Women in Venture Capital: A Primer
As our inaugural Women in Venture Capital panel draws closer (tomorrow!), we wanted to give a quick intro to the topic with the kind help of two of our panelists. We think the panel discusses an important topic because venture capitalists (VCs) play an active role in shaping companies they fund, so diversity (or lack thereof) at an investor level can have flow-on effects to the wider startup ecosystem.
Okay, so what do venture capitalists actually do?
Venture capital pools cash from investors to fund early stage businesses (aka startups). Beyond funding, a major chunk of the role involves mentoring founders, leveraging their networks and helping their portfolio companies scout for talent in order to grow.
The impact VCs have is two-fold: (i) deciding which companies are funded; and (ii) influencing the direction of the companies they fund. A VC is often more to a founder than just a source of funding: ideally providing the mentoring and support that enables founders to use the investment to grow.
Samantha Wong, VP Operations at Blackbird Ventures and Partner at Startmate, says a huge motivator in her role is:
“Helping build entities that are having an impact on the world. It’s a unique privilege to be part of the journey for better or for worse, with people who get up, create things and overcome their struggles. I am hugely fortunate to be a small part of the journey”.
What’s the startup ecosystem like in Australia?
We are starting to see Australia’s startup ecosystem populate with world-class teams tackling global problems, which means an increased appetite on the venture front.
Sam Wong is “fairly optimistic” about Australia’s startup scene. She notes, “it’s pretty well known that Australia has created some of the great marketplace and SaaS companies but there’s now a new wave of entrepreneurs who are entering higher risk tech. We have a burgeoning space tech scene and plenty happening in fintech, biotech and applied robotics for example … it’s a bit of a renaissance time for deep tech”. (Just quietly, how freaking cool is the phrase “renaissance time for deep tech”?!)
How’s the diversity in venture capital? (Hint: not great… yet)
Whilst the figures are improving, there is no doubt VCs are still predominantly white males. According to TechCrunch data from last year:
Only 7% of partners from the top 100 VC firms globally are women.
This has been argued to skew the companies that are being invested in: during 2016, female founded companies accounted for just 17% of angel rounds, 13% of early stage and 7% of late stage by value. For this event, we have focused on gender diversity but this is obviously just one facet of diversity.
Sibel Buyukbaykal, an investment associate from Reinventure, thinks the need to address the gender gap is “not just about diversity for the sake of diversity, but about the importance of diversity of thought” in investment committees.
Sibel also mentioned that having “women in venture capital is really important as there’s a little bit of a chicken and egg situation with women entrepreneurs and then woman VCs. Female entrepreneurs should feel as they connect and relate to their venture partners” and how, “it makes a huge difference when you can see yourself reflected by people in the leadership, see who you want to be in the future reflected in that person”.
Research is confirming a lot of these empirically observed flow-on effects: a lack of female partners at an investor level may undermine performance of female-run companies; the way investors talk about female founders includes detrimental gender bias (granted this is 2009–10 data); and a survey of 210 women in Silicon Valley found that 60% had experienced unwanted sexual advances and that two-thirds felt excluded from important social and networking opportunities. Even for Textbook Ventures, our student-run fund based at UNSW, Sydney, we found there were almost 3 times more male applicants than female applicants for associate roles.
Long story short: a lack of diversity discourages interactions from minority groups that negatively impacts the wider startup ecosystem and tech industry.
How do we change this?
This is part of a larger puzzle of cultivating inclusive environments in a number of spaces. Venture capital sits at a cross section between finance, technology, engineering and entrepreneurship: all four sectors that perform pretty poorly on the diversity front.
Some of the important puzzle pieces include increasing participation of women in STEM, supporting founders from diverse backgrounds, and changing cultures of existing tech firms (sounds easy, right?!).
Sam Wong from Blackbird Ventures weighed in on how to spur change: “we’d like to see more women but don’t think the solution is to brute force it”… “Actively thinking about the environments we create and how welcoming they are. Even at a cosmetic level, “take a look around your office space: the ping pong tables, the beer. Maybe you like the space but imagine how it would be for different minority groups. How would they feel about this? What about the fact that the sole way of bonding is drinking? Set up a culture that accommodates a diverse range of people and makes them feel comfortable. Ultimately this makes a better environment for everyone and diverse companies much better reflect customer needs.”
A pretty neat initiative tackling the diversity issue in the tech industry is Project Include, which started in Silicon Valley last year and four Australian investment teams, including Blackbird Ventures, are part of their network. Very little data exists about the state of diversity in the ecosystem in Australia, so a first step has to be to collect both qualitative and quantitative data on the issue. (Melinda Gates makes a good point on the importance of qualitative data).
Given Textbook Ventures is a student-run venture team, it gives us the (somewhat daunting but hugely exciting) opportunity to help build inclusive environments for startups at our tertiary institutions. Whilst we are just starting on our home turf at UNSW and shifting the gender balance is only one part of the story, we hope to learn from and support initiatives around diversity in Australia’s wider startup and venture community.
Technology has always fixated itself upon solving really hard problems. Diversity is an important problem to tackle to ensure that our tech companies are better positioned to understand and solve human problems.
See you at the event!
So that’s your primer on why we’re hosting our Women in Venture Capital event. Look forward to hearing a whole lot more from our panelists tomorrow.
Can’t make it?
For those who cannot make it in person, there are two ways to get involved:
- Watch our Facebook Live session that we will be recording on our Facebook page. Like us here.
- Sign up to our newsletter to get updates on women in venture capital and be notified of our next event.
Otherwise, see you then!
Written by Adya Goswami, Student Associate at Textbook Ventures
