Closing The Opportunity Gap For Minority Women in Finance

By Diane Yoo

When it comes to approaching a career as a venture capitalist, I have several factors working against me: I am young, female and a minority.

Subscribe to the Crunchbase Daily

I knew from the outset that my climb to the top would be rocky, studded with roadblocks. I also knew that I would be discounted or outright ignored as I tried to reach success. A very small number of venture capital managers are female, and an even smaller number are Asian females.   I was not working under the assumption that my journey would be smooth. However, I did know that I had just as much to offer the VC world as anyone else.

There is still a vast chasm when it comes to opportunities for minority women in finance. Acknowledging this disparity is “step one” to bridging the gap, then making a concerted effort toward diversity initiatives is “step two.” Changes will not happen overnight. Instead, the way to real, permanent change is consistent effort.

Mind the gap

Seeing where gaps exist and acknowledging them, is a crucial part of fixing the issue. Several factors contribute to the existing gender and minority gap in the financial sector. These include:

• A major disparity exists for women and minority business owners in receiving VC funding. At the beginning of 2021, companies with female founders raised just 2.2 percent of  all venture funding. That’s a lower share than any of the previous five calendar years. It can be a lose-lose situation when venture capitalists go after supporting teams that “look like them.” Meanwhile, female-only or female-led teams seek venture capitalists that “look like them” and are coming up short.
• Studies show that even though women and men enter the financial field in nearly equal numbers, men tend to rise to the top faster. The silver lining is that more women and minorities are joining VC firms and private equity firms, but the top roles remain elusive for women and minorities alike.
• Men grow up and enter the financial sector with the many men just like them who came before. They have role models galore. Women and minorities, however, have to seek out their role models among the rare people to ascend to the top despite unequal circumstances.
• Business school and financial degree enrollment still skews male.
• Companies may discuss diversity, especially following significant events in civil rights such as the #MeToo movement or the death of George Floyd. But, very often, the conversation does not convert to action.

A change is going to come

All is not lost. There are still ways to encourage women and minorities to seek roles in finance, go after top-level positions, and be role models for the next generation.

• Encouraging young women and minorities to consider financial sector jobs through initiatives such as Girls Who Invest—encouraging minorities to go after these positions and implementing hiring policies that will allow a path for women and minorities to reach high-level leadership roles.
• Elevating the voices of those women and minorities already in top positions in their firms. Let people hear their stories and see what their path entailed.
• Firms and companies need to acknowledge that diversity benefits all, from clients to top-brass executives.

Changing the financial world to accept female and minority leaders will not be an overnight fix. The first step, acknowledgment of the problem, has already been taken. People are talking about diversity more than ever before. The real magic comes when the talking becomes action.

Diane Yoo, the founding partner of Parliament Venture Fund, discusses the achievement gap for minority women in the financial industry and how that gap can be addressed and bridged. 

Illustration: Dom Guzman