In the competitive world of venture capital (VC), less than 2% of funding goes to startups led by women and minorities. Toby Egbuna, co-founder of Chezie, is calling attention to the systemic barriers that perpetuate this inequality and proposing a bold solution: banning the warm intro.
Egbuna, a Forbes 30 Under 30 honoree and advocate for equitable opportunities, reflects on his experience raising pre-seed funding for Chezie. In the first two months, he sent nearly 100 cold emails and applications, receiving no responses. A turning point came when John Hu, a founder who raised $5 million for his company, shared a crucial piece of advice: “It’s all about the warm intro.” Once Egbuna prioritized warm intros, he immediately began landing meetings.
However, Egbuna believes that this reliance on warm intros is at the heart of the VC industry’s inequality problem. He argues that warm intros are discriminatory, stifle innovation, and shrink returns.
Why Warm Intros Are Killing Innovation
1. They Are Discriminatory
Warm intros rely heavily on personal networks, which often exclude underrepresented groups. Egbuna notes that those without access to well-connected networks—such as founders from remote locations, those early in their careers, or minorities breaking into tech—are effectively locked out of funding opportunities.
“I was lucky to have worked in tech and built a network, but what about founders who don’t have that privilege? These are often the people solving the most important problems,” he says.
2. They Block Great Ideas
When VC firms rely on the same networks for deal flow, they end up chasing the same types of startups. This leads to overcrowded sectors and copycat solutions, while real, unique problems remain unaddressed. “The reliance on warm intros creates an echo chamber, where the most innovative solutions are often overlooked,” Egbuna explains.
3. They Shrink Returns
The best solutions often come from founders with lived experience of the problems they’re solving. However, when access to capital depends on social capital, game-changing ideas from these founders are often left unfunded. “We’re leaving money on the table by not funding these solutions,” he warns.
A Call for Change
Egbuna argues that the VC industry needs a complete overhaul, shifting from exclusivity to a standardized process based on merit. He acknowledges that such change would challenge decades of entrenched practices but insists that fairness and innovation depend on it.
“The truth is, the system is broken, and it needs fixing. But will VCs embrace this change? It remains to be seen.
”For those interested in diving deeper into this critical issue, Egbuna shares insights and potential solutions in his Equity Shift newsletter. As he continues building Chezie—an equitable startup aimed at making workplaces more inclusive—his mission to break down barriers in venture capital is gaining momentum.
This story isn’t just about VC inequality; it’s about the missed opportunities and untapped potential of underrepresented founders. By addressing these systemic issues, the VC industry has a chance to foster innovation and maximize returns for all.
For now, Egbuna’s bold call to ban the warm intro has sparked a vital conversation about the future of venture capital.
