Female leadership continues to reshape the VC industry
Although the unprecedented COVID-19 pandemic has created hardships for nearly everyone, it affected professional women especially hard in 2020, with female employees dropping out of the workforce at a rate of four times that of their male counterparts. In VC, women similarly faced extraordinary challenges in 2020, but thankfully, we’ve also had significant successes and cemented our position as important players at all levels of the venture ecosystem.
Kirsten Green raised $500 million for Forerunner Ventures V was a shining success story, and she wasn’t alone. Kesha Cash, one of the industry’s few black female GPs, landed $55 million for her Impact America Fund, which invests in startups looking to solve social injustice. We also saw other important launches from female-led funds, including Cake Ventures, Renegade Partners, Scribble Ventures, Divergent Capital, Construct Capital, and many more.
Women are still in the minority, making up just 4.9% of all VC partners, but the number of women-led venture funds has 4x over the past 5 years, and this trend seems to be showing no sign of slowing down in 2021.
According to the Women in Venture Capital report, there are now 275 women-led VC firms, and those firms plan to invest in more than 7,000 companies in the coming years, creating at least 80,000 jobs.
While just 5.6% of VC funds are led by women, the Women in Venture Capital report notes that 90% of those are emerging managers. Half of all female VC partners, representing 320 women across 275 firms, are founding partners who got their jobs by creating them for themselves.
Almost three-quarters of women-led funds were founded in the past five years, and nearly a quarter are still raising their first fund. With Goldman Sachs reporting that women-led funds significantly outperform their male-led counterparts, we expect to see a greater number of female-led VC funds in market in the coming year.
Additionally, there is a growing awareness among LPs that investing in women founders and women-run VC firms is a recipe for success.
However, limited partners controlling allocation decisions are still overwhelmingly male. In family offices, men represent seven out of 10 employees at all levels. And while LPs increasingly acknowledge the importance of supporting female VCs, gender isn’t always a catalyzing factor decision making. While two-thirds of institutional investors say they want to back more diverse VCs, only a quarter explicitly make gender and diversity issues part of their due diligence processes.
If you’re looking to learn more about our Venture Capital emerging manager and family office LP programs, please reach out to me at hanayang@firstrepublic.com or follow me at @hanayang.
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