Today is Women’s Equality Day, otherwise known as the day women were granted the right to vote. There’s nuance to the date, of course, as Indigenous women weren’t guaranteed that right in every state until 1962 and Black women weren’t allowed to vote until 1965.
This story of delayed progress is still seen in every American industry and sector. Venture capital is no different. Overall, women received 2.3% of the $341 billion in venture funds secured by U.S. startups last year — that’s around $7.7 billion, and it was a record sum for solely women-founded companies.
Progress in the amount of venture capital funding raised by companies with all-women teams has been slow and daunting, if steady. Looking at PitchBook data, in 2008, all-women founding teams raised $461 million out of the nearly $37 billion invested in U.S. startups that year. By 2012, that number jumped to $750 million (out of more than $41 billion) and then to $1.6 billion (out of more than $72 billion) in 2014.
The cohort saw a slight dip in 2016, raising $1.4 billion (out of nearly $78 billion), a sum that jumped to a stunning $3.1 billion (out of around $140 billion) in 2018. From there, the sums raised by all-women founding teams fell slightly again in 2020, eventually landing where it is today: $3 billion in venture funds compared to the $144.2 billion invested in American startups through the first two quarters of 2022.
These numbers tell a story as old as time — that change is far from linear.
It is telling how the numbers change substantially when a man is listed as a co-founder. While all-women teams raised $461 million in 2008, mixed-gender teams pulled in $1.8 billion, for a total that PitchBook rounds to $2.2 billion. Turning the clock closer to today, 2018’s then-huge $3.1 billion raised by all-women startup teams grows to $16.8 billion for mixed-gender founding crews ($20.0 billion in aggregate, again per PitchBook rounding). In a more extreme example, all-women teams raised $7.7 billion last year, an all-time record. But that data point for mixed-gender founder teams was $49.1 billion ($56.8 billion in total, per PitchBook).
Clearly, the presence of a man remains highly valued when seeking funds.
Crunchbase data shows that all of these numbers are more than halved when broken down by race. Black women raised just over $15 million in 2008, while Latinx women raised around $20 million in the same year. By 2014, Black women managed to raise about $55 million, and nearly $150 million in 2016. Latinx women snagged around $117 million in 2012, followed by nearly $362 million in 2014. Numbers for Indigenous Americans don’t really appear in the Crunchbase dataset until 2014, when one company raised $200,000.
Out of the roughly 2% of venture funds raised by all-women founding teams last year, approximately 0.5% went to Black women, less than 0.6% went to Latinx founders, an estimated 0.71% went to Asian women, and 0.004% went to Indigenous women founders. Though the numbers are lower than this time last year, Crunchbase shows Black women have managed to raise $797 million this year, while Latinx founders nabbed $728 million and Indigenous Americans scored $5.6 million, as previously reported by TechCrunch.
For these reasons, Hessie Jones, a partner at MART Ventures, believes investors should remain vigilantly focused on the area of minority fundraising. She told TechCrunch that industry change means setting organizational performance to allow for proper representation of women, people of color and the LGBTQ community.
“Unconscious bias lives and breathes within our systems,” Jones said. “Let’s start to dismantle this precious infrastructure by living outside of those norms and intentionally reviewing policies and processes to make decisions that are more inclusive and make the system more accountable.”
She continued, saying that some organizations will need to make short-term sacrifices to contribute to a more sustainable system. “If not now, then when?” she added.
There is good news, though. There’s an increase in incubators, funds, firms and companies founded by women and people of color. Christie Pitts, a general partner at Backstage Capital, said there has been some progress at the early stages for women founders and that expanding those gains downstream is imperative.
“As Tiffani Ashley Bell said, progress is made when we make the hire, send the wire,” Pitts told TechCrunch. “Over the next few years, I’d like to see more women check writers hired and promoted into investing positions, especially in growth-stage roles. More women need to be funded, and the round sizes need to be larger.”
Day One Ventures founder Masha Bucher expressed similar sentiments. She said she would love to see more active female limited partners and less gender bias in later-stage investments so that more women can mint unicorns and decacorns. Finally, Bucher believes the industry (and media) could better support people of color.
“I don’t like that women are only accepted when it comes to DTC, consumer brands, health and so-called ‘female’ categories,” she said. “We have emerging tech or deep tech founders, and they’re moving super fast toward their ambitious world-changing visions. We have to provide more support to females doing something truly innovative and complex.”
Theodora Lau, the founder of Unconventional Ventures, said she also wants to see more women have a seat at the table, with opportunities to speak and write checks. “It must be a norm rather than an exception,” she told TechCrunch.
“The reality is wealth begets wealth,” Lau continued. “To give more women the power to invest means that as a society, we must invest more in women and be more intentional in promoting them, both from a policy perspective as well as a private sector perspective.”
The road to equality is not unidentified. Numerous experts and articles have been written on the increased need for LPs to take accountability for where and to whom their money goes, for investors to take more chances on women and to implement standards that decrease gender and racial bias. What is missing is the commitment from those in power (ahem, white men) to take charge.
“This entire struggle is rotted in this power dynamic,” Candice Matthews, the founder of Lightship Capital, told TechCrunch. “Over 98% of all assets managed in the U.S. are managed by white men. It is integral that the LP base shifts to new asset managers in a balanced way. It’s a mathematical fact that this will increase their returns, so it’s a simple and financially prudent fix.”
Matthews wants to see increased hiring of women analysts and associates and said existing women fund managers need to look at mentoring each other on how to structure rounds. Overall, she wants to see more women trusted to lead their funds. “We can’t be afraid to ask for more,” she continued. “Today’s analysts and associates are tomorrow’s fund managers.”
Em Herrera, a cultural investor at Night Ventures, agreed, and as part of the rising cohort of “Gen Z VCs,” she said she’s excited to see what change her cohort will eventually bring to the industry. She hopes to see firms give more women decision-making abilities and benefits that will help retain them in the venture workforce, such as women’s health.
She added that the next generation of women VCs are already making strides that will put them in a good position later on. “The investors that take the most interest in the majority of consumer research, investment, network, are the women themselves,” she told TechCrunch. “Whoever cares the most about the majority consumer now, will win. That’s probably going to be women.”
The harrowing numbers today are only motivation for the future, a marker of how much more there is to accomplish. Luckily, there is an increase in the number of conversations around gender and racial inequity in venture capital. What’s missing is more action.
That progress has been slow and daunting but steady.
And it’s not impossible. After all, the path to change will always be one filled with ups and downs, stand-ups and sit-downs, like driving down an old state route with potholes never fixed from the last hurricane that made landfall. Eventually, though, those roads are paved. And time marches on.
