Only 8% of venture capital (VC) firms in the U.S. have female partners, and that lopsided gender composition may be hurting venture capital performance portfolios. The evidence suggests that having no female partners makes VC firms less likely to invest in female-founded or female-led firms. But what much of the VC world might not realize, is that female-led firms may have a higher rate of return on average than male-led firms.
The Comprehensive Case for Investing More VC Money in Women-Led Startups
And for hiring more female investors.
September 18, 2017
Summary.
Only 8% of venture capital (VC) firms in the U.S. have female partners and that lopsided gender composition may be hurting venture capital performance portfolios. The evidence suggests that having no female partners makes VC firms less likely to invest in female-founded or female-led firms. But what much of the VC world might not realize, is that female-led firms may have a higher rate of return on average than male-led firms. According to First Round Capital’s review of their own holdings, female founders’ companies out-performed their male peers’ by 63% in terms of creating value for investors. And a study conducted by the Small Business Association determined that venture firms that invested in women-led businesses had more positive performances than firms that did not.
There are two steps venture capitalist firms can take now to increase the diversity of their portfolios: avoid unconscious bias about “lack of fit” and actively seek out women founders where they network.