Women in venture capital explained

Women in venture capital or VC are investors who provide venture capital funding to startups. Women make up a small (usually less than 10%) fraction of the venture capital private equity workforce. A widely used source for tracking the number of women in venture capital is the Midas List which has been published by Forbes since 2001. Research from Women in VC, a global community of women venture investors, shows that the percentage of female VC partners is just shy of 5 percent.[1]

One of the first women to make the list, Annette Campbell-White, has been cited as an example of discrimination in venture capital. She was mentioned in the Midas List for three consecutive years, from 2005 to 2007.[2] She claimed that a number of firms in the 1980s ignored her senior management experience in Hambrecht & Quist.[3] [4] In addition to finding that women make up the majority of early technology adopters,[5] Harvard Business School Professor Paul Gompers has stated that female venture capitalists consistently perform as well as males at large firms that have more than one woman.[6]

Questions about how to increase the number of VC opportunities for women have been brought to the forefront by several events. One of them is a lawsuit by Ellen Pao against her former employer Kleiner Perkins Caufield & Byers. Another is Elephant in the Valley, a survey aiming to expose discrimination started by several women in business including Tracy Vassallo, a former partner of the same firm.[7] Expressing criticism of existing funds, a number of women since 2007 have begun to start their own.[8]

Statistics

Babson College’s Diana Report, research by an initiative working to increase the number of women entrepreneurs, found that the number of women partners in VC firms decreased from 10% in 1999 to 6% in 2014, though that number has recovered to 9.5% in 2018.[9] The report also found that 97% of VC-funded businesses had male chief executives, and that businesses with all-male teams were more than four times as likely to receive VC funding compared to teams with at least one woman.[10]

More than 75% of VC firms in the US did not have any female venture capitalists at the time they were surveyed. It was found that a greater fraction of VC firms had never had a woman represent them on the board of one of their portfolio companies. For comparison, a UC Davis study focusing on large public companies in California found 49.5% with at least one female board seat.[11] When the latter results were published, some San Jose Mercury News readers dismissed the possibility that sexism was a cause. In a follow-up Newsweek article, Nina Burleigh asked "Where were all these offended people when women like Heidi Roizen published accounts of having a venture capitalist stick her hand in his pants under a table while a deal was being discussed?"[12] [13]

Effect on the technology industry

Makers of software and related products receive the majority of venture capital funding in the US.[14] [15] Since the dot com boom, venture capital has become almost synonymous with technology startups due to the large potential investors see in this sector.[16] Regarding the shortage of women in the industry, some venture capitalists have called this a contributing factor to similar gender disparity seen in a wider range of Silicon Valley companies.[17]

These Silicon Valley leadership positions are mostly held by men, with only 15.7% of board members being women, according to a report by Fenwick & West.[18] This compares negatively to the 20.9% across all S&P 100 firms. These numbers drop to 11% and 16% respectively when considering executive positions. Industry scholar Vivek Wadhwa has proposed that another contributing factor is a lack of parental encouragement to study science and engineering.[19] He has also cited a lack of women role models and noted that most famous tech leaders like Bill Gates, Steve Jobs, and Mark Zuckerberg are men.[20]

2014 saw the release of several corporate transparency reports that offered detailed employee breakdowns. The largest contributors were Google, Yahoo, Facebook, and Apple, who respectively reported that 17%,[21] 15%,[22] 15%[23] and 20%[24] of their tech employees were women. Subsequent commentary in USA Today pointed out that "women are underrepresented in Silicon Valley — from giant companies to start-ups to venture capital firms."[25] In October of that year, Bloomberg reported that Apple, Facebook, Google, and Microsoft attended the 20th annual Grace Hopper Celebration of Women in Computing conference to recruit and potentially hire female engineers and technology experts.[26] That same month, the second annual Platform Summit was held to discuss increasing racial and gender diversity in tech.[27]

Notable cases

The 2012 lawsuit Pao v. Kleiner Perkins was filed in San Francisco County Superior Court by executive Ellen Pao for gender discrimination against her employer, Kleiner Perkins Caufield & Byers.[28] The case went to trial in February 2015. On March 27, 2015 the jury found in favor of Kleiner Perkins on all counts.[29] Nevertheless, the case, which had wide press coverage, resulted in major advances in consciousness of gender discrimination on the part of venture capital and technology firms and their women employees.[30] [31] Three later cases, one of which was dropped, include lawsuits against Facebook, Twitter and Microsoft.[32]

Possible solutions

Women are far outnumbered by their male counterparts in venture capital.[33] Eileen Lee, cofounder of Cowboy Ventures, one of the most prominent women in venture capital in Silicon Valley, started a group with fellow women in venture capital who seek "to both mentor and increase the number of women founders and women in venture capital".[34] Groups that advocate for women in venture capital and help them find positions in the field are seeking to break down gender biases and stereotypes that prevent women from succeeding in venture capital to begin with.[34]

There are steps that can be taken within the venture capital field to help women in the industry. One of the ways in which more women can obtain jobs in venture capital is to increase the number of women in U.S. graduate school business programs. According to Joan Winn in her journal article “Women Entrepreneurs: Can We Remove The Barriers?”, one-third of the individuals enrolled in graduate school business programs were women.[35] Many graduate business programs try to recruit women, yet are unsuccessful in doing so. Winn believes that if these universities were to cater their programs more towards women by accommodating their obligations to work and family needs, their percentages of women would be higher.[35] Enrollment in a graduate business program would prepare them for the venture capital field.

Winn says that one of the main problems women face is a lack of funding or capital for their ventures.[35] According to Fortune, funding for female venture capital founders was 2.2% of all venture capital dollars in 2018. Although women-founded venture capital firms are far less prevalent than male-founded firms, the disparity of the disbursement of venture capital dollars is high.[36] The most plausible solution to this issue is to provide more funding for venture capital funds led by women. Having sufficient funding will generate more capital for their firms, allowing women to feel comfortable with making investments, especially where there is risk.[37]

List of women in venture capital

In alphabetical order by last name:

See also

External links

Notes and References

  1. Web site: Women and minority investors are taking matters into their own hands. 2021-10-07. Chicago Booth Review. en.
  2. Web site: 2007.
    1. 24 Annette Campbell-White - Forbes.com
    . www.Forbes.com. October 9, 2018.
  3. News: PROFILE / Annette Campbell-White / Trail-blazing venture capitalist does it her way / Startup specialist has carved out a niche in health care, biotech. Carol. Emert. SF Gate. May 12, 2002. January 15, 2016.
  4. Web site: Where Are The Women Venture Capitalists?. Claire. Miller. Forbes. 2007-01-25. January 15, 2016.
  5. Web site: Sephora CMO debunks a major stereotype about women and tech. Julie. Bornstein. Business Insider. 2013-05-21. 2016-01-15.
  6. The gender problem in venture capital is really, really bad. Davey. Alba. Davey Alba. Wired. 2015-03-20. January 15, 2016.
  7. The 'Elephant in the Valley': A new survey looks at the experiences of women working in tech. Stat. Ziv. Newsweek. January 15, 2016. January 15, 2016.
  8. News: Claire Cain Miller. Female-Run Venture Capital Funds Alter the Status Quo. April 2, 2015. The New York Times. April 1, 2015. Dealbook blog. “We’re in the middle of a shifting trend where there are newly wealthy women putting their money to work, and similarly we’re starting to have a larger number of experienced investors,”.
  9. News: Schubarth . Cromwell . More VC firms have women partners but nearly 75% have none . Silicon Valley Business Journal . Jan 2, 2019 . 21 March 2023 .
  10. Web site: Diana Report. Candida. Brush. Women Entrepreneurs 2014. 2014. 2016-01-14.
  11. Ellis . Katrina . 2006 . UC Davis Study of California Women Business Leaders . UC Regents . March 25, 2015.
  12. News: Tam . Ruth . January 30, 2015 . Artist behind Newsweek cover: it's not sexist, it depicts the ugliness of sexism . PBS NewsHour . March 21, 2015.
  13. Burleigh . Nina . January 28, 2015 . What Silicon Valley Thinks of Women . Newsweek . March 21, 2015.
  14. Top 10 Industries Raising the Most Venture Capital. Laura. Montini. Inc. 2014-03-11. 2016-01-16.
  15. Web site: Top 10 Sectors Venture Capital Likes Right Now. Christopher. Steiner. Forbes. 2010-04-01. 2016-01-16.
  16. Web site: What is venture capital?. VC Experts. 2016-01-16. 2008-02-28. https://web.archive.org/web/20080228221626/http://vcexperts.com/vce/library/encyclopedia/documents_view.asp?document_id=15.
  17. Web site: Bros Funding Bros: What's Wrong With Venture Capital?. Chamath. Palihapitiya. 2015-10-06. 2016-01-16.
  18. News: Neate . Rupert . 2015-03-13 . Ellen Pao gender discrimination trial grips Silicon Valley . en-GB . The Guardian . 2023-10-08 . 0261-3077.
  19. Web site: Wadhwa . Vivek . May 15, 2010 . Fixing Societal Problems: It Starts With Mom and Dad . TechCrunch . AOL . 26 December 2014.
  20. News: Wadhwa . Vivek . November 9, 2011 . Silicon Valley women are on the rise, but have far to go . Washington Post . December 26, 2014 . This is one of Silicon Valley’s most glaring faults: It is male-dominated..
  21. Web site: Musil . Steven . May 28, 2014 . Google discloses its diversity record and admits it's not good . CNET . CBS Interactive .
  22. Web site: Levy . Karyne . June 17, 2014 . Yahoo's Diversity Numbers Are Just As Terrible As The Rest Of The Tech Industry's . Business Insider . March 24, 2015.
  23. Web site: Williams . Maxine . June 25, 2014 . Building a More Diverse Facebook . Facebook . March 24, 2015.
  24. News: . August 13, 2014 . Apple diversity report released; Cook 'not satisfied with the numbers' . CBS Interactive . Associated Press .
  25. News: Guynn . Jessica . Weise . Elizabeth . August 15, 2014 . Lack of diversity could undercut Silicon Valley . USA Today . March 24, 2015.
  26. News: Burrows . Peter . October 8, 2014 . Gender Gap Draws Thousands From Google, Apple to Phoenix . Bloomberg Business . Bloomberg . March 24, 2015.
  27. Porter . Jane . October 29, 2014 . Inside the Movement That's Trying to Solve Silicon Valley's Diversity Problem . Fast Company . Mansueto Ventures . March 24, 2015.
  28. Web site: Complaint of Ellen Pao. April 16, 2019.
  29. News: Liz Gannes and Nellie Bowles. Live: Ellen Pao Loses on All Claims in Historic Gender Discrimination Lawsuit Against Kleiner Perkins. March 27, 2015. Re/code. March 27, 2015. That’s the full verdict. No on all claims..
  30. News: Sue Decker. Susan Decker. A Fish Is the Last to Discover Water: Impressions From the Ellen Pao Trial. March 28, 2015. Re/code. March 26, 2015. We may look back at this as a watershed moment — regardless of how the very attentive jury comes out on their verdict..
  31. News: Farhad Manjoo. Ellen Pao Disrupts How Silicon Valley Does Business. March 28, 2015. The New York Times. March 27, 2015. Ms. Klein argued that the Kleiner trial would become a landmark case for women in the workplace, as consequential for corporate gender relations as Anita Hill’s accusations in 1991 of sexual harassment during the confirmation hearings of Supreme Court Justice Clarence Thomas.
  32. News: Streitfeld . David . March 27, 2015 . Ellen Pao Loses Silicon Valley Gender Bias Case Against Kleiner Perkins . April 1, 2015 . New York Times . In a sign that the struggle over the place of women in Silicon Valley is only beginning, gender discrimination suits have recently been filed against two prominent companies, Facebook and Twitter..
  33. Patterns of venture capital funding: Is gender a factor? . Venture Capital . 3 . 63–83 . An International Journal of Entrepreneurial Finance. 2010-11-26 . 10.1080/13691060118175 . Greene . Patricia G. . Brush . Candida G. . Hart . Myra M. . Saparito . Patrick . 155018065 .
  34. This is how we get more women in venture capital . Fast Company. September 20, 2018 . April 1, 2019.
  35. Women Entrepreneurs: Can We Remove The Barriers . The International Entrepreneurship and Management Journal . 1 . 3 . 381–397 . September 2005 . 10.1007/s11365-005-2602-8 . Winn . Joan . 154361071 .
  36. Funding For Female Founders Stalled at 2.2% of VC Dollars in 2018. Fortune . 2019-01-28 . April 2, 2019.
  37. Web site: The Real Reason There Aren't More Women in VC . themuse . 2018 . April 2, 2019.
  38. Web site: Jewel Burks Solomon. 2021-09-19. WSJ Women In.
  39. Web site: Beezer Clarkson.
  40. Web site: Trail Mix Ventures. www.trailmix.vc. April 16, 2019.
  41. Web site: In light of Pao: Where are women at top VC funds?. Julia. Boorstin. CNBC. 2015-03-27. 2016-01-15.
  42. News: This Black Woman Is Turning The White Investing World On Its Head. Emily. Peck. The Huffington Post. 2015-09-18. 2016-09-20.
  43. News: Alison Leigh Cowan. Not-So-Hidden Asset, His Wife, Is Force in Lamont's Senate Bid. Now Ms. Lamont, one of the most successful women ever in the lofty realm of venture capital, is the not-so-hidden hand behind her husband, Ned, the political novice who managed to topple a three-term incumbent in the Democratic primary.. The New York Times. October 16, 2006. March 27, 2015.
  44. Web site: The rulebook for being a female investor: don't complain | The Verge. theverge.com. March 22, 2015. March 9, 2015.
  45. Web site: The Five Most Powerful Female Venture Capitalists. Meghan. Casserly. Forbes. 2012-05-02. 2016-01-15.
  46. Web site: 5 emerging female VCs you should know about. September 25, 2017. venturebeat.com. April 16, 2019.
  47. Web site: Meet the Bay Area's top female venture capitalists. Anna. Volpicelli. 7x7. 2014-08-01. 2016-01-15.
  48. Web site: Cervin Team – Cervin Ventures. www.cervinventures.com. en-US. 2018-11-17.

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Women in venture capital".

Except where otherwise indicated, Everything.Explained.Today is © Copyright 2009-2024, A B Cryer, All Rights Reserved. Cookie policy.