Gender Balance in Venture Capital
Venture Capital has been in existence for a very long time.
However, the sector has experienced growth and massively evolved during the past two decades. From Facebook to Google, organizations supported by venture capital firms have contributed a lot to the economy. Although the industry is still young as compared to other sectors, one in every five public companies in the United States uses this mode of financing. It is basically used by innovative minds that are high risk takers. Not only do venture capital firms provide funds, but also offer network access, strategic guidance, mentorship, etc.
However, despite the continuous growth, the industry still faces a huge gap between genders as men are leading the venture capital market. In other words, the more it changes, the more it stays the same, especially after analyzing the demographics based on gender.
Gender-wise Statistics of the Venture Capital Market
According to a survey, the percentage of women as decision makers in the U.S. based venture capital firms is 7 percent and they control only 4.7 percent of the venture capital (VC) invested in the market during the past five years. Moreover, out of 1,019 professionals who take strategic decisions in 227 VC firms in America, the number of females was just 72. Furthermore, 169 of these firms had no females at a strategic level. These firms managed to raise about $153 Billion within a period of four years from 2012 till 2016, and only $9.51 billion of it was controlled by women.
Development Over the Year
Another analysis was conducted last year on sample years between 2011 and 2015. According to that analysis, the percentage of female decision makers was just 5.7 percent in the U.S. based VC firms. It shows an increase in the overall number of women in the industry, representing a 17.7 percent increase in female decision makers at a strategic level.
More Investment in Companies with Male Executives
Furthermore, when it comes to which firm gets the venture capital, male majority takes the lead. According to the CB Insights, organizations with men in executive positions receive 98 percent of the venture investments, which is about $1.88 billion.
All in all, there is a need for a lot to be done especially for women in the VC industry. Megan Quinn, a growth investor at Spark Capital, said that every individual has a role to play in this industry, whether it is an entrepreneur, press, or existing VC firm, and she doesn’t agree with the notion that there are not enough qualified women to be in this sector. A small percentage of women depicts the issue of gender inequality in the VC sector and also in the world of technology.
Why Lack of Women in VC Persist?
Ann Miura-Ko, a partner at Floodgate, also share the same thoughts as Quinn’s. She said that there was a time when most of the small firms had female decision makers and firms experienced a small increase in applications from women. She further stated that women feel welcome in places where there are more female colleagues as they usually question whether they can fit into male-dominated organizations or not.
The managing partner of New Enterprise Associates (NEA), Scott Sandell, talked about the reason why the VC firms around the world don’t usually have female partners. He pointed out the fact that some women simply leave the place for personal reasons. He also said that people working at a strategic level are usually promoted from within a firm. They make their way up from an associate level all the way to the top. However, he admits the fact that although there is no conscious bias against women, there is probably an element of unconscious bias, which is represented in the form of a small number of females at a strategic level. NEA is currently holding trainings to remove any sort of unconscious bias that may occur in the VC firms. He further added that this issue can easily be resolved and it has a tendency to sort itself out, but it does require attention.
Today, women constitute more than 50 percent of the consumers’ spending power and studies have revealed that the absence of female perspective in the board room will ultimately affect the profits.