More Women Became VC Partners Than Ever Before In 2019 But 65% of Venture Firms Still Have Zero Female Partners
Correction [2/12/2020]: It came to our attention that there were two more female partners added in 2019, making the total number of new female partners 54, not 52. Because one of those women identifies as Latinx, we have corrected the sentence below about that. The figures and graphs below still reflect the 52 total because using our stated methodology of scouring the web for press announcements and website changes, we could not have known about those two additional partners before publishing the report. We’ll continue to improve our methodology going forward and augment it with crowdsourcing. Stay tuned for our next report!
Correction [2/7/2020]: In a previous version of this blog post we published that there were 50 new female VC partners in 2019 but the number was actually 52. In addition, there was one black woman who identifies as African American, of Bermudian, Grenadian, and Colombian heritage. We regret having to make a correction, but in this case, it’s good news! We have made these changes in the post, including updating our figures and graphs.
According to our analysis of U.S. venture capital firms with over $25M AUM (excluding life science and corporate VC firms), in 2019 52 women became VC partners or general partners for the first time.
This figure is unprecedented: it represents the highest number of new female VC partners and a 37% increase from last year’s record (38). Despite these notable advancements, the industry still has a long way to go.
The majority of firms — 65% — still don’t have a single female partner or GP at their firm and even as we hit a record number of new female partners and GPs last year, there were still more men named partner or GP (71).
Furthermore, underrepresented women of color were largely not part of the 2019 list, as it appears there were only one black woman and one Latinx woman named partner. That maps with the paltry entry rates of black and Latinx people into venture, just 0.67% and 3.22% respectively between 2010–2015.
Let’s dive in and put those numbers into context. All Raise has been tracking VC partner additions by gender since 2017. In 2018, coinciding with the same year that All Raise officially launched, the number of new female partners (38) almost exceeded the number of new male partners (40) for the first time.
Some of the largest, most well-known institutional VC firms have been signaling big changes to come, adding multiple female partners — not just one — to their investment teams in recent years:
- Sequoia Capital added two female partners to their team in 2018.
- Lightspeed Venture Partners added four female partners to their team in 2018 and added three in 2019.
- Andreessen Horowitz added three female general partners in 2018. In 2019, the firm added four female partners and one general partner.
What do these firms know that others don’t? For one, they are showing other firms that adding just one woman to their teams isn’t enough. More broadly, they seem to understand that diversifying their investment teams is a strategic necessity that allows them to tap into a much broader set of networks and areas of expertise. As I said at Fortune Brainstorm TECH last year, making diversity the new normal is not just the right thing to do, it’s the best thing for business. For example, we recently found that out of all of the U.S. VC firms that scored a top-quartile fund between 2009 and 2018, 69.2% of them had women in decision-making roles.
If VC firms stay homogenous and keep investing in people who look like them, they’ll get left behind. According to Morgan Stanley, they risk losing out on as much as $4 trillion by not investing in women and other underrepresented entrepreneurs.
Tracking the decision-makers in venture
One of our goals at All Raise is to double the percentage of women who are decision-makers in venture capital in 10 years. We define decision-makers as VC investors who can write checks, lead deals, and sit on boards — essentially those who have the power and influence to invest in the next generation of companies, bring a diversity of perspectives to the table, as well as hire and compensate new investors.
Since the public launch of our organization in 2018, we have seen a 4% improvement in the percentage of female decision-makers in VC, from 9% to 13%.
With the record number of new female partners and general partners last year, that percentage has improved to 13% as of February 2020, according to PitchBook. We still have a long way to go to get to All Raise’s goal of 18% or better by 2028.
Female representation in venture overall remains staggeringly low — 65% of U.S. VC firms still do not have any female partners. With the influx of new female partners last year, this number has improved significantly from 2019, when 71% of firms had no female partners. Along with that positive shift, between 2018 and 2019:
In 2019, 32% of the new female partners were the first female partners (again, investment decision-makers, not operations partners) ever at their firms.
Let’s see where these new female partners came from, both in terms of geographic locations and career paths.
Geography: Where are the new partners located?
Unsurprisingly, the San Francisco Bay Area has long dominated this category, with 62% of the new female partners being named there. Other regions are also on the rise, with New York City and Chicago posting the next highest numbers of new female partners in 2019. New York City also happens to be one of the most female-founder-friendly locations, in terms of funds secured via venture capital. According to our recent joint report with PitchBook, in 2018, companies with at least one female founder secured 27% of total VC investment in New York, compared to just 19% of total VC investment in the San Francisco Bay Area. Meanwhile, Chicago venture funding hit a decade high in 2019, as VC funding there surpassed $2 billion.
Venturing out: Where did the new partners come from?
More newcomers to VC
There was a big increase in the percentage of women who joined VC from an operating or executive role, from 34% in 2018 to 50% in 2019. This is not an atypical track. The largest group of the new male partners in 2019 (30%) also joined venture from operating roles.
Fewer women moving between firms to get promoted to partner
There’s been a sizable decline in the percentage of women who moved from one VC firm to another in order to make partner, from 21% in 2018 to 15% in 2019. Moreover, in 2019 there was a big delta between the percentage of women who moved firms to get promoted (15%) and the percentage of men who followed a similar path (27%).
Fewer women becoming partners by starting new firms
There was a slight decrease in the percentage of women becoming a partner for the first time in starting their own VC firms, from 21% in 2018 to 17% in 2019. There was also a higher percentage of men who became a partner by launching a fund in 2019 (24%).
Fewer promotions from within firms
We saw a lull in the percentage of women who became a partner by getting promoted, from 24% in 2018 to 17% in 2019. It’s too early to tell whether this is a concerning trend but it’s one we’ll certainly keep an eye on to consider how VC firms can become more inclusive, equitable workplaces. For comparison, the percentage of men who newly became partners in 2019 through internal promotions was 19%.
The only moonshot investment that’s a sure thing
Investing in a more diverse and equitable technology ecosystem is a moonshot investment but without any of the risky downside that most moonshots have. It’s a sure thing.
VCs are waking up to the economic benefits of diversity. We recently found, together with PitchBook, that companies with women on their founding teams are more likely to exit one year faster than companies with male-only founding teams. They heard, loud and clear, from over 1,000 Founders for Change that the next generation of founders wants investors with diverse teams and they’re not afraid to decline checks from firms without them. Just last week Wall Street’s biggest underwriter of initial public offerings, Goldman Sachs, announced that it will no longer take companies public without at least one board director from an underrepresented group.
These new female partners are the architects of tomorrow, drawing up new blueprints of startup success and enabling underrepresented founders to build this decade’s unicorn companies and IPO candidates. It’s their firms that stand to reap the rewards of their fresh ideas.
I can’t wait to see these women uncover groundbreaking companies and products that deliver outsized returns and positively shape our politics, policies, and culture. I’m also looking forward to a new decade in which we’ll keep setting new records for more women in leadership.
For this report, we obtained Crunchbase data about when female and male partners started at new firms from 2017–2019. The All Raise team then drilled down each annual list to ensure we were being consistent with our other data tracking in excluding investors from firms that are:
- Not based in the U.S.
- Corporate VC
- Life science or healthcare VC
- Under $25M in AUM
We also manually checked LinkedIn profiles and other online sources like newsletters and press announcements to verify the year in which each person became a partner for the first time. This isn’t always a perfect science. For example, some investors list their most recently held title at a firm rather than the progression of their roles and the precise time periods in which they held various titles. Our data collection became more vigorous in 2019 when we started actively capturing the names of investors from the sources mentioned above (newsletters, press announcements).
PitchBook provided us with aggregated data about the gender diversity of VC firms overall, helping us parse how many firms have no female decision-makers, at least one, or two or more. The same exclusion criteria outlined above apply.