The scandal involving 500 Startups, following allegations of sexual harassment, has us talking about cultural and gender issues in the tech and startup ecosystem. This discussion reminds us of some alarming numbers. Just 5% of VC money goes to women-founded companies and merely 7% of partners at VC funds – people with the authority to make investment decisions – are women.
So, what are we, the VC community, doing about it? We are signing a pledge agreeing not to sexually harass women. While we are at it, why don’t we also sign pledges not to steal or cheat on our taxes.
I am not saying a pledge is a bad idea, but I worry that people in our industry will use it as a substitute for addressing the real problem. We need more concrete actions to ensure better gender diversity across the VC industry. As it stands, there are simply not enough women making decisions on how capital gets allocated. We know that more female investors equals more female VC-backed CEOs.
I am lucky to live in Australia where gender diversity in leadership is an acceptable discussion topic. I also work at a company that takes this subject seriously. Over 35% of NAB’s senior leaders are women and our CEO is an active supporter of the Male Champions of Change movement.
NAB is also making some great strides in gender diversity, particularly in the tech space, with a “girl geek in residence” and a thriving Connecting Women in Tech program which are highlighting that technology can be a viable career path for everyone. That is not to say we are getting it all right, but I can see we are making a genuine effort. The fact that 50% of the partners and associates at our fund are women, puts NAB Ventures in a very small club.
However, even in Australia, the numbers of women actively engaged in the venture community are abysmal. The four largest VC funds in the country – Blackbird, Airtree, Square Peg and Brandon Capital – do not have a single woman at partner level.
This issue is not unique to Australia. Globally, most VC funds do not have female partners. That needs to change as we know diversity of thought is proven to be pivotal to business success.
A big bank, or any listed company, would probably lose many of its customers and eventually go out of business if it failed to embrace gender diversity practices. The institutional limited partners (LPs) who fund venture capitalists are typically not concerned with whether or not there is gender diversity in a fund. Until the LPs expand their investment criteria to include gender diversity, nothing is likely to change.
It is important we use an issue like this as a wake-up call to put in place commitments to improve our industry.
This is an edited version of an article first published on LinkedIn