The trade association for the venture capital industry, the NVCA, gathered yesterday in San Francisco to talk about the state of the industry and some of the key policy issues we are facing. The short list is an obvious one for anyone who has been reading the news lately: Net Neutrality, Immigration Reform and Patent Reform are all hot topics in our industry. More inward-looking topics like the rise of corporate VC and new emerging managers also were batted about.
But one panel stood out for me yesterday, and not just because I was on it: "Women in VC". Maria Cirino of 406 Ventures led a discussion regarding the stubborn reality of the massive, pernicious gender gap that exists in our industry. Because the numbers are so stunningly bad – Dan Primack did some analysis a few months ago that showed that only 4% of all senior VC partners are women and NVCA statistics show that 11% of all VC professionals are women – I wanted to spend some time sharing the observations and discussions that came out of the panel in the hopes that it will spur further discussion in the community.
The panel was an awesome group led by Maria and included Kate Mitchell of Scale Ventures, Diana Frazier of FLAG, author Vivek Wadhwa and Veracode CEO Bob Brennan. I don't know exactly why I was on the panel, to be honest, but it probably had something to do with a blog post I wrote four years ago titled "The VC Gender Gap: Are VCs Sexist"? It may also be that at Flybridge, after founding the firm with all men, we have hired a majority of women (5 out of 9 investment professional team members). That said, the four general partners are still men – more on that shortly.
Wadhwa kicked things off with a recitation of some research in the area. Specifically:
- Only 3% of all tech firms are started by women, although venture-backed companies led by women perform equally well if not better.
- In an HBS research study, it was shown that – all else being equal - investors prefer backing men over women (and good-looking men over less good-looking men): a male founder is 60% liklier to secure financing from investors.
- Emory University research which showed that founding teams with women were less likely to attract VC funding.
- Newsweek's cover story this week is titled "Women entrepreneurs fight for their piece of the pie" and shares some of the posts going around on Secret that depict the bad behavior of VCs in pitch meetings with women.
- A data point I didn't get a chance to mention during the panel is that only 9% of all HBS case study protagonists are women – something the dean has identified as an issue and has stated a public goal of getting to 20% (I have consciously tried to address this in my entrepreneurship class, where 40% of the protagonists are women and more than half of the panelists I bring in).
With the data on the table, the real discussion began. Everyone agreed there is a pervasive bias in the industry. Not everyone agreed what to do about it. A few observations were interesting to me:
- Paul Maeder at Highland shared his conclusion that the industry is culturally dysfunctional. There is no good logical reason for the numbers to be as bad as they are. He drew an analogy with gay marriage, where there after decades of discrimination, we recently hit a tipping point where suddenly it was no longer culturally appropriate to block gay marriage. What needs to occur to hit that tipping point regarding women in venture capital?
- Someone pointed out that corporate VC is less gender biased, perhaps because corporate America has rules that they live by. Although there is still plenty of sexism in corporate America, there are systems and processes in place to support diversity, recruiting and mentoring. Small VC partnerships do not live by similar rules. One woman corporate VC in the room who had previously been at an institutional VC observed that she preferred the partnership dynamic in corporate VCs where the investment committee is not made up of other investment partners (instead, it's the CFO, treasurer and other corporate leaders) and therefore the testosterone-filled competitiveness of the dreaded "partnership meeting" did not exist.
- The industry is a pattern-recognition industry, and – as Vivek points out in a WSJ article he wrote – pattern recognition can become code for sexism. One women VC I interviewed in advance of the panel shared with me that "Whether we like it or not, females act and are different than males, and I believe that lack of pattern recognition makes it harder to push through. So, partnerships need to make a conscious effort to not jump to conclusions when a colleague does something different – rather push themselves to look at results, not merely the path." Entrepreneur-turned-VC Heidi Roizen wrote a scathing blog post about her own experience last week that touched on this theme called "It's Different for Girls". It may be easy to dismiss Heidi's stories as what happened in the past, but in talking to my women colleagues at Flybridge, I hear similar stories, including senior VC men using their power status as a tool to hit on younger VC women. This puts the woman in a no win situation. On the one hand, these interactions can represent legitimate networking opportunities to build relationships across firms with potential mentors. But on the other hand, these interactions might put them in an awkward situation and further damage their reputation if and when it is clear that the meeting is not purely professional in nature.
- I raised the question whether we needed an explicit, organized Affirmative Action program in the industry, modeled after what elite universities have successfully executed on to ensure diversity and gender balance in schools. I have floated this around to a few other women VCs in recent weeks and get mixed feedback. Some have said it is absolutely necessary and would bring great focus and attention on the issue, forcing different conversations when sourcing and hiring VC professional talent. One woman VC friend pointed out that a big part of being a VC is confidence – confidence in your investment judgment, in the board room, in the partners meeting – and that women already have "Imposter Syndrome" and can lack that confidence. Having an explicit Affirmative Action program might serve to only further undermine their confidence in the business.
- There was a lot of discussion about how to make sure we fill the pipeline (i.e., recruit junior women into the business from business schools and industry) and then do not lose talent as they progress. There was good debate back and forth about whether the job was conducive to raising a family. Many thought it was given the flexibility over your schedule, but the cultural dysfunctionality needed to be addressed to make the work environments more supportive to women having kids while serving as venture capital professionals. Many high end professional services firms seem to have figured this out (e.g., Goldman, McKinsey, BCG) so why can't VCs? On this point, we have some interesting case studies of the five women investment team members we have hired at Flybridge, one became a VC partner at another firm (she moved to Europe for personal reasons) and just had her first child, one became an executive at a portfolio company she helped us find shortly after she had her first child, one started her own advisory firm to start-ups while raising her kids. One is graduating HBS next month and one is with us.
As with any hard problem, there is no silver bullet. But asking hard questions is what VCs are supposed to be good at, and this is an area where some really hard questions need to be asked. More to come, I hope.
SEEING BOTH SIDES 
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BTW – I was being obnoxious/funny-attempt about the Tupperware …
I am all for an examination of the status quo; I just think there are some non-negotiables that are gender neutral – goals; quantifiable progress; etc. There are of course different paths that can be taken, perhaps, tho reach those ends, that would make the VC industry more palatable to females and also bring out their value-add.
@MerkleMerkle
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Haha no, I’m not implying Tupperware parties. What I am implying is that men and women (or any other demographic groups you choose to look at) are not necessarily the same, and do not always succeed in the same way, or even necessarily define “success”, “winning” or “fun” in the same way. The industry currently defines these terms, and the rules of engagement in a specific and narrow way, to the advantage of some people and not others. I’m advocating that perhaps it’s time for us to take a look at the historical rules and norms, and broaden them in line with the diversity of today’s workforce, rather than accept them blindly as they’ve been handed down to us. I’ll go further and forecast that the companies that manage to do this, and create environments where a more diverse set of people can “win”, “succeed” and “have fun” (however they define this for themselves), are likely to be more profitable than those who insist on following the norms created for a more homogenous workforce. Feel free to message me on Twitter if you’d like to discuss further.
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“More enjoyable for females”? Are you implying Tupperware parties and in-house Cosmo happy hours? Team Manolo-shopping excursions?
Work is not about “fun”. You succeed, and find “fun” – regardless of gender – in what constitutes success – hard work; the desire for constant forward motion and learning; a literal desire for the win. That is not gender-specific and has nothing to do with women in this sector or any sector.
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My view is that the answer is to make the job more fun for women. The rules of the game were designed by men, to make the work enjoyable for men, and help men win, i.e. more masculine traits such as confidence and aggression are celebrated and rewarded. I think of it like when my brothers watch boxing and drink beer – they’re perfectly happy to have me join and play… as long as I also enjoy watching boxing and drinking beer in exactly the same way they do. I don’t. (Flippantly, my guess would be that 96% of people who do are men!) The situation is just not one where I’m going to have fun. So I leave. I think it’s even more important to enjoy your job, and if you constantly feel left out and feel as though you have to prove yourself somehow to be included in the group, rather than just feel like you belong, you’re not going to enjoy it. And these women are smart, with a lot of options – if they don’t enjoy it, they’ll leave. There are plenty of things that would make the job more fun for women – celebrating rather than deriding their natural qualities, giving them confidence and support when they don’t already feel it, including them socially, and giving them more flexibility to achieve the goals they value in the way they want to. Ask the question of your female and male colleagues – how much do they enjoy their job? What would make them enjoy it more?
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Very cool. Do you know her personally? Having a background in stats / academic research, I’m curious about her methodology.
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I think the tipping point will be when a VC makes hundreds of millions/billions of dollars from a female founded company. Then VC’s will be hunting for similar pattern recognition cases, hiring female VCs to better understand female founders etc. That first (correct me if its already happened?) female founded billion dollar exit will have it all to do, but it will get easier each time
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Janet Kraus of HBS is doing research on female-founded companies, capital raised and outcomes. It will come out this fall.
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Yes, far more than one opinion must be marshalled.
Also – destroy the notion that everything worth investment in is a “product”. Not everything is a widget,an app, a build. Consider innovation breathed into a market ripe for change; foster ideas and models that change lives; expand your frame of thought.
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Definitely increase in entrepreneurial segment would be beneficial and naturaly progress toward increase in VC segment.
Instead quotas, that will be perceived as “force feeding” engagement would be more effective.
Implementing designer mindset through out the industry will help it increase efficiency and diversity.
True designer mindset is the one Steve Jobs explains as “… design is how it works”, not just make it pretty.
This is where technology becomes true product.
To be successful in that effort, diversity of the team is mandatory as the process is cooperation of insights.
As software is eating the world, customers base becomes population. No female insight in company is missing on huge part of customer base.
But don’t make mistake of thinking that this is enough just to have opinion of say one female, and that is it.
This is process of constant reiteration within all segments of production. A constant multidirectional communication.
In same way branding is not just a logo, but overall experience that comes from building engaging environment.
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y’all might want to clean up the trail on this one. emails are public.
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Oh yes, it’s definitely discrimination but I would say in the economic sense – forcing a choice in one direction. I also think Jeff’s point about affirmative action feeding imposter syndrome is valid. I guess it’s naive to think a firm could set a quota and not keep it quiet from the rest of the world so it wouldn’t look like affirmative action. Of course even if they could, that’s really only a stick to enforce your point – better candidate identification efforts.
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I do not see the solution in that way at all. I do not believe in mandated gender quotas; that is subtly discrimination, if that makes sense to you. It’s akin to affirmative action. Which would not be an operative or optimal model for pragmatic VC investment strategies. I think one answer lies in better candidate identification efforts.
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Hmm, that’s an interesting point. So part of a solution could be “X% of the fund must go to female entrepreneurs” as the seeds for future partners?
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They exist, very much so. The current boys-club tech climate often relegates their contributions and leadership to masked roles. Women experience more difficulty in achieving funding – I can attest to that personally. Female entrepreneurs are typically not just looking to build a startup for the sake if building a startup ’cause that’s the “hot” thing to do; their ideologies are born of actual hands-on experience, perspective, and mastery. Many women, in the face of the VC disconnect in funding as well as representation, bootstrap their own ventures. These entrepreneurs and change agents go uncounted.
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As a digital media veteran and entrepreneur, I operate outside of the traditional VC universe. I have had experience with firms in a hiring capacity; I am an active member of Fred Wilson’s AVC community. In a very recent post, he displayed a valid and substantial acknowledgement of the influx of women into the tech space. It needs to be taken further; if the observed trend is more female entrepreneurs striking out into the world, a representative VC industry might very well have a greater insight into their distinctly-unique operating and management styles; experience; vision.
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Percentage of VC partners seems like a lagging indicator. Don’t you need more women as entrepreneurs or engineers to move that number?
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The trends are quite worrying. Culturally, what has happened is that gentlemanly behavior is no longer appreciated, meaning men treat women even worse, in some ways, than ever. Over sexualization of the media is responsible for a lot of that. Ironically, in the case of gay marriage, oversexualization of the media has led to a welcome cultural change. Changing how women and girls are portrayed in the media is an important issue, and we’re seeing a huge push for improvement in that area. Our company (Gangly Sister) is setting out to create cartoons for kids that portray girls in tech fields, and this article gave me something to think about as far as encouraging girls to see themselves in the roles of financiers as well.
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There is more to this issue than simply the gender disparity. In my opinion, many more women would be an asset to a VC firm if the archaic requisite of the MBA were minimized. Women with backgrounds in varied areas might contribute in novel and beneficial ways. Break up the group think. Success as captains of industry, entrepreneurs, advanced degree scholars in areas of psychology, for example, offer relevant firms experience and knowledge that would be viably applicable to the venture. But this way of thinking must be seeded by a potential candidate, or a woman with perspective, and then championed by leaders who are willing to invest in the scientific method.
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Breaking up groupthink is definitely a much-needed approach. Interestingly, 40% of the MBAs from top schools are women and in my entrepreneurship class at HBS, there have been 40-50% women each year, many of whom have technical backgrounds.
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