A new report from Women in VC suggests that, while women partners and fund managers have the talent and tenacity to pave a new path in venture capital, they need more support than they’re currently getting. They need more access to capital, mentorship, and industry networks.
Getting in on the ground floor of emerging managers is known to represent a compelling financial opportunity, but funds require time to prove themselves. Even under the most ideal circumstances, it takes years to fundraise, establish a viable track record, and build a brand—but these women are facing the additional headwinds of persistent industry-wide bias and economic uncertainty related to COVID-19. Additionally, with hundreds of new managers coming to market and a virtual fundraising cycle, it’s an incredibly challenging time for small and emerging funds to raise capital. If these women-led firms are unable to close their first fund, or raise sequential funds to continue building their franchise, the industry is at risk of losing all the growth and progress that women-led firms have made over the past 5 years.
The venture community must do the work, now, to address the challenges attached to unconscious beliefs, attitudes, and stereotypes. We also need to get comfortable investing in “non-traditional” fund managers that may not have a track record. The women paving the way come from all kinds of backgrounds—they’re spin-outs from top firms, former founders, professional angels, early employees at tech companies, former operators or customers, and more. This represents an exciting opportunity and a flashpoint for major and necessary change.
When women control the capital, it empowers them to invest in the teams, markets, and companies they see as transformative for the coming generation. It’s also a meaningful step to begin overcoming the wealth gap, but if we continue at the current pace, it will take female fund managers 200 years to achieve equal status to male counterparts.
That’s not fast enough.
This report explores the nuances of female partners and women-led funds—the reality, the opportunities available to us, and the actions we need to take in order to move the conversation forward. The data points to an outsized opportunity to anchor and nurture this new wave of women-led funds, and emphasizes why the time to invest in their potential is right now. Together, we can tackle the inequality in venture funding.
Key highlights:
There are many meaningful stats throughout the report, but these are the ones that jumped out at us:
- VC Partners in the US are still 95.6% male, and 4.1% female. Those woman are 67% White, 16% East Asian, 7.7% South Asian, 4.8% Black, and 3.5% Latinx. While these stats are showing slight upward movement, there is still a long way to go.
- While 61% of all women partners are currently based in the SF Bay Area or NYC, there are several emerging markets that have demonstrated promising growth in recruiting women partners. LA, Boston, Seattle, DC, Minneapolis, and Atlanta are proving to be hot beds for diverse funder and founder talent.
- Only 2.4% of all VC partners are founding female partners, and only 5.6% are women-led funds. Only 0.8% of those founding partners are women of color.
- 73% of women-led firms were founded in the last five years, which means they are ripe for new capital partners and relationships now. 67% are either raising their first fund or on
- Fund I, which means the pipeline for women-led funds is deep. 44% are currently investing out of Fund I, which tends to indicate they’ll be in market for Fund II in the next 12-24 months.
- 38% of all women-owned firms are founded by a woman of color. Yet this represents only 2.1% of all VC firms in the US. That disparity is staggering.
