The State of Women in Venture (Part 2)

Diversity isn’t just an aspiration. It’s a strategy.

Our mission at AngelList Venture is to increase the number of successful startups. We do this by reducing friction for investors and increasing participation in the venture economy.

When (not if) we do, it’s a win for startups, VCs, angels, and anyone else touching this rocket ship of an industry that’s grown to an estimated $3T in value globally (a 20% increase in just two years).

When (not if) we do, the most significant engine of wealth creation in our lifetime keeps humming along and, we hope, takes many more passengers along for the ride.

When (not if) we do, we open new avenues to innovation that have the potential to change the world.

That’s a vision most in the tech ecosystem would say they support. If ever there was a time to redouble our efforts and turn sentiments into action, it’s now.


In Part 1 of this series, I reviewed sobering statistics showing how little progress women — and especially women of color — have made compared to men during a decade of explosive growth in the venture industry. I also noted early warnings that we may be losing ground in the wake of a global pandemic (a point further underscored by a report from All Raise this week showing that women founders have significantly less runway compared to their male peers).

Just as we’re no longer willing to accept decades-stale excuses for why more women founders don’t get funded, we cannot accept COVID-19 and the economic fallout as an excuse to fall backward on progress. Rather, now is the time to double down on diversifying founding teams and the VCs who fund them.

Women founders and investors face steep challenges even in the best of times, often citing systemic, upstream issues like:

  • Lack of investment in STEM curriculum for girls in schools.
  • Fewer female role models and mentors in the industry.
  • Investors who favor “warm introductions” (but don’t know many women).
  • VC firms that want previous founding experience (but haven’t given women a chance to get it).
  • Pattern matching” against images of what founders typically or should look like (read: white or Asian male).
  • And so on.

Even when women overcome these endemic hurdles, new ones await as they confront imposter syndrome and learn to navigate a world that’s neither natural to them nor designed with them in mind.

The good news for women is that most of the primary trend lines are moving in the right direction as women start more and more unicorns, ascend to senior-level positions at venture funds, and combine efforts to support the next generation of leaders.

Lessons from the past

We learned from the Great Recession and other economic crises that the venture-backed startups created today will become the essential services of tomorrow (think WhatsApp, Airbnb, and Slack). By prioritizing diversity in venture now, we can ensure that women benefit from the opportunity ahead and help lead us to it.


As McKinsey outlined in a recent coronavirus report; “Prioritizing innovation today is the key to unlocking post-crisis growth.”

The aftermath of a downturn is a fertile ground for mass innovation and the rise of companies, but this can only happen when there is money funding those innovations and fueling their growth.

Not a wish, a strategy

Diversity of participation in this venture economy is not a wish; it’s a strategy. Research confirms what we intuitively know: More women and minorities participating in our startup ecosystem only makes our industry stronger.

Various research studies indicate that companies with female board directors have higher average operating profits, returns on equity, and price-to-book values; stronger average growth rates; and lower financial gearing ratios, compared to companies with all-male boards.

More broadly, a Thomson Reuters global study of some 4,500 publicly listed companies showed that boards with the highest diversity scores for gender and race/culture outperformed peers for each of the prior five years on measures like return on equity, profit margins, and dividend yields.

As the Harvard Business Review reported last month, governance research has shown that when women serve on a company’s board, there is a 20% lower risk of bankruptcy or liquidation and a 40% drop in restatements of published financials. Researchers at INSEAD f0und that women outperform men on seven of the top 10 leadership attributes, including team building and emotional intelligence — skills that are essential to effectively managing relationships and building successful companies.

Appointing women to governance boards expands women’s leadership experience and professional networks, which in turn helps women compete on a more level playing field for top executive roles and corporate directorships.

“On average, women raised less than half as much money as their male counterparts, yet they earned 78 cents per dollar invested, compared with 31 cents for the men. A prominent seed-stage venture firm also found that teams with at least one female founder did 63% better than all-male founder teams, when looking at the change in valuation since the initial investment.” -Morgan Stanley report, “Beyond the VC Funding Gap

Be the change, or be witness to it

Not everyone is getting the message, though. How is it possible that a firm like Matrix Partners has been around for over 40 years and hired its first female investment partner just this year? (To look up diversity progress at other firms, visit The Information’s VC Diversity Index.) As a recent review by the Economic Times revealed, even the firms that are significantly stepping up their hiring of women are filling lower-level positions.

We’re in an unprecedented moment for women in venture, where now, more than ever, there are organizations such as All Raise that champion female founders and funders in the venture community; different diversity and female-focused investors like January Ventures (formerly Jane VC), Backstage Capital, and Unshackled Ventures; and initiatives like Airtable’s Global Women in Venture directory that shed light on inequities that women face in venture capital and provide resources to tackle the gender gap with funding and representation.

Though they still are widely outnumbered by traditional firms, the rise of these new VCs — mostly, if not entirely, founded in the last decade — are making an impact. Bloomberg reported last month: “Investing in VC Funds for Diverse Founders Is Getting Competitive.”

Smart VCs know that those that fail to change will have the change forced upon them, as tools like Fundraise From Home and AngelList Rolling Funds — which allow accredited investors to raise money from their networks with minimal legwork — open up new audiences and geographies to the venture landscape.

We already see evidence of this. In its “Global Startup Ecosystem Report,” Startup Genome reported the number of tech ecosystems producing at a company valued at $1B increased nearly four-fold in the past five years to 84.

Join the conversation

Monday, August 24th at 10:00 am PT/ 1:00 pm ET

What will it take to change behavior to combat systemic biases and equalize the playing field in the venture industry? Join us Monday, August 24th at 10 am PDT for AngelList Connect: Women in Venture as we explore the current landscape of diversity in venture, as well as the impacts and opportunities resulting from COVID-19.

This virtual event will feature fireside conversations with notable women and investors who are working to accelerate gender equality in venture, including Pam Kostka, CEO of All Raise, Kate Brodock and Allyson Kapin of W Fund, and fintech executive/angel investor Sima Gandhi.

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