The venture capital sector as we know it is in a state of disarray. That is, at least for women. In terms of investment for female entrepreneurs, 2020 was one of the worst years ever. Only 9% of all capital invested in technology firms went to founding teams that included at least one woman on a worldwide scale. Crunchbase data revealed that solo female founders and all-female teams raised just 2% of all venture capital dollars. Surprisingly, this figure is lower than it was when we first began counting a decade ago, even before several high-profile diversity initiatives were undertaken to address this issue.
This funding shortfall isn’t only a moral issue; it’s also a financial one. The absence of investment in women-founded businesses is a billion-dollar opportunity lost. Indicating’s because there’s a lot of evidence that female-led films outperform male-led startups: they create more revenue, earn higher profits, and exit faster at higher valuations. And they accomplish it all while RISING significantly less money.
What we’re doing doesn’t seem to be working. Throughout my research for my upcoming book on women founders and funders, I kept asking myself the same question: What is the one thing we can do to make everything else easier or unnecessary when it comes to closing the funding gap for women entrepreneurs?
I now believe that focusing our efforts on growing the number of women investing partners who can write significant seed cheques is our best option for long-term change. This is why.
One of the world’s top VCs just informed me how difficult it is to diversity his senior team. He stated that as a well-known truth and general perception. This is a frequent stereotype in Silicon Valley: everyone wants gender diversity, but finding all the senior women is impossible!
Who you employ at the senior level in the venture capital sector is who you hang out with. Who you hire at the top affects who your fund will support.
Since studies show that women investors are up to three times more likely to invest in women founders, it’s evident that hiring more women investment partners with check-writing abilities is the quickest method to fund more women. What impact will this have on venture capital firms?
According to Lisa Stone of WestRiver Group, when VC companies in the United States raised the share of female partners, they saw a 9.7% rise in profitable exits and a 1.5 percent increase in overall fund returns yearly.
