Breaking Barriers to Bring Fresh Perspectives to Venture Capital
The number of female venture capitalists is growing and as more women join the industry, they are bringing diversity and fresh perspectives that are enhancing opportunities for everyone involved. This piece explores the current state of gender diversity in venture capital and provides steps for making further progress toward equal representation.
The Current Landscape
Historically, the venture capital industry has been predominantly male-dominated, with women significantly underrepresented. Deloitte’s periodic VC Human Capital Survey signifies that the percentage of female employees in investment positions has been steadily increasing since 2016. In their 2022 survey, 26% of respondents held such positions, up from 23% in 2020 and 21% in 2018. In 2016, their inaugural survey year, only 15% of respondents were women in investment positions.
More recently, the 2023 State of Corporate Venture Capital Report by Counterpart and Silicon Valley bank, dives specifically into the current landscape of women in corporate venture capital (CVC). Overall representation of women in corporate venture firms has seen a slight bump, with 42% of CVCs sitting in the 25%-50% range (see graph below). However, the report did find that the percentage of female CVC heads remains flat compared to last year.
Source: https://www.svb.com/globalassets/trendsandinsights/reports/state-of-cvc-report-2023.pdf
Despite the fact that women have made great strides in recent years, there is still a ways to go. The percentage of women in venture capital positions remains far from parity with that of the overall workforce and US population.
Strategies to Continue Progressing
Here are three actions you and your firm can take to help make a difference in increasing gender diversity in venture capital.
- Develop a strategy and implement it.
To increase gender diversity among employees at VC firms, one action item is to implement Diversity, Equity, and Inclusion (DEI) strategies and programs. This NVCA 2020 Survey found that when investment firms have a diversity and inclusion strategy in place, 25% of their investment professionals are women, compared with 20% of those firms without such strategies.
Moreover, these firms reported higher numbers of women in leadership positions, with approximately 20% of investment partners being female compared with 14% at firms without DEI strategies. To address the gender gap at firms, companies can institute accountability metrics that specifically measure their progress on diversity and inclusion.
2. Create communities and opportunities for connection
Programs, workshops, and conferences organized to bring women together help existing employees in the industry by addressing knowledge gaps as well as provide networking opportunities. They also empower aspiring women to enter the industry with confidence. Since deal sharing and overall knowledge sharing are critical pieces of success in venture, it is vital for women to build strong networks that help with deal flow and career support.
Creating communities can occur by developing opportunities for connection in the form of networking events, mentorship, or simply sharing your story with others. This year’s Women’s History Month had a global theme of “Women who tell our stories” — there is incredible power in storytelling as it helps expand our understanding of the world and strengthen our connections with each other.
3. Invest in female-founded companies
A focus on investing in female-led startups can make a positive impact on women in venture capital. Research has repeatedly demonstrated that diverse teams perform better and that there is a clear financial upside of gender equity not only for companies and investors but also for the economy at large. Additionally, would-be female inventors and founders benefit from having successful role models to look up to as well as peers on the other side of the conference room when they are pitching for venture capital.
Many women in venture capital have pioneered initiatives and funds targeted specifically at female founders. By investing in female-led startups, women in venture capital are not only diversifying the investment landscape but also enabling innovative ideas and untapped potential to flourish. This approach promotes a more inclusive startup ecosystem and paves the way for future generations of female entrepreneurs.
Final Thoughts
The rise of women in venture capital is an exciting development that signifies progress towards a more diverse and inclusive investment landscape. As more women break into this field, they bring fresh perspectives, invest in untapped talent, and shape the future of entrepreneurship. By advocating for gender diversity and inclusion, promoting female founders, and inspiring the next generation, women in venture capital are challenging the status quo and fostering a brighter, more inclusive future for the industry as a whole.
