WOMEN IN VENTURE CAPITAL:

Where are they?

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women in venture capital

2019 just might go down in history as the year for women in venture capital.

While 2018 saw the creation of several women-led funds, incubators for female founders and other new companies, 2019 was the time for these new initiatives to get their footing and make an impact.

More and more women are becoming entrepreneurs, but the venture capital world is still overwhelmingly dominated by men.

Disparities Between Gender

A lack of social networking and mentors is one of the biggest obstacles being tackled to help bring more women into venture capital firms. 

In 2015, invite-only dinners designed to bring together female venture capitalists quickly gained popularity and turned into the largest self-reported directory of women investors at institutional, corporate, and family offices. The directory includes more than 900+ women, across 600+ funds from more than 25 countries, now known as Women In VC. The organization was founded by Sutian Dong, partner at Female Founders Fund, and Jessica Peltz-Zatulove, partner at MDC Ventures, and has helped encourage more women to enter or stay in the industry through fostering partnerships and providing role models. 

Through this gathering, the roles women partake in at their investing companies has been gathered and compiled. Statistics from the Women In VC organization indicate:

  • Overwhelmingly women are investing in the early stage (71% investing in Series A, and 66% investing at the seed stage).
  • The top sectors women are investing in are Enterprise (22%), Healthcare (22%), Fintech (22%), Consumer (21%), SaaS (16%), AI/Machine Learning (16%), Marketplaces (10%), Education (10%), and Commerce (10%).
  • The top 10 markets for women in venture are San Francisco, New York, London, Boston, Chicago, Los Angeles, Toronto, Washington D.C., Singapore and Sydney . San Francisco has the most women partners however New York City has more junior women in venture.
  • 37% of women in VC have a Partner or General Partner title. The data shows that while 3 in 4 women in venture capital sit on the Investment Team, there are other pathways into VC today.

Looking at these statistics is important in bringing light to when women drop off the investing path, where women are the strongest, and battling stereotypes. Such as, it was previously commonly believed that women primarily invested in consumer and commerce, rather than enterprise and healthcare. 

Another study by Pitchbook focuses on how primarily female or all female venture capital firms perform, and how this helps female-founded startups who traditionally struggle to receive funding from male investors. 

Standing Ground In The Boys Club

Women in venture capital often leave. Barriers to entry are plentiful, and once in the boys club, many women feel unwelcome or struggle balancing family with work.

“Though venture capital represents one of the most sought-after fields for top business school grads today, women represent only 8% of the investment professionals at the top 25 VC firms.” The Muse

Venture Capital is a competitive field. To succeed you need social networks, mentors, attainable goals. The top of the industry has been described as “impenetrable,” referring to the old boys club at the top. Not being able to finish reaching one’s career goals is a discouraging barrier that ultimately leads many women to change their path altogether. 

Some women have also expressed a lack of acceptance and understanding when balancing motherhood and careers. 

“This particular Boston VC, for example, was harangued by her bosses when she was six months pregnant. Her boss was upset that she wasn’t projecting enough during client presentations. “Projecting? I was having trouble breathing.”” The Muse

The long hours and heavy commitments are common in high-pressure industries, but in companies run by men and populated by men, it can be hard for women to feel understood.

The lack of females in VC shouldn’t and hasn’t discouraged women from entering. Journalist Jodi Kanotor published an article in the New York Times in September 2013 on the Harvard Business School’s gender equality initiatives. Kantor emphasizes the bias women face in the industry, particularly when she reports that former Highland Capital Partners co-founder William Boyce advised women students at HBS to stay away from venture capital because “men don’t want you there.” Not only is it a battle once in the firms, women are being given the message to not even try.

The Forbes Midas List can also be used to track the number of women in venture capital. The Midas List, published since 2001 and an allusion to King Midas being able to turn anything he touched into gold, is the annual ranking by Forbes magazine of the best dealmakers in high-tech and life science venture capital. It uses parameters including the first-day market capitalization of IPOs, and the opinions of a panel of experts (somewhat controversial considering it focuses on first-day market capitalization rather than longer-term measures and that the panel of experts uses subjective judgement).

Women Supporting Women

Women VCs need to support women entrepreneurs, as women typically have a harder time finding funding for their companies. 

The statistics mentioned earlier show that female VCs drop off at the Series B and growth stage, which also happens to be the investment cycle stage where the venture industry sees a lack of funding for female founders. 

As women on the funding side continue to delve into the industry, women on the business owner side will be able to benefit and grow as well.

And what’s more inspiring than female-led VC funds backing women-led startups?

Roles of Women in VC

Referring to the data compiled by Women in VC, nearly half of all women in VC hold roles below the partner level. However, there appears to be an increasing number of opportunities for junior talent in VC firms, talent that would could use mentorship for partner-tracking roles or other opportunities.

An increasing number of women are also starting their own firms, as opposed to joining an existing partnership. This creates additional opportunities to offer more support and funding initiatives to continue increasing the number of first-time female fund managers around the world.

The data also shows that around one fifth of women investors are in either Principal, VP or Investment Director/Manager roles, which can lead to more partner positions later on. More women in partner roles means more women writing checks.

Women In VC is the largest online community for members to gain support, information, job openings and other important pieces of industry knowledge. By working together, women can lift each other up to success, increase diversity and improve the gender gap in the tech community. By connecting women through an online global directory, these women can connect and collaborate either through co-investing or new job opportunities at different funds.