A handful of venture capitalists determine the future of technology. The world’s ten leading venture capital firms have invested over $150 billion in technology startups. The venture capitalists who run these firms decide which startups today will develop the new platforms and technologies that will shape our lives tomorrow. There is a startling lack of diversity within the venture capital sector. This means that a small group of predominantly white men make decisions that affect all of us. Unsurprisingly, they often ignore these investment decisions’ broader societal and human rights implications.
We all live in a world shaped by venture capital. As of 2019, 81% of all venture capital funds worldwide are clustered in just a handful of countries, primarily in the U.S., Europe, and China, which in turn are shaping the future of technology. If you spend time on Facebook or Twitter, use Google, travel in an Uber, or stay in an Airbnb, you’ve experienced firsthand the impact of venture capital funding. Venture capital firms, which provide equity financing for early- and growth-stage startups, are critical in deciding which new technologies and technology companies will receive funding.
All businesses — including venture capital — are responsible for respecting human rights. Therefore, venture capital firms must conduct due diligence processes before making investments to ensure that their investments are not undermining our human rights. No one of the world’s ten most prominent venture capital firms had an adequate human rights due diligence process that met the standards outlined in the UN Guiding Principles on Business and Human Rights. Amnesty International recently surveyed the world’s largest venture capital firms and startup accelerators.
Unfortunately, this is true of the broader venture capital sector as well. Of the 50 VC firms and three startup accelerators analyzed by Amnesty International, we found that almost all packed adequate human rights due diligence policies and processes. This failure to carry out adequate due diligence means that most VC firms fail to respect human rights.
This almost complete lack of respect for human rights among the world’s largest venture capital firms has three key impacts. First and most immediately, it means that venture capital firms invest in companies whose products and services have been implicated in ongoing human rights abuses, such as companies that support the Chinese government’s repression of the Uyghur population in Xinjiang across China.
Second, venture capital firms continue to fund companies whose business models significantly negatively impact human rights, including our privacy and labor rights. For instance, leading venture capital firms continue to support companies that rely on app-based or “gig” workers, who often face exploitative or otherwise abusive work conditions, and companies whose “surveillance capitalism” business model undermines our right to privacy.
Third, venture capital firms’ lack of human rights due to diligence dramatically increases the risk of funding new and “frontier” technologies without ensuring adequate human rights safeguards are in place. This is a critical blind spot, especially as VC-funded startups seek to disrupt such fundamental parts of our lives as education, finance, and health. For instance, applying increasingly powerful artificial intelligence/machine learning (AI/ML) tools across various sectors risks amplifying existing societal biases and discrimination. Seemingly objective algorithms can be biased by relying on incomplete or unrepresentative training data and replicating the unconscious bias of those who developed the algorithms.
