Diversity Rider for Convertible Note and Series Seed Equity Term Sheets
Many thanks to Alexander Knight for his contributions.
In an effort to further advance diversity efforts and increase the representation of underrepresented minority groups on cap tables, Cooley GO’s term sheets include the option for a diversity rider, which requires startups and their investors to seek diverse co-investors in their deals.
Diversity riders were developed by Alejandro Guerrero, a principal with Los Angeles-based Act One Ventures, following the deaths of George Floyd and Breonna Taylor. A number of venture capital firms have committed to including diversity riders in their term sheets. The diversity rider is a tangible effort to expand access to investors of underrepresented minority groups who have historically been excluded from the venture capital industry. The new rider includes the following language:
“In order to advance diversity efforts in the venture capital industry, the Company and the lead investor, [Fund Name], will make commercial best efforts to offer and make every attempt to include as a co-investor in the financing at least one Black [or other underrepresented group including, but not limited to LatinX, women, LGBTQ+] check writer (DCWs), and to allocate a minimum of [X]% or [X] $’s of the total round for such co-investor.”
Diversity and Inclusion are embedded in Cooley’s culture and we are dedicated to supporting our colleagues, clients, industries, and communities as we work toward greater racial equality.
For more information on Cooley’s Diversity and Inclusion efforts, click here.
For more information on Cooley’s racial justice efforts, click here.
For more information from Act One Ventures on the Diversity Rider, click here.