FRESH DATA ON WOMEN IN VC PAINTS A PICTURE OF BOTH URGENCY AND OPPORTUNITY.Part 2

State of Women Partners in VC

Over the last five years, concerns about gender and ethnic diversity have risen to the forefront of industry discussions. There’s good reason for that—the data is sobering. Using our proprietary Women in VC dataset against the Preqin universe of US-based VC partners, only 4.9% are women. Of that percentage, the majority are still white. When compared to the overall industry, these statistics are even more dismal—just 0.2% of VC partners are Latinx women. Just 0.2% are Black women. While this marginal representation still indicates progress (of all women VC partners, 33% are women of color, which is an encouraging signal relative to overall diversity statistics), we know that we have to do better. As firms look to increase the diversity of their partnerships, it will be critical to recruit from non-traditional paths into venture, including different schools, and new or different operating experiences to expand access to the industry across a broader set of demographics.

Ethnicity Breakout of All Female Partners Ethnicity of Female Partners vs. All VC . All female Partners Partners in the US

White 67% Whites 3.3%

East Asian 16 % East Asian 0.8

South Asian 7.7 % South Asian 0.4

Black 4.8 % Black 0.2

Latin 3.5 % Latin 0.2

Others 1.1 % Others 0.1

Location of females partners

Location of Female Partners 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. These communities are benefiting from strong, diverse networks of customers, operators, and new venture firms raising capital. They’re also experiencing a surge of growth from people moving back home or seeking lifestyle changes in response to COVID

The rise in female partners is promising, but it’s not enough.

In order to instigate large scale and structural change, we also need to see an uptick in founding women partners. Founding women partners are almost universally more empowered to make investment decisions, and have the ability to define and lead a firm’s thesis and culture. This stands to be a tremendous leverage point for driving diversity in downstream funding. It is also important to note that founding women partners have favorable economics that create meaningful wealth through carry and firm ownership, one part of closing the wealth gap in venture capital.

Founding Women Partners 49 % vs. Women Partners at Existing Firms 51%

Right now, 49% of all female partners are founding partners, which means they started their own firm. This represents just 320 women across 275 firms. Based on our network and research, we believe this is a significant percentage of the founding female partners currently in the market. Being the minority in any industry is difficult, but these emerging managers also come from largely non-traditional career paths, which means they face additional obstacles of bias. 8 The rise in female partners is promising, but it’s not enough. In order to instigate large scale and structural change, we also need to see an uptick in founding women partners. Founding women partners are almost universally more empowered to make investment decisions, and have the ability to define and lead a firm’s thesis and culture. This stands to be a tremendous leverage point for driving diversity in downstream funding. It is also important to note that founding women partners have favorable economics that create meaningful wealth through carry and firm ownership, one part of closing the wealth gap in venture capital. Founding Women Partners vs. Women Partners at Existing Firms The urgency is clear: based on our Women in VC dataset against the Preqin universe of US based VC funds and Partners, this translates to only 2.4% of all VC partners being founding female partners, and only 5.6% being women-led funds. It’s unlikely that the ratio of firms with a founding female partner vs. firms with only founding male partners is as balanced. This likely stems from women’s drive for career advancement that’s often limited in venture firms. In many cases, there’s not a path to equal partnership, or it could take years to achieve. Starting a small proof of concept fund (typically under $10MM) can be the fastest way to get ahead in venture and build a track record. The diversity numbers for founding women partners require significant improvement. Only 0.8% are women of color, which is less than 1% of all VC partners in the US.

Ethnicity of Founding Female Partners

White 67 %

East Asian 16 %

South Asian 7.7 %

Black 4.8 %

Latin 3.5 %

Middle Eastern 0.9 %

A lack of diversity in fund managers directly contributes to funding inequality at the founder level, which then prevents an open flow of capital into the teams, products, and solutions that would be representative of a more inclusive society. Empowering women and people of color to drive the investment strategy of venture firms is the fastest, and most effective course correction for this problem

State of Women-Led Funds: The Opportunity

Over the last 5 years, public awareness about women in venture capital has dramatically increased. There are a few reasons for this. The timeline makes sense: a more prominent conversation about the rise of micro funds started around 2014, thought leaders like Samir Kaji started tracking the landscape in 2015, and RAISE at the Presidio, a widely recognized conference showcasing promising emerging managers, launched in 2016. There were also massive social shifts, which acted as lightning rods for women’s empowerment: forcing functions like Hillary Clinton lost the election, the #MeToo and Time’s Up movements helped shine a light on harassment and bias in tech, and AllRaise launched, driving urgency into the conversation around recruiting women partners. Now, with iconic role models like Mary Meeker’s $1.25BN debut fund, Bond, and Kirsten Green’s latest $500MM fund, more and more women are inspired to take control of their own success in the venture community. 

An increase in public awareness about women in VC has paralleled a spike in women-led funds. Over the last five years, the number of women-led funds has nearly quadrupled, and there is evidence this rise is accelerating. These funds have the potential to drive huge change across almost every industry and represent an opportunity to back the next wave of State of Women-Led Funds: The Opportunity Over the last 5 years, public awareness about women in venture capital has dramatically increased. There are a few reasons for this.

The timeline makes sense: a more prominent conversation about the rise of micro funds started around 2014, thought leaders like Samir Kaji started tracking the landscape in 2015, and RAISE at the Presidio, a widely recognized conference showcasing promising emerging managers, launched in 2016. There were also massive social shifts, which acted as lightning rods for women’s empowerment: forcing functions like Hillary Clinton lost the election, the #MeToo and Time’s Up movements helped shine a light on harassment and bias in tech, and AllRaise launched, driving urgency into the conversation around recruiting women partners. Now, with iconic role models like Mary Meeker’s $1.25BN debut fund, Bond, and Kirsten Green’s latest $500MM fund, more and more women are inspired to take control of their own success in the venture community. successful managers, but they need time to establish themselves as fund managers and solidify wins on their track record to earn a more permanent place in the venture community. That means right now is their most critical moment. It also means, for investors, that this is their biggest opportunity.

The time to get in on the ground level is now.

Chris Alexander