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The VC Gender Gap: Are VCs Sexist?
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I find the preponderance of males in VC an annoying and stubborn phenomenon. When I first entered the start-up game as an entrepreneur in the mid 1990s, I didn’t think much of the “VC gender gap” as there were plenty of women executives around. In fact, between one third and one half of the executive teams at my two start-ups (Open Market and Upromise) were women. As the father of a capable, ambitious daughter, perhaps I’m over-sensitive to the issue, but since becoming a VC seven years ago, I find it amazing that only 5-10% of the VC industry is made up of women. Only 25% of all VC partnerships have a single women partner and only 7-8% have more than one women partner. Anecdotally, even fewer women are “management company GPs” as opposed to “employee GPs” - in other words, true owners of VC funds as opposed to deal partners. What other major industry remains 90-95% male-dominated? What’s the deal? An outstanding Kauffman Institute study, “Gateways of Venture Growth”, analyzes this issue and comes up with some thoughtful but unsurprising conclusions. They point out that the industry remains very clubby, and the lack of female role models creates a self-perpetuating cycle. Professor Myra Hart of Harvard Business School writes, “Women trying to launch or further careers as VCs have fewer first-degree connections with those (men) in positions to hire or promote them.” Another issue that holds women VCs back is the fact that the academic backgrounds of VCs tend to be in technical areas, such as computer science, engineering and biotechnology where, again, females are in the minority. In talking to my women VC friends, they reinforced these two major issues, but held out some cause for optimism going forward. Irena Goldenberg of Highland Capital in Europe (an formerly an associate with us at Flybridge Capital before she went to HBS and then Geneva), believes there are more female VCs in life sciences as the medical field has a higher ratio of women to men then, say, engineering. Our senior associate, Robin Lockwood, told me she thinks VC profiles simply lags entrepreneur’s profiles. As more women entrepreneurs emerge, more women will become VCs. Here’s a thought-provoking observation that an anonymous woman pointed out to me (and please do not accuse me of channeling Larry Summers on this - I’m just passing along what I heard): she believes the VC industry is male-dominated because men are more wired to take risks than women. Gambling, she points out, is more popular amongst men than women. Thus, risk-taking with capital is more likely to be comfortable for men than women. Some women have been able to break out as strong investors and industry leaders. In my informal survey, a few experienced women VCs stood out as strong role models: Venetia Kontogouris at Trident Capital, Annie Lamont at Oak, Patricia Nakache at Trinity and Nancy Schoendorf from Mohr Davidow. I guess when you have a clubby, tightly-woven, self-perpetuating network, it’s hard for women to break in. It’s a stubborn phenomenon, but I hope we can figure out how to correct it. Otherwise, our industry is tragically losing out on 50% of the world’s best talent! Jeff is a partner with Boston-based VC firm Flybridge Capital Partners. Read his past peHUB posts, or follow him on Twitter at www.twitter.com/bussgang. |
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October 6th, 2009 at 10:37 am
What a refreshing thing for a man to point this out! Thanks Jeff. Cannot tell you how often I go to conferences and am asked “Oh, what do you do for Ascend…marketing?” Ahhh, no. And so it goes. But you push through, keep looking for killer investments, keep working with your great teams, and make sure women know it’s not an impossibility for them to enter this industry. Just find the right firm.
October 6th, 2009 at 11:15 am
For women who want to take a few years off in early child rearing years, VC is not a friendly career path, at least from the Associate ranks. It’s just not the kind of career you can take a few years away from and come back to later, as the deals, relationships, people, the partnerships all shift pretty quickly. That would be my guess as to why there aren’t more women in the junior VC ranks (and thus senior ranks coming up from Associate level).
It doesn’t explain the lack of women GPs or Venture Partners who enter at that level or found firms — I think Robin Lockwood’s assessment is correct on that front… over time as the ranks of successful female entrepreneurs grows so too will the ranks of female senior VCs (who enter VC via that path).
October 6th, 2009 at 11:35 am
just.a.guy: I think you are right but how many women who are really excited about VC at a young age are also thinking of raising a family at that time? I am 37, have a daughter and am making it work. Most women who put themselves out there for a high stakes career and who also want a family probably have thought through those issues and have a plan for how to make it work. I would hope that any VC interviewing said woman would not make too many assumptions about what she - potential vc - actually wants and opt to hire the guy instead because he suspects she really wants to opt out.
October 6th, 2009 at 12:35 pm
Absence of women in the tech sector is the main cause. Silicon Valley had 8 men to 1 women at its peak. Look at India, there are many more women in the tech sector. As the VC sector headcount stabilizes, we will see more women management GPs.
Robin’s argument is somewhat convincing. But, despite widespread acceptance, there is no evidence to prove the myth that ex-entrepreneurs make successful investors.
@just.a.guy - VC industry does not care to groom talent. Name one VC firm that offers ‘a friendly career path from the Associate ranks’. Successful VC investors are lone wolves whose first priority is increasing IRR, second is investment management and finally (most time/energy is exhausted prior to reaching down to this priority) leadership development within the firm.
October 6th, 2009 at 1:29 pm
In addition to Nancy Schoendorf at MDV, I’d like to highlight Sue Siegel. She’s a former CEO among other accomplishments and is now leading investments in the life sciences area. I’m happy to report she makes it a point to develop and mentor the women *and* men at MDV.
October 6th, 2009 at 1:49 pm
I am really glad you bring up this topic! This not only applies to who works for VCs, but also who VCs back.
I don’t have a daughter yet, but I think about how some day the world may be like for her, if I am blessed with one or two. I also watch my wife, who has amazing credentials in the world of science (she is a postdoc at Harvard working on adult stem cell research). From what I have seen in my 12 years of working for startups and 7 years of watching her in sciences is that sexism is live and well. To be successful you have to put in the extra effort (and grow extra thick skin) to handle male chauvinism. Some things have gotten better, but much is still the same.
Another point, many investors will not put money in companies founded by a team of women (Daily Grommet comes to mind). This only perpetuates the vicious circle. In the world of Angel and VC, if you don’t support women entrepreneurs, a lot fewer will succeed and later join your ranks.
If your networking consists of golfing and some other male-centric activities, how many women do you think will join and do well.
Is that the kind of future we want for our daughters?
P.S. And re. women being risk-averse. BS! Women just take risks differently in less blind and more calculated ways.
October 6th, 2009 at 1:50 pm
There are proven ways to address the cultural dynamic of a “clubby, tightly-woven, self-perpetuating network.” Other industries had the same problem 10, 20 and 30 years ago. Glad to see that some VCs may be waking up.
October 6th, 2009 at 1:51 pm
Enough with the PC cover language. VC is a boys’ club just like private equity is a boys club just like most of finance is a boys club.
Make enough money for a firm and they will overlook sexism.
October 6th, 2009 at 2:47 pm
It’s a problem of critical mass. Every African American who ever attended an Ivy League University or top prep school knows the feeling of being the only one in the room. That’s how it feels to be a female VC. it’s not just that VC firms have one woman partner (at most), it’s also that most board rooms have one woman there (at most). Some whole start-up companies have just one woman. Tech, especially startup tech, is a male dominated field. Lots of organizations do a good job trying to increase the networking and mentoring between women in the field, but we’re just too few. I believe the tipping point will come, as it has in the legal and medical fields, but it’s not here yet.
BTW the ‘child rearing’ argument is not a good one. If women can be doctors and lawyers they can be VCs. I would actually argue that investing is a pretty family friendly job. The risk argument might actually have some merit, though, as more women are the primary income in the family these days and may be after more stability, not sure. Now that women make up more than 50% of the US work force it’s no longer unusual to be a working mom, it’s normal. I never thought that would happen in my life time! So there is hope….
October 6th, 2009 at 3:18 pm
As a young female VC I found the club quite accessible. Male VC peers in the industry consistently referred me strong co-investment opportunities. However, I faced sexism when working with entrepreneurs as a Board member. When I suggested, during the dot.com implosion, that an entrepreneur lower his burn rate or reconsider his business model I was labeled “aggressive” and “sharp elbowed.” Strong women executives in other business fields face similar challenges with communications styles that are typical of the work place and expected of men but labeled “aggressive” when they come from women.
October 6th, 2009 at 5:34 pm
Just why does it matter? Is there any bias against women? I think not. Is there a reason women do not enter this field? Possibly yes. Should we care? No. Money does not smell.
October 6th, 2009 at 5:38 pm
Interesting. I just posted a similar post today, about how career women need to try harder, and how in the start-up world and in the working world in general it’s extremely difficult. I hope that instead of telling stories about how women are missing, someone will tell stories soon of the success of the women who are participating.
October 6th, 2009 at 7:02 pm
If I were to note another contrarian viewpoint (similar to the risk profile observation), I might say that VC is still largely about the transaction (i.e. the deal side of the equation). Men love the hunt and the adrenaline of catching the best deal out there. Perhaps women care more about cultivation and less about the hunt. Perhaps their passion is in building great companies in a shoulder-to-shoulder approach. The role of a VC partner (particularly of a mgmt company GP) is really not about being this close to the company build – the logistics are not organized to foster this type of relationship. You may argue that early stage VC’s offer a heavier touch than later stage VC’s and I would agree with this logic. But given that an established GP has anywhere from 4-10 investment companies under his arm, he (or she 5 % of the time) just doesn’t have the time to really get into the trenches with any one particular company.
any other contrarian observations/thoughts?…..
October 7th, 2009 at 10:03 am
Saying that gambling (predominantly men) means that women aren’t risk-takers, must mean that people who buy lottery tickets make good VCs.
October 7th, 2009 at 2:52 pm
Thanks for the insightful comments, Jeff.
I do believe there are psychological elements to this issue on both gender sides. I’m sure more than a few investment bankers have run into the “she’s just a woman” I”m not gonna let a girl beat me” attitude out there on the part of certain guys. The good news is that over my career, and I”m sure this will resonate with many women, there have been a number of guys who have served as mentors and coaches, and are willing to work with you if you provide high caliber product and value.
I’m going to suggest a VC boot camp for women that focuses on the psychological aspects of the game — to the extent guys like you with daughters can be empathetic to the issues women face and offer strategies and competitive “steeling” techniques, like sports and martial arts mindsets, perhaps in boot camp type setting, Add negotiation and posturing strategies and I think you would do a great service to levelling the playing field for ladies like your daughters as well as the rest of us.
As far as the math/technical side, practical financial modelling and analyis could also taught in such bootcamp/seminar format. You don’t have to be Einstein to figure out a venture deal. You need models, instruction and practice.
I have a concept (and incorporated a company in Massachusetts) called “College Consulting Group” originally aimed at board of director practicums for young women. Maybe the predecessor concept should be the boot camp concept above, so that more women would develop the means to acquire the capital and resources to rise through the ranks.
Best regards, Paula
Paula A. Argento, Esq.
Partner
http://www.linkedin.com/in/paulaargento
Argento International Law Firm
Argento Venture Group
1250 Connecticut Avenue, NW Suite 200
Washington, DC 20036
(202) 538-2473 (c)
(310) 492-4014 (fax)
October 8th, 2009 at 4:38 am
Think about it this way. Look at our dating patterns. Women are looking for successful men. This puts pressure on men to go out and become successful. Men prefer women with stable jobs and nice maternity packages like back office banker.
If there was complete gender equality women would have to marry each other.
October 9th, 2009 at 12:29 pm
Great post. I was in VC in the early 1990’s, and came back in 2005 after a nice long detour through the operating side. The number of women has definitely increased - I knew of no female partners the first time around, and only one other female associate. Though there are now just a few female partners, at least there *are* some. And there are several of us (yours truly included) doing the work, and looking for the deals, that we hope will get us there.
Open-minded GPs that think of all of us female principals and VPs when looking to develop, add, or even refer a new partner are definitely appreciated! Thanks for being one.
October 9th, 2009 at 2:36 pm
[...] Are VCs sexist?, [...]
October 12th, 2009 at 10:34 am
Women are making inroads within VC and PE but it hasn’t been easy. 30% of HBS grads are women yet only a small % of them are working FT. 10% of mutual fund managers in the US are female; 6% of hedge fund managers in the US are women (not middle office or back office, but actual principals with investment decisionmaking authority). Has anyone seen the stats for women in sr positions within VC?
Within 85 Broads, we are examining the root causes of why smart, capable women aren’t pursuing VC careers vs. wealth advisory, fund management etc. Kaufmann and Catalyst have done some great research in terms of female leadership. if interested, pls attend the first alternative investments conference of its kind (focused on women): http://www.womensalternativeinvestmentsummit.com/
NYC Cipriani NYC Dec 1-2, 2009
October 12th, 2009 at 5:02 pm
VC, PE, and alternative assets in general have been a ‘boys’ game, but that is absolutely changing. Every year, attendance at our Women’s Private Equity Summit—and the upcoming Women’s Alternative Investment Summit—increases, and I’m heartened by the number of fantastic, senior-level women at many of the most prominent firms.
October 16th, 2009 at 5:09 am
Thanks everyone for the great comments. Having just sat through a board meeting with Lucy yesterday, I’m sympathetic to the point on lack of critical mass. It’s going to require a concerted effort to break through the boys club. At our annual meeting yesterday, I was struck once again how many of the Flybridge Capital LPs are women (one of whom was 9 months pregnant!). It’s not a question of the investor-side of the VC equation, I would argue, but rather the entrepreneur-side. We need to address both in parallel.
October 19th, 2009 at 4:14 pm
Great post, Jeff. The presence and influence of women in VC is increasing but it requires women building bridges to other women in the VC ecosystem, including enterpreneuers, VCs, LPs, and service providers. Historically, it is not something we have done well. I’ve been in tech for 16 years and VC for 7 years (including doing venture in Europe while 9 months pregnant)–it took years to build a critical mass of senior execs at tech companies but we now have a place at the table. The same will happen in VC but we the current women GP’s to mentor then next generation of leaders.
October 21st, 2009 at 11:19 pm
I heard some bad stuff is being said at shops about women but these guys are punk asses anyway… most of these guys were nerds in school and now they are misogynistic feeling like a cro-magnons while they have daughters they are making extinct in business–Karma will have it’s day– go figure!
October 26th, 2009 at 1:08 pm
There is a reason they call it the Old BOY Network.
Seriously, VC is very much a business in which people tend to hire people like themselves, however subconsciously. The early GPs were men, and they tended to hire men, who tended to hire men, etc.