Following the events of May, when Minneapolis police officers caused the death of George Floyd and sparked months of protests across the country, the business sector – including venture capital firms – has been responding to the Black Lives Matter movement.

Many organizations promptly used social media to express their support, announce new networking groups centered on diversity, and commit to improvement, especially in the areas of identifying and investing in more Black founders and other entrepreneurs from underrepresented groups.

There was a temptation to view these actions as merely superficial, considering the long history of venture capitalists discussing diversity without substantial progress.

As a report from All Raise, an organization dedicated to supporting female founders, indicated in February 2020, 65% of venture capital firms still had no female partners. Furthermore, an analysis by Richard Kerby of Equal Ventures revealed that, as of 2018, 81% of venture firms had no Black investors.

These figures appear relatively positive when examining the proportion of women and Black investors holding senior decision-making positions. According to recent PitchBook statistics, only 12.4% of decision-makers at U.S. venture firms were women at the beginning of this year, a slight increase from the 9.65% recorded at the start of 2019. The number of Black investors in senior roles has consistently remained around just 2%.

However, there is encouraging news: despite the continuing difficulty in aligning these numbers with other industries, two specific developments in 2020 suggest the potential for increased action in 2021.

First, Yale’s endowment made a significant decision this fall to require its asset managers to demonstrate improvement in diversity. The school’s $32 billion endowment – overseen by investor David Swensen since 1985 – informed its 70 U.S. money managers that their progress in increasing diversity within their investment teams, encompassing hiring, training, mentorship, and retention of women and minorities, will be evaluated annually.

Although Swensen has not publicly announced specific targets, the importance of this directive is considerable given his influence in the institutional investment landscape. The majority of funds raised by venture firms originate from institutions like Yale, as well as pension funds, hospital systems, insurance companies, and family offices; if more of these entities utilize their influence to hold venture firms accountable for diversifying their management and investments, it could fundamentally change the industry.

Some anticipate this outcome as inevitable, including Lo Toney, founder of Plexo Capital, a diversity-focused investment firm backed by Alphabet that both invests in venture funds and directly in startups. As Toney, who is Black, explained to us this summer, pension funds like the California Public Employees’ Retirement System manage assets for 1.6 million employees, many of whom “share my background.” He questioned what impact might occur if they began to inquire more thoroughly about who is managing their funds.

The second impactful development of the year came from SoftBank, which announced a $100 million Opportunity Growth Fund in June, dedicated entirely to funding startups founded by individuals who are Black, Latinx, or Native American.

While $100 million is a relatively small amount compared to current venture fund sizes – and the fund initially faced skepticism, given that SoftBank’s $100 billion Vision Fund supported only one company with a sole Black founder – it represents the largest commitment to date by an investment firm.

Earlier this month at WebSummit, we had the opportunity to discuss this initiative with SoftBank COO Marcelo Claure, along with two members of the fund’s investment committee: Stacy Brown-Philpot, former CEO of TaskRabbit, and serial entrepreneur Paul Judge, who has co-founded Luma and Pindrop Security, among other ventures.

During the conversation, Claure stated that SoftBank has consistently prioritized diversity, stemming from its founding by Masayoshi Son, a Korean native who achieved success in Japan, and furthered by Claure himself, “a Bolivian who has prospered in the U.S.”

“We have consistently acknowledged the greater challenges minorities face in achieving their goals,” Claure said, adding that the Opportunity Growth Fund has already received over 700 business proposals and has since invested in 20 startups, with 80% of them being led by first-time founders.

Regarding whether this is sufficient to create significant change, Claure believes that other traditional venture firms often emulate SoftBank’s initiatives. He noted that other firms quickly increased their activity after SoftBank launched its substantial Vision Fund. Claure also highlighted SoftBank’s $5 billion Latin America-focused venture fund, which the company introduced in the first quarter of 2019. While that capital amount was initially “greater than the combined total of all [regional funds],” he said, “now, I am competing with Sequoia; Dragoneer is also involved.”

Given the caliber of founders SoftBank is identifying, Claure anticipates that other firms will soon establish their own, substantial diversity-focused funds. He also predicts they will provide subsequent funding to the startups SoftBank is currently backing. “Everyone is seeking exceptional companies,” Claure said. “People tend to follow where SoftBank leads.”

If you are interested in learning more about SoftBank’s initiative, please view or listen to our interview with Claure, Judge, and Brown-Philpot below.