At Lockstep Ventures, we’re on a mission to invest in businesses committed to reducing inequality and supporting economic and social justice initiatives. Chief among our core commitments is recognizing the challenges faced by formerly incarcerated individuals in obtaining employment opportunities and supporting broader efforts to reduce recidivism. In support of this commitment, we ask all of our portfolio companies to commit to open and inclusive hiring practices that reduce systemic bias against diverse candidates, particularly those with criminal records.
Prison populations in the United States have grown from about 200,000 at the beginning of the War on Drugs to over 2,000,000 people at present. While only 13.4% of the United States population is Black, 34% of the current prison population is African American and, in the past 40 years, 35% of those executed under the death penalty have been African American. Black men and Black youth have carried an undue burden of incarceration that keeps the community in a cycle of incarceration and poverty.
Workplace discrimination is an endemic problem in the United States, particularly for formerly incarcerated individuals. In theory, once an individual has served their prison sentence, they have paid their debt to society and should be able to live penalty-free. Despite this, many formerly incarcerated people find it difficult to vote, obtain employment, open a bank account and secure housing due to their felony conviction and record. Legal restrictions often inhibit re-entry into the United States population. Homelessness, unemployment, and poverty are often cited as the primary barriers to re-entry. One year after leaving prison, 75% of formerly incarcerated people are still unemployed and some studies have indicated that unemployment is the clearest indicator of recidivism.
Hiring models often require background checks and criminal history backgrounds, which prevent formerly incarcerated people from obtaining employment. However, if these hiring practices were to change, there would be far more opportunities for employment and potential for reducing recidivism. Clean slate initiatives are now under way in virtually every state in the United States to combat this type of persistent discrimination.
Black men without a criminal record are less likely to get a call-back (14%) than white men with a criminal record (17%). 67.5% of previously incarcerated people are arrested within three years and 1-in-5 African American men have a criminal record. With societal biases preventing employment and re-entry, the Black population has a far higher rate of recidivism.
Venture capital and private equity funds invest hundreds of billions of dollars into companies at various stages of growth. These portfolio companies produce great profits and millions of jobs, yet very little effort is made towards asking them to examine their impact in addressing inequality and other economic and social justice issues. Venture-backed companies are significant employers, with approximately 2.5 million employees in 2020 (about a 10% increase from the previous year). Our view is that these companies have an important role to play in helping to provide employment to the 650,000 people released from prison annually. As part of the broader clean slate initiatives in the United States, Lockstep Ventures is committed to inclusive hiring and actively hiring formerly incarcerated people and invites other venture capital funds and portfolio companies to work together to eliminate discrimination against formerly incarcerated people.
Guiding Principles & The “Ask”
To align Lockstep Ventures’ portfolio companies with Lockstep Ventures’ mission, we ask that you undertake the following commitments within sixty (60) days following any Closing:
- Revise Interview Processes and Hiring Policy: Review your interview and hiring process and analyze whether your current processes and HR language exclude candidates with a criminal record. Design, adopt and maintain in effect a hiring policy, tailored to your specific industry and business that prohibits discrimination with respect to candidates with a criminal record and eliminates barriers to hiring such candidates.
- Identify and Implement Fair Chance Hiring Practices. Identify elements of Fair Chance Hiring practices, including the “Ban-the-Box” initiative (i.e., not requesting criminal history until later in the hiring process or until a conditional offer of employment has been given), that your company can implement. Implement and thereafter maintain in effect these practices.
- Implement Focused Diversity & Inclusion Training. Implement diversity & inclusion training for the company’s officers and employees, including HR professionals charged with recruiting and hiring, that is focused on Fair Chance Hiring and Fair Chance Hiring practices. Such training would ideally be provided by a D&I firm or individual practitioner who has extensive knowledge of Fair Chance Hiring and Fair Chance Hiring practices and can help you institutionalize these practices within your company.
While Lockstep Ventures’ goal is for all portfolio companies to adopt Fair Chance Hiring and Fair Chance Hiring practices, we acknowledge that each portfolio company is unique, and that your ability to implement these practices may be limited by the industry in which you operate or your specific legal, regulatory or operational needs. For that reason, we view the commitments laid out above as guiding principles and encourage engagement with us on how to tailor Fair Chance Hiring and Fair Chance Hiring practices to your organization.