Why it’s important to have more Women in Venture Capital

Screen shot 2016-04-28 at 21.20.25Previously CrunchBase reported on the steady increase in the number of women founders. This is my summary of a new study where they looked at two new questions:

First, how many women are true investing partners at the leading venture and micro-venture firms?

Second, which venture firms have the strongest track record of supporting startups with at least one female co-founder?

Only 7% of partners at the top 100 VC firms are women

To answer the first question, they looked at the top 100 VC firms globally and found that 7% of partners (or 53 of 764) are women. (When they applied their “investing partner” criteria to a list of 2,300 VC firms, they found that 8% of partners are women.)

A potentially more rapid path for women to become partners is the growth of female-founded venture firms. In the last three years, 16% of newly launched venture and micro-venture firms, 20 firms in all, had at least one female founder. And where there’s a female co-founder, the overall percentage of female partners in the firm soars.

Only 10% of VC and 17% of seed/angel capital goes to women

Between 2010 and 2015, 10% of venture dollars globally, funded startups that reported at least one female founder. This represented 3,265 funding rounds or 12% of all venture funding rounds.

During the same time period, 17% of seed/angel rounds globally, funded startups that reported at least one female founder. This represents 4,852 rounds or 17% of all seed rounds.

VC firms with only one female partner don’t necessarily back more women

Of the 54 firms whose portfolio of investments in startups with a female founder exceeds the industry average of 12%, 24 (or 44%) have at least one female investing partner. This is only a modest increase on the 38% of all firms investing at above-average levels in female founders.

But as most firms with a female partner have only one so far, and some of those are relatively new hires, so it may be too early to determine whether female investors alter the funding equation for female founders.

VC firms with female founders and/or a very high % of female partners do back more women

An indication of what the future may hold came by singling out firms that have both a high number of rounds in female-founded firms and where those rounds also represent a high percentage of their total: a small collection of firms where the partnership was either founded by a woman and/or there is a relatively high percentage of female partners.

More women in VC isn’t just important with regard to female founders…

Obviously, at Angel Academe we want to see more funding going to female founders, but this is just one of the arguments we make for more women investors. We need far greater diversity in the investment community to reduce the risk of group think, have an enhanced connection to customers (both consumer and enterprise) and to leverage the widest possible talent and funding pool.

Thank you CrunchBase for this really important research. Please keep it coming. You can read the full TechCrunch article here.