional perspective – Black and Latinx female founders receive less than 0.5% of all US-based venture capital funding in 2019.
The situation in the UK is comparable. According to Diversity VC, as of 2019, men comprised 80% of all investment roles at venture capital firms in the UK.
“This glaring lack of diversity means new frontier technologies are being largely funded and built by white men, without an understanding of the broader impact of their technologies. VC firms urgently need more women and minority groups in decision making roles and should publicly commit to hiring more diverse teams,” said Kleinman.
“Venture capitalists ultimately get to decide which startups will grow to become the next Google or Facebook. If we want to ensure that tomorrow’s leading tech companies and technologies support our human rights, we need to act today.”
Notes to Editors
- To investigate whether VC funds and those providing their capital conduct human rights due diligence, Amnesty International reviewed publicly available information about each firm’s human rights policies. Since the results have limitations (e.g. some funds did not have human rights due diligence policies disclosed on their websites), we also sent letters to each of the firms requesting information on their human rights due diligence practices. Only six responded. The methodology is described in detail in the full report and responses from specific VC firms are included in the Appendices.
- In order to assess adequacy of companies’ human rights due diligence, Amnesty International used the UN Guiding Principles on Business and Human Rights (UN Guiding Principles). The Guiding Principles impose a range of requirements on corporate actors, including to avoid contributing to human rights abuses through their business activities, and to have in place ongoing and proactive human rights due diligence processes, both on their own activities and through their business relationships (and to ensure human rights impacts of business partners are mitigated by exercising leverage on such third parties).All companies have a responsibility to respect human rights wherever they operate, including throughout their operations and supply chains. The corporate responsibility to respect is independent of a State’s own human rights obligations.
- The UN Guiding Principles establish that to meet their corporate responsibility to respect human rights, companies should have in place an ongoing and proactive human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights.
 The ten largest VC firms according to the VCJ 50 are: Insight Partners, New Enterprise Associates, Tiger Global Management, Sequoia Capital, Lightspeed Venture Partners, Andreessen Horowitz, Accel, Index Ventures, Norwest Venture Partners and General Catalyst Partners.