The pandemic put a spotlight on the need to invest in women founders

Comment

an engraved illustration of two women fist-bumping.
Image Credits: George Peters (opens in a new window) / Getty Images

Diane Yoo

Contributor

Diane Yoo is a results-driven entrepreneur and venture capitalist with more than 15 years of experience.

Without a doubt, the COVID-19 pandemic created catastrophic effects in our communities, educational systems and, most importantly, our careers and overall global economy.

The pandemic has also had a disproportionate effect on women’s careers: We are 1.8 times more likely to be laid off than men. It is also important to note that the pandemic caused a significant rise in the need for at-home childcare services.

Women, traditionally expected to be homemakers, were twice as likely to leave their jobs than men in order to stay home, and data collected as recently as 2020 shows a significant decrease in venture capital funding for women-led startup companies.

In 2019, nearly 2.8% of VC funding was used to invest in women-led startups. While considered a relatively low statistic, this was an all-time-high investment rate for women. However, 2020 Crunchbase statistics revealed that the amount of VC funding that went toward women-led startups dropped to 2.3%. When viewed realistically, this “minor” setback actually delayed women’s progress in VC by five to 10 years.

Many women in venture capital know that waiting for opportunities to come is never as efficient as creating your own. As a seasoned investor, venture capitalist and founding partner, I have been presented with a variety of unique opportunities to invest in different industries and niches. While I have spent years creating my own opportunities in venture capital by raising and launching funds, I have found it impossible to ignore the impacts women in VC have faced throughout the course of the pandemic.

Prior to the pandemic, women were making consistent and tremendous strides in VC. As of 2019, women in VC made up nearly 12.4% of all decision-makers at venture capital firms in the United States, up nearly 3.5 percentage points from data collected in 2018. Despite the rise of women entering the VC workforce, not all women working in VC are allowed to make decisions at their firms. Out of 351 venture capital firms in the United States, only 34 firms had two or more women in decision-making positions, according to an Axios analysis.

Despite these obstacles, I believe there is a strategic and collaborative approach to creating more opportunities for women in the aftermath of COVID-19.

Venture capital is growing exponentially. For instance, Crunchbase statistics show that venture capital in my hometown of Houston, Texas, has tripled in value over the last four years. Investments went from $284 million in 2016 to nearly $800 million in 2021. This tremendous growth requires the support of diverse talents from all backgrounds in order to continue to build long-term, stable investments in the future.

As of 2021, only 6% of the VC industry is made up of women of Asian descent, such as myself, so I deeply empathize with the challenges and hardships associated with breaking barriers in VC.

I have made it my mission to empower and uplift individuals of all backgrounds, especially women. This ultimately led me to create a diverse team of seasoned experts, with 90% of those individuals coming from diverse ethnic backgrounds. By investing in a diverse team, we ultimately yield greater results in both revenue and diversity levels throughout VC.

When women venture capitalists are put in positions with decision-making power, they are actually twice as likely to invest in diverse, women-led founding teams or startups. Moreover, women have personal experiences that men often overlook. These experiences are incredibly valuable to women in VC because they allow us to further identify overlooked problems and understand market size. Additionally, women investing in women can increase the chances of a women-led firm building a record-breaking or category-defining company in the future.

In fact, a study conducted by Kauffman Fellows found that when women-led startups receive funding, they are more likely to deliver higher revenue rates at nearly twice the value of the original investment. Because women are told “no” more often than they are told “yes,” women are more likely to create stronger, more concrete business plans to execute their goals and strategies. Over the course of women’s careers, I have also found an increase in resilience, adaptability and innovation — all of which are extremely valuable traits when working in VC.

The Kauffman Fellows study also found that women founders or women in VC are twice as likely to hire women as employees for their startup companies. This study also stated that women are drawn to work for companies that focus on making a global impact or societal contribution, as well as building long-lasting relationships with their workforce.

The same study found that startups with both a female and male founder would be nearly six times as likely to hire female staff members.

However, it is important to note that the solution behind creating more opportunities for women in VC, even during a post-COVID society, does not come from merely supporting women-owned businesses, but from debunking the institutional and systemic myths, biases, prejudices and thinking patterns that prevent VC firms and men in decision-making roles from investing in women-led startups.

In order to accomplish this, the best approach would be to focus on human-centered business models. These models stand out because they tend to focus on fulfilling societal needs such as creating additional job functions, increasing employee satisfaction rates and creating a healthy work environment that supports and empowers employees through career advancement opportunities.

Venture capital is not a safe industry, by any means. It takes courage, empathy, intuition, determination and resilience to truly break through as an investor and become successful over time. Given the risky nature of VC, there is no way to know for sure what will bring success and profitability.

However, my own experience in VC has only proven that taking risks leads to further innovation and evolutionary strides. It’s time to take that risk on women and bet on a brighter future in VC.

More TechCrunch

London-based fintech Vitesse has closed a $93 million Series C round of funding led by investment giant KKR.

Vitesse, a payments and treasury management platform for insurers, raises $93M to fuel US expansion

Zen Educate, an online marketplace that connects schools with teachers, has raised $37 million in a Series B round of funding. The raise comes amid a growing teacher shortage crisis…

Zen Educate raises $37M and acquires Aquinas Education as it tries to address the teacher shortage

“When I heard the released demo, I was shocked, angered and in disbelief that Mr. Altman would pursue a voice that sounded so eerily similar to mine.”

Scarlett Johansson says that OpenAI approached her to use her voice

A new self-driving truck — manufactured by Volvo and loaded with autonomous vehicle tech developed by Aurora Innovation — could be on public highways as early as this summer.  The…

Aurora and Volvo unveil self-driving truck designed for a driverless future

The European venture capital firm raised its fourth fund as fund as climate tech “comes of age.”

ETF Partners raises €284M for climate startups that will be effective quickly — not 20 years down the road

Copilot, Microsoft’s brand of generative AI, will soon be far more deeply integrated into the Windows 11 experience.

Microsoft wants to make Windows an AI operating system, launches Copilot+ PCs

Hello and welcome back to TechCrunch Space. For those who haven’t heard, the first crewed launch of Boeing’s Starliner capsule has been pushed back yet again to no earlier than…

TechCrunch Space: Star(side)liner

When I attended Automate in Chicago a few weeks back, multiple people thanked me for TechCrunch’s semi-regular robotics job report. It’s always edifying to get that feedback in person. While…

These 81 robotics companies are hiring

The top vehicle safety regulator in the U.S. has launched a formal probe into an April crash involving the all-electric VinFast VF8 SUV that claimed the lives of a family…

VinFast crash that killed family of four now under federal investigation

When putting a video portal in a public park in the middle of New York City, some inappropriate behavior will likely occur. The Portal, the vision of Lithuanian artist and…

NYC-Dublin real-time video portal reopens with some fixes to prevent inappropriate behavior

Longtime New York-based seed investor, Contour Venture Partners, is making progress on its latest flagship fund after lowering its target. The firm closed on $42 million, raised from 64 backers,…

Contour Venture Partners, an early investor in Datadog and Movable Ink, lowers the target for its fifth fund

Meta’s Oversight Board has now extended its scope to include the company’s newest platform, Instagram Threads, and has begun hearing cases from Threads.

Meta’s Oversight Board takes its first Threads case

The company says it’s refocusing and prioritizing fewer initiatives that will have the biggest impact on customers and add value to the business.

SeekOut, a recruiting startup last valued at $1.2 billion, lays off 30% of its workforce

The U.K.’s self-proclaimed “world-leading” regulations for self-driving cars are now official, after the Automated Vehicles (AV) Act received royal assent — the final rubber stamp any legislation must go through…

UK’s autonomous vehicle legislation becomes law, paving the way for first driverless cars by 2026

ChatGPT, OpenAI’s text-generating AI chatbot, has taken the world by storm. What started as a tool to hyper-charge productivity through writing essays and code with short text prompts has evolved…

ChatGPT: Everything you need to know about the AI-powered chatbot

SoLo Funds CEO Travis Holoway: “Regulators seem driven by press releases when they should be motivated by true consumer protection and empowering equitable solutions.”

Fintech lender SoLo Funds is being sued again by the government over its lending practices

Hard tech startups generate a lot of buzz, but there’s a growing cohort of companies building digital tools squarely focused on making hard tech development faster, more efficient and —…

Rollup wants to be the hardware engineer’s workhorse

TechCrunch Disrupt 2024 is not just about groundbreaking innovations, insightful panels, and visionary speakers — it’s also about listening to YOU, the audience, and what you feel is top of…

Disrupt Audience Choice vote closes Friday

Google says the new SDK would help Google expand on its core mission of connecting the right audience to the right content at the right time.

Google is launching a new Android feature to drive users back into their installed apps

Jolla has taken the official wraps off the first version of its personal server-based AI assistant in the making. The reborn startup is building a privacy-focused AI device — aka…

Jolla debuts privacy-focused AI hardware

The ChatGPT mobile app’s net revenue first jumped 22% on the day of the GPT-4o launch and continued to grow in the following days.

ChatGPT’s mobile app revenue saw its biggest spike yet following GPT-4o launch

Dating app maker Bumble has acquired Geneva, an online platform built around forming real-world groups and clubs. The company said that the deal is designed to help it expand its…

Bumble buys community building app Geneva to expand further into friendships

CyberArk — one of the army of larger security companies founded out of Israel — is acquiring Venafi, a specialist in machine identity, for $1.54 billion. 

CyberArk snaps up Venafi for $1.54B to ramp up in machine-to-machine security

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

2 days ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses