Critics of the venture capital industry have long maintained that VC firms have too few female partners and extend too little funding to women-led startups.
But this year, even the industry’s main trade group has joined the chorus.
The National Venture Capital Association conference in San Francisco May 13-14 included two panel discussions on the subject of diversity in the venture industry. The first, led by Maria Cirino, a founding partner of Boston-based venture firm .406 Ventures, brought in mostly industry insiders to tackle the question of how VCs ought to address the gender gap.
A venture industry census published by the NVCA about three years ago found that only about 11 percent of investment partners at VC firms were women. That number is largely believed to have fallen to roughly 5 percent female, based on a Fortune report that looked at 92 venture firms that have raised a fund of more than $200 million since 2009.
The second panel featured Vivek Wadhwa (also present at the prior panel), vice president of research and innovation at Singularity Institute and an academic known for his work in entrepreneurship, as well as a frequent critic of the gender gap in the tech startup ecosystem. Wadhwa began raising some hackles around 2010 when he published a series of columns, including one entitled “Silicon Valley: You and Some of Your VCs have a Gender Problem.”
Wadhwa’s contention is that VCs failure to back more women entrepreneurs isn’t just bad for women, it’s bad for venture returns.
“If it was 50 percent women, I bet venture capital would have 50 percent better return rates,” he said.
With women out-earning men in advanced degrees, and accounting for an increasing share of STEM graduates, it’s safe to conclude that the problem isn’t a lack of qualified female entrepreneurs, Wadhwa said. Rather, he has maintained, there are systemic problems. One is the reliance of venture capitalists on so-called pattern recognition, backing entrepreneurs who seem like the kinds of people they’ve successfully funded in the past.
Kate Mitchell, partner and co-founder of Scale Venture Partners and a speaker at the first panel, said after the conference that she appreciated that the discussion about gender and diversity was front-and-center at the NVCA annual meeting.
“The good news is that there was consensus among the audience that this will not be limited to an annual discussion,” said Mitchell, who helped draft a series of recommendations on IPOs that were incorporated into the JOBS Act. “There is strong interest in forming a cross industry working group on this to develop practical, actionable recommendations like we did for the JOBS Act. Our industry has a culture of working together in syndicates to support company innovation. I am excited to think about that energy being applied to this issue.”
Photo of Vivek Wadhwa speaking at VentureScape in San Francisco on May 14 by Alastair Goldfisher.