The pressure on the venture capital industry to back more women entrepreneurs was ratcheted up a notch by women entrepreneurs organisation Astia in a white paper this month.
Astia draws attention to an issue which should make everyone in the venture capital industry sit up and take note: venture capitalists are not meeting women entrepreneurs but there is a growing pool of executives that are able to get funded.
Sharon Vosmek, chief executive of Astia, said: “We continue to hear from VCs in Silicon Valley that annually they only see two deals a year which have women on their founding team. Currently at Astia we have >1,000 deals in our pipeline – many of which are not making it into mainstream venture.”
Vosmek said Astia was able to secure funding for many women-backed entrepreneurs. She said: “Those companies which make it through to our investor screen – two out of three of those businesses secure funding or exit within one year of that investor screen.”
Astia is concerned the apparent mismatch exists, and thinks the venture capital industry must increase the number of women entrepreneurs it backs, which she argues is a more pressing issue than even encouraging women into technology. Vosmek said while it was positive that famed venture capitalist and entrepreneur Marc Andreessen and his wife were giving $500,000 to women coding organizations “because we all acknowledge that we would like to see more women in technology, we value more the participation of his venture firm Andreessen Horowitz in the Astia community to ensure that the women who are already at the ready, have access to the critical venture capital to grow their businesses.”
Vosmek pointed to Harvard research from this Spring which found that men were more likely to secure funding all other things being equal.
She said: “VCs still prefer investing in attractive white men in particular. People invest in people like themselves. VCs are generally white male which is having a profound impact.
She added: “This is a social ill. Research shows that businesses which have inclusive teams outperform. That VCs are disregarding this data is worrisome at best and absurd when you take it to the extreme.””
As regards corporate venturing units, Vosmek believes they could be a force for change. “I love corporate investors. They tend to have a single large LP in the corporate entity. Those technology corporations continue to struggle to get women into executive ranks and are actively seeking new approaches to achieve their diversity or inclusion goals. Investment in inclusive teams can help achieve these goals – entrepreneurship is the fastest path to the executive suite and board room.
“Corporates with a greater proportion of women in their ecosystem or immediate reach can achieve a more diverse or inclusive deal flow than their classic venture counterparts. This is because business networks still divide along gender lines. Firms with a woman in their partnership were 75% more likely to have women in their portfolio,” she added.