Despite the positive trend, women remain grossly underrepresented, not only as VC-backed entrepreneurs but as venture capitalists themselves.
“[A majority] of venture capital firms don’t have a single female partner at the table,” said Pam Kostka, CEO of All Raise, a nonprofit that provides guidance and access to professional networks for female founders and funders. Among individual venture capitalists, 88% are men.
Male VCs traditionally have had a bias toward businesses run by men that provide products and services men use and understand, said Alden Bowden, PitchBook’s vice president of Research and Analysis. It’s also a familiar bet to them because men have a longer track record of launching successful startups.
Promising signs of progress
But several things have been happening that could start to level the playing field.
There is a growing awareness of men’s investment bias and increased training at venture capital firms to overcome it, Bowden noted. There’s also increased understanding that bringing women to the table broadens the awareness of promising ventures — especially those that cater to female customers.
What’s more, female-founded startups that “exit” and pay back their investors — either by going public or by being acquired — do so within 6 years on average, well below the overall average of 7.4 years, according to PitchBook.
“If you look at the VC industry as one of pattern recognition, there are now patterns to follow,” Kostka said.
Women VCs also are making a splash. Alexa von Tobel, founder of the online financial planning platform LearnVest, and former US Commerce Secretary Penny Pritzker, recently co-founded Inspired Capital. They have raised an initial $200 million to invest in early-stage startups, making it one of the larger VC firms.
Going forward, sufficiently supporting women entrepreneurs will require more than providing them with the typical entrepreneur playbook since there is still bias built into the system, said Ari Horie, CEO of Women’s Startup Lab, an accelerator that connects female founders in Silicon Valley with investors. “The road is still steeper and rockier for them than it is for men.”
Even with the positive momentum of the past two years, the road to a fair shake for women founders and funders in the VC world is still very long.
“We’re at Mile 1, but the pace is picking up,” Kostka said.