One year after a comprehensive Crunchbase report found that 7 percent of partners at the top 100 venture firms globally are women, female venture capitalists say they still have a long way to go to catch up to their male counterparts in the industry.
Kate Mitchell, who co-founded Foster City, Calif.-based Scale Venture Partners in 2000, is one of two female partners in the firm, which is currently investing out of its $335 million Fund V that closed in Q1 2016. As the co-chair of the National Venture Capital Association’s Inclusion and Diversity Task Force, Mitchell is painfully aware of the underrepresentation of women in the venture capital industry.
“We [women] still have a ways to go,” Mitchell said. “But I do applaud some firms’ efforts to be more diverse in both their hiring and investments.”
She points to Lightspeed Venture Partners, which discussed hiring its first female investment partner, Nicole Quinn, and the fact that it has invested over $125 million in companies founded by female entrepreneurs over the past five years. Meanwhile, Costanoa Ventures in March announced a fellowship program for women and “underrepresented minorities.”
“There is a lot of discussion about the lack of women and underrepresented minorities in venture capital. Many debate if it’s a problem of bias, pipeline, or other factors, but what we know for sure is the current state isn’t good enough for the industry or Costanoa.”
Mitchell also points to a December 2016 NVCA-Deloitte Human Capital Survey that had similar results as Crunchbase’s study. In that survey of 217 VC firms, only 11 percent of investment partners and equivalents were women.
Stilted Progress Is Being Made
Despite the low numbers, Mitchell believes the environment is slowly becoming more open to female partners at VC firms. Additionally, more women are launching their own funds.
“We’re seeing more and more either women starting their own firms, or leaving existing firms to start their own,” she said.
Perhaps one of the most high-profile examples is the case of Aileen Lee, who left Kleiner Perkins Caufield & Byers in 2012 after 13 years to start her own firm, Cowboy Ventures. Another example is Cindy Padnos, who founded Illuminate Ventures in 2009. Both women went on to add senior male partners to join their teams.
More recently, Rebecca Lynn co-founded Portola Valley, Calif.-based Canvas Ventures in 2013 with a male partner, Gary Little. Lynn is not daunted by being a minority in a male-dominated venture capital world.
“Women in venture are having huge exits this year,” she said. “Just as good as their male counterparts, but just not as many.”
But she believes changing the gender makeup of venture capital firms will still take some time. “It’s just how the industry has always been, and there hasn’t been a real push to change it until recently,” Lynn said. “Also, what happens is that people tend to hire people that are like themselves. It’s an unconscious bias in a lot of cases.”
Currently, Lynn is Canvas’s only female partner, but she’s hoping to change that soon with a hiring in the near future.
“Hiring or having just one female partner is not enough,” she said. “You have to hire two or three within a larger firm to really culturally make a difference.”
Lynn also said her last two investments were in female-led companies. (The firm closed a $300 million fund in the fourth quarter of 2016.) “A lot of times those entrepreneurs are the ones who go on to be venture capitalists,” she said. “And that encourages other women that they too can go do this.”
Women Investing In Women
Then there are those who start their own firms with the intention of being exclusively female and investing only in female-run companies.
Sara Brand founded Austin, Texas-based True Wealth Ventures in late 2015 with the intention of investing in startups run by women in the consumer healthcare and sustainable products markets. She doesn’t feel like her firm is limiting itself with its focus on women – at least in Fund I. True Wealth last August raised $4.7 million of a targeted $20 million fund and closed on another (undisclosed amount) raise late last year.
“Our whole strategy is that investing in women-led companies is such an underfunded and undercapitalized opportunity,” Brand said. “Plus, there’s such a strong financial correlation with more female leaders correlating to financial outperformance.”
Thus far, True Wealth has not had to go look for deals. Instead, deals have been coming to the firm.
“A lot of other VC firms are blind to those companies unconsciously. They’re either not looking at them or the companies aren’t even coming to them to pitch,” she said. “Some women have said they don’t want to end up having an old white guy telling them what to do on their board. As such, I think we have advantaged deal flow with this strategy since so few funds are proactively focused on this area.”
Brand firmly believes that more female VCs will lead to more female entrepreneurs getting capital. “When women VCs are making investment decisions, they’re more likely to invest in companies with a woman on the management team, or that are led by a woman CEO,” she said.
What the short-term impact of the above will be isn’t completely clear today, but we’ll continue tracking the industry to see if, and when the numbers change.