VC Industry Diversity Trends to Watch

Only 2.2% of VC funding went to women founders in 2024. Black founders? 0.48%. LGBTQ+ founders? 0.5%. If VCs actually want to improve these numbers (big if), here are 5 things they could start doing: 1. Ban the warm intro You can't get warm intros without social capital. And underrepresented founders often lack the networks that make this possible. As long as access to capital requires social capital, diverse founders are going to take an L. 2. Be direct with your "no" - "Let me know when you have a lead investor" - "You're too early for us" - "Keep us updated on your progress" These are all indirect ways of saying no. So instead of beating around the bush, just say you’re not interested so founders can pursue investors who are genuinely interested. 3. Give real feedback Don't say that the "metrics aren't there." Tell us which metrics matter and what benchmarks you're looking for. Specific feedback helps founders improve and better understand what investors want. 4. Look beyond SF and NYC When you only invest in major tech hubs, you're saying you only want founders who can afford $4K/month rent. Remember: Mailchimp ($12B), Calendly ($3B), and Duo Security ($2.35B) weren't built in SF. 5. Diversify LP bases It makes sense that diverse LPs would lead to diverse founders. They bring different networks, understand overlooked markets, and can better evaluate opportunities in their communities. Will any of this happen? Probably not. These changes would mean disrupting systems that work really well for VCs and their existing networks. It would cost them traditional deal flow and require more work. But maybe in 2025, we'll see some brave firms try something different. Until then, we’ll keep building, growing, and finding ways to succeed despite the barriers. Founders: What other changes could help improve funding access for underrepresented founders? Share your ideas below 👇🏾 - - - If you found this insightful, follow me Toby Egbuna for more real talk about startup building and funding 🤝🏾

An important new analysis of the 2024 VC landscape reveals critical insights into the persistent gender disparities impacting female founders and investors. My latest Forbes article, "Female Founders And Women VCs: An Unrealized Opportunity For Investors," highlights key findings from PitchBook's "2024 US All In: Women in the VC Ecosystem Report:" 📉 Declining early-stage funding for female founders signals a concerning trend. 📈 Record exit shares achieved by female-founded unicorns demonstrate their significant potential. 💰 Compensation progress for junior-level women VCs contrasts with persistent senior-level gaps. 👩🦰 Increased representation of women in VC decision-making roles is crucial for equitable change. 🤝 Expanding investment opportunities for women LPs is essential to support diverse venture funds. The data underscores the urgent need for collective action to address these disparities and unlock the full potential of women in venture capital. This is an important read for anyone invested in the future of innovation and economic growth. Read the full article here: https://lnkd.in/eG-xuaUV Annemarie Donegan, Jody K. Thelander, J. Thelander Consulting, Julie Castro Abrams, How Women Invest, How Women Lead, Jo Ann Corkran, Loretta McCarthy, Golden Seeds #VentureCapital #FemaleFounders #WomenInVC #Investment

Amid an industry reset, where fundraising is squeezed for both VCs and founders, investors tend to revert to what they know; the tried and tested. AKA ‘pattern recognition’. So while depressing, there was little to shock us in the Carta Equity Report for 2023, which included the following:  - Only 4.6% of funding to pre-seed companies on Carta went to women-only founding teams this year. (Down from 6.3% in 2022) - The percentage of Black founders has fallen from 3.9% in 2021 to 2.7% in 2023. - The percentage of founders who are women declined this year. For companies incorporated in 2023, 86.8% of founders were men, the highest rate in the past six years. The proportion of founders who are women (13.2%) is the lowest in the last six years. And as a reminder, the VC industry itself is only marginally better: - In 2022, women represented just 16% of GPs at U.S. VC firms with over $50M in AUM. (source: PitchBook) - In Europe, for every woman VC there are > six men, and women hold just 13.5% of GP roles (source Atomico, via Insider) - In 2022, companies founded solely by women garnered just 2% of the total capital invested in venture-backed startups in the U.S. (source: PitchBook) - More promisingly, startups founded by mixed female and male teams received 16.5% of total VC capital invested in the U.S. last year. (Source: PitchBook) Techstars is a universal investor, which means we invest in standout entrepreneurs, regardless of background, race, gender, age and geographical location, because that’s where we believe the best returns lie. While we still have far to travel, I’m so proud that this year, across over 700 investments, we have far out-performed the wider industry:  U.S. investments in 2023: - Gender Diversity (including non-conforming) - 27.4% - Ethnic/Racial Diversity - 43.9% - Total Diversity - 69.3% Non-US investments in 2023: - Gender Diversity (including non-conforming) - 21.4% - Ethnic/Racial Diversity - 20.2% - Total Diversity - 44.3% Overall investments in 2023:  - Gender Diverse (Woman only) - 24.5% - Gender Diversity (including non-conforming) - 25.2% - Ethnic/Racial Diversity - 35.7% - Total Diversity - 60.4% We haven’t taken this approach because it’s ‘the right thing to do’ (although it is!), but because we the largest financial upside often lies not in following the VC pack, but in going where most other investors do not – and in many cases that is traditionally underrepresented entrepreneurs. https://lnkd.in/eYYXN_nd #techstars #startups #VC #fundraising #VentureCapital #startups #growth #founders #Entrepreneurs #preseed #seed #womenintech #womeninvc #diversityintech #blackentrepreneurs #blackfounders

A meager 2% of VC capital is invested in female-founded companies.  
Many people I know are working hard to highlight the funding gap between male and female-led companies, exploring the root causes, and proposing actionable solutions, including my colleagues, Teresa Wells, CFA Kate Nevin Lenore Champagne Beirne Research shows: 🚩Female-founded companies command only 7% of VC deal counts 🚩Teams with both male and female co-founders receive just 14.2% 🚩Only 2% of VC dollars were invested in female founded companies  🚩Women received just 11.4% of the total Small Business 504 Loans Yet: Rogue Women’s Fund Stats (as of 2020): Women led companies have 63% higher returns over 10 years period and invest up to 90% back to community and family. The Root Causes Identified: ➡️ Women are underrepresented in VC decision-making roles (just 11% of VC partners are women) ➡️ Childcare is unaffordable – 46% of women left jobs in 2021 for this reason ➡️ Women with higher VC positions in at male dominated firms protect their status by backing male biases ➡️ Gender stereotype and display of more feminine behavior (practicality) during pitches is viewed as lacking vision, while overinflated pitches and numbers are rewarded. Harvard Business School 2017 Pitch Study ➡️ Antiquated small business lending diligence biased against women. United States Senate Small Business & Entrepreneurship Committee 
 Proposed Strategies for Change:  ✅Raise awareness of the statistics above - go see the Show Her The Money documentary! ✅Get more women into VC investor roles  ✅Change the way diligence is done to address biases ✅ Create different fund structures that accommodate venture, private equity and debt ✅Promote networking opportunities through organizations like WOMEN IN TECH®- Global Movement @womenfundwomen ✅Help more women pursue careers in STEM and higher education 
Shoutout and thank you to the amazing women and their male allies who are doing this work and believe we can invest in the female operators to increase our global economy. #womeninbusiness #diversityinvc #venturecapital #privateequity #smb

I stood outside Y Combinator’s headquarters this week. All I could think about was Emily Chang’s 2023 interview with CEO Garry Tan about female representation. In the Bloomberg interview Emily Chang questioned the lack of female representation in YC's 2009 class and the overwhelming male presence on their walls. While Garry said it's "something we're continuing to work on," the data tells a sobering story: 📉 Female only founded companies received just 2.3% of VC funding in 2024 ($6.7B out of $289B total) 📉 This is DOWN from 2.1% in 2022 which means we're moving backwards! 💰 Women still earn 83 cents for every dollar men make 🚨 Tech layoffs hit women 65% harder than men, with 45% of laid off workers being women despite representing only 39% of the workforce The lack of women in AI and tech is undeniable. But here's the hope: Women are increasingly embracing AI tools. I met with Fatimah Hussain, a brilliant University of California, Berkeley CS student and founder who recently completed a summer cohort with FoundHer House: an all female hacker house in Glen Park that just landed a feature in The New York Times for their work breaking AI's glass ceiling. These are the type of individuals and communities we need to be highlighting, and advocating for so the AI gap and funding gap close. Here’s what we can do: ✅ Support female founded AI startups with our dollars and attention ✅ Demand diverse investment committees at VC firms ✅ Create mentorship pipelines for women in technical roles ✅ Build tools that serve the women entering the digital economy The future of AI will be shaped by who gets to build it. Let's make sure that future includes all of us. What are you doing to close the gap? Starting a conversation about it on LinkedIn can make a difference.👇 💌 Follow me Valerie Chapman for the latest in AI, personal branding, and the future of work. #WomenInTech #FemaleFounders #VentureCapital #Diversity #AI #SanFrancisco #SiliconValley #Tech #Startups

2023: 71.9% male only founded #venturecapital. 1st half of 2024: 83%. (#BoyMath using PitchBook data) "When women are part of founding teams, they often receive less #equity than their co-founders who are men. The exception is teams of 2, where founder equity is often split equally. In teams with more than 2 #founders, co-founders often prorated equity, rather than splitting equally among founders. In these cases, women tend to receive less equity than their counterparts who are men. 2023: 76.2% of the earliest-stage #money—pre-seed SAFEs and convertible notes—went to men-only teams. This disparity is wider than in the previous 3 years. The data here speaks to a dual barrier for early-stage founders who are women: They face difficulty joining co-founding teams 72.7% of founding teams at this stage did not include any women or non-binary individuals and when women are present, the teams raise less money. 👀 These disparities among the newest of companies speak to a continued pipeline problem in the #startup ecosystem. The mid-stage and late-stage companies of tomorrow are being founded today, and they continue to be founded disproportionately by teams made up entirely of men." Carta "For doing the same #work, women are getting less reward and hold less relative #power in their own companies. The question is why." Jennifer Hyman (slightly tweaked) https://lnkd.in/eT5zK2Q7 "As VC investment tightens, risk aversion intensifies. This conservative climate pushes investors back towards established #networks, potentially amplifying existing gender biases in #funding decisions. Investors may also be shifting focus towards industries with fewer female founders." Geri Stengel #InspiredByYou #OnRepeat with this post: https://lnkd.in/eVGtQPMg H/T to Mark Gannott for tagging me! To truly shift the flow of capital, we have to shift the #narrative, #mindset, the players, the infrastructure, the #laws...the ecosystem. Systemschange work at this level, requires unprecedented #collaboration and a re-framing towards inclusive #leadership in #assetmanagement #wealthmanagement #banking & #finance #Together we must... Recognize #Talent as an asset class and begin to #InvestDifferent #investing #entrepreneurship #intersectionality #economy #innovation #strategy #diversity #inclusion #belonging #culture #cultureofmoney Fig1 Carta https://lnkd.in/evpFzYix Fig 2 PitchBook https://lnkd.in/eBVbN_35

Executive Summary: AdvancingVC w/Courtney Russell McCrea: From Kauffman Fellows to Empowering Emerging Managers at Recast Capital I interviewed Courtney Russell McCrea, co-founder and managing partner of Recast Capital, for an episode of our AdvancingVC podcast. With over two decades of venture capital and private equity experience, Courtney brings invaluable insights into funds investing and supporting diverse emerging managers. Here are some key takeaways from the pod 💡 🌱 Journey to Recast: Starting as one of the early Kauffman Fellows, Courtney's path led through Western Presidio and Weathergage Capital, where she invested in 100 venture funds and over $1B in commitments before co-founding Recast Capital in 2020 to focus exclusively on emerging managers. 🎯 Emerging Manager Focus: Courtney emphasized how early-stage funds (institutional funds 1-4) consistently appear in the top 10 performing venture funds, highlighting how hungry, scrappy emerging managers can drive outstanding returns when adequately selected. 💫 Three-Pillar Approach: Recast's platform includes a fund of funds investing directly in emerging managers, tuition-free educational programming, and a fiscally-sponsored nonprofit supporting female led venture funds with reducing their operating expenses by providing $100K grants. 🔄 Industry Evolution: Courtney shared fascinating insights about the bifurcation of venture capital. Multi-billion dollar platforms focus on safety and consistent returns, while emerging managers pursue outsized returns through focused strategies. 📚 Diverse Teams: Drawing from extensive experience, Courtney highlighted how diverse partnerships make better decisions and bring different networks and perspectives that drive outperformance in the competitive venture landscape. If you're interested in emerging managers, fund of funds investing, or creating a more diverse and inclusive VC ecosystem, then this episode has invaluable insights from one of the industry's most experienced investors. We have some fantastic episodes we'll be releasing in the future. Here are some of the guests in our future episodes: 🚀Ned McGuire of Wilshire 🚀Lyon Wong of V0 🚀Henry Ward of Carta 🚀Renata Aráuz-DeStefano of Pivotal Ventures ⚡Comment below or message me if you have feedback or suggestions for future guests!👇 #Podcast #VentureCapital #EmergingManagers #AdvancingVC

While overall #venturecapital funding has experienced a notable surge, the progress for female founders in the VC landscape remains slower. In 2022, companies exclusively founded by women secured a mere 2.1% of the total capital invested in US venture-backed startups. Despite this, there's a positive trajectory as funding for #femalefounded or co-founded firms has been on the rise, accompanied by the emergence of #womenledfunds and incubators. The data reflects a nuanced picture of #womeninVC over the past 15 years, exploring deal counts by state, industry, and stage, and showcasing noteworthy #femalefoundedstartups and firms. PitchBook

According to a 2019 Harvard University Kennedy School Women and Public Policy Program report, just 2.4% of the VC industry’s billions went to companies founded by women of any race or ethnicity on average over the past 30 years. Although Black women launch businesses at a higher rate than anyone else, in 2020, VC firms invested less than 0.35% of available money in companies founded by Black women, according to Crunchbase, a business information company. Furthermore, over 80% of VC firms don’t have even one Black investor on their team, not aligning with the demographics of our country and missing out on critical representation. To combat this, Black women 👩🏽 are launching a new generation of funds, and every few months, it seems, another barrier is broken. From the largest woman-founded firm to even more funds led by Black investors,  the “no limits” mantra is truer than ever before. The barrier to entry in venture has continued to fall – thanks to organizations and individuals. Slowly but surely, the old (white) boys club’s stronghold on the venture ecosystem is loosening. Meet 10 women driving this change on our UrbanGeekz story ➡️ https://lnkd.in/duWKcNgg