Deep Dive: Diversity in Venture Capital
The third edition of the VC Human Capital Survey, which is put together by a partnership of the National Venture Capital Association (NVCA), Venture Forward, and Deloitte, looked into the state of diversity, equity, and inclusion (DEI) in the VC industry. Its findings are based on the participation of 378 VC firms with an aggregate total of $256.4B in assets under management and nearly 5,000 employees.
Women comprised 45% of the overall VC workforce, a percentage that remained unchanged from 2016 and 2018 (see graph).
- Large firms had a higher percentage (49%) of female employees compared with medium-sized firms (42%) and small firms (32%).
The actual investment positions at those firms, however, saw lower representation (23%) for women.
- Still, this figure grew from 21% in 2018 and only 15% in 2016. The greatest improvement came from junior-level investment professional positions, which were held by white, non-Hispanic female employees at a rate of 18% in 2020, compared with just 12% in 2018.
While the firms’ investment partners grew more gender diverse (16% in 2020 compared with 14% in 2018), the changes were concentrated at very few firms.
- 65% of firms still do not have any female investment partners, only a small decrease from 68% in 2018. 75% of firms that did have a female partner only had one.
The gains for women at the investment partner-level came effectively only from white, non-Hispanic women.
- The representation of Black and Hispanic female employees among investment partners was 1% in 2020, down from 2% in 2018. Harlem Capital's managing partner Henri Pierre-Jacques stressed the particularly difficult position of Black women in venture capital in a discussion with Fortune.
3% of investment partners, regardless of gender, were Black. There was a small bump (up to 4%) for firms started in the last 10 years.
- The Black investment partners were concentrated in only 7% of all firms surveyed. Early- and seed-stage firms had 5% and 4% Black investment partners, respectively, while that figure drops to 1% for both multistage and growth-stage firms.
Asian/Pacific Islander employees comprised 15% of investment partner positions (see graph), unchanged from 2018. That figure jumps to 22% for firms headquartered in the West, and to 20% for multistage firms.
Hispanic employees comprised 7% of all employees in the survey sample, up from 5% in 2018.
- This progress was not seen among investment professionals at firms surveyed, where Hispanic employees accounted for 4% of positions, which was a decrease from 5% in 2018.
Hispanic employees accounted for only 4% of investment partners at the firms surveyed, entailing a slight bump from 3% in 2018 (see graph).
- 10% of firms reported having at least one Hispanic investment partner, also a slight increase from 9% in 2018.
Strategies to Foster Diversity
41% of VC firms said that one of their LPs requested DEI details from their organization over the past 12 months, a modest increase from 36% in 2018.
- Firms have acknowledged that their lack of diversity calls for deliberate action. In 2020, 43% of firms reported having a diversity strategy, an increase from 35% in 2018 and 24% in 2016. Similarly, 41% said they had an inclusion strategy, compared with 31% in 2018 and 17% in 2016.
- In 2020, these attempts were most concentrated within formal programs aimed at recruitment (33%) and hiring (33%), while the percentage of firms with informal programs for those same categories was much higher at 74%.
Suggestions to Promote Diversity
- The report urges firms to be more vigilant in collecting data on diversity and notes that 25% do not yet do this. Indeed, 41% of firms reported having an inclusion strategy, but only 26% said they conduct surveys of their employees to assess inclusion.
- Firms that have a diversity and inclusion strategy report that 25% of investment partners are women compared with 20% at firms without a strategy.
- Further improvements could be achieved if firms continue to open up their hiring processes to outside candidates.
- For senior investment positions, 46% of VC firms said they sought external candidates always or most of the time (up from 35% in 2018), while 65% said the same about junior investment positions (up from 49% in 2018). External hires for investment professionals tend to be more diverse (see graph).
- Such efforts require dedicated personnel. There was positive momentum here: 50% of firms said they have either a staff person or a team with the responsibility of advocating for diversity, a sharp increase from 34% in 2018 and 16% in 2016.
- These measures should help combat the prevalence of subjective bias in hires and promotions, which continue to offer a bulwark against diversification efforts, as Maryam Haque, executive director of Venture Forward, and Bobby Franklin, CEO of the National Venture Capital Association, noted in a TechCrunch article about the survey.
Union Square Ventures’ Fred Wilson made similar recommendations in the face of the disappointing findings from a Bolster survey looking into diversity on companies’ boards of directors.
- Overall, only 21% of board members are non-white, while only 10% of investor board seats are filled by women (see graph). As that figure improves for independent directors, Wilson advocates for companies opening up seats for independent directors from the beginning, and using them to focus on diverse representation.
- Companies, according to Wilson, should prioritize such initiatives, and should furthermore go so far as to ask investor directors to become observers to make room for independent diverse candidates.
Today's Funding 💸
- ContentCal (London, U.K.), marketing technology platform: $6.2M A from Fuel Ventures, Guinness Asset Management.
- DanAds (Stockholm, Sweden), self-serve advertising tech: $5M from undisclosed sources.
- LiveEO (Berlin, Germany), large infrastructure network monitoring via satellites: $6.3M A led by btov Partners, Helen Ventures, participation from DvH Ventures, Motu Ventures, et al.
- Affinia Therapeutics (Waltham, Mass.), gene therapies for rare and non-rare diseases: $110M B led by EcoR1 Capital, Farallon Capital Management, participation from Avidity Partners, Casdin Capital, GV, Octagon Capital, Perceptive Advisors, et al.
- Mogrify (Cambridge, U.K.), immuno-oncology and ophthalmology programs: $17M A-Extension from Parkwalk Advisors, et al. The new funds bring the round's total to $33M.
- Artio Medical (Prairie Village, Kan.), innovative products for the peripheral vascular, neurovascular, and structural heart markets: $12M A led by Nathaniel and Sarah Hagedorn.
- Alife Health (San Francisco, Calif.), data-based platform for fertility treatment: $9.5M Seed led by Lux Capital, participation from Amplo, IA Ventures, Springbank Collective.
- Cumulus Neurosciences (Belfast, U.K.), clinical trial data and AI-powered insights platform: $8.3M led by Dementia Discovery Fund.
- The Public Health Company (Goleta, Calif.), platform to protect businesses and communities from infectious disease: $8M Seed from Venrock, Verily, Sweat Equity Ventures.
- RazorMetrics (Austin, Texas), platform to lower pharmacy costs for at-risk employers: $6M A led by Sopris Capital, participation from Joel Trammel, Jonathan Weiner.
- Movia Robotics (Bristol, Conn.), robotics systems to help children with autism: $5M Seed from ZFC Capital Partners II.
- Vantis (Munich, Germany), mobile app for heart treatment: $4.6M led by btov Partners, firstminute capital.
- Anodyne Nanotech (Boston, Mass.), transdermal forms of high-value drugs: $4.2M Seed from Velocity Partners, Relativity Healthcare Fund, Big Pi Ventures.
- ResBiotic (Birmingham, Ala.), medical food that targets the gut-lung axis: $3M Seed led by Timberline Holdings.
- HeartBeat.bio (Vienna, Austria), molecular biology platform: $1.8M Seed from red-stars.com data AG.
- Qredo (London, U.K.), decentralized digital asset management infrastructure: $11M Seed from Amnis Ventures, Artus, Borderless Capital, 3commas, Wintermute, Celsius, CMS Holdings, Connect.Capital, et al.
- Hashflow (Santa Monica, Calif.), decentralized exchange connecting DeFi traders with top crypto market makers: $3.2M Seed led by Dragonfly Capital, Electric Capital, participation from IDEO Ventures, Alameda Research, Metastable, Galaxy Digital, Unanimous Capital, et al.
- Headset (Seattle, Wash.), data and analytics platform for the cannabis industry: $1.825M led by Silverleaf Venture Partners, participation from WGD Capital, Poseidon.
- Catch Co. (Chicago, Ill.), fishing brand, content, and commerce platform: $38M B led by True Ventures, participation from TechNexus.
- Barkyn (Porto, Portugal), subscription service for pets with healthy food with tele-vet services: $9.6M A led by Five Seasons Ventures.
- Sherpa (Toronto, Canada), international travel booking platform: $8.5M led by Narrative Fund, True Ventures.
- Sesamy (Stockholm, Sweden), online device-agnostic audiobook/ebook purchasing platform: $4.8M Seed fromGP Bullhound, Edastra, Peter Dahlberg.
- Rapchat (New York, N.Y.), platform to create music tracks with crowdsourced beats: $2.3M Seed from Sony Music Entertainment, Adjacent.
- Mux (San Francisco, Calif.), video platform for developers with APIs for live and on-demand video: $105M D led by Coatue, participation from Accel, Andreessen Horowitz, Cobalt, Dragoneer.
- SafetyCulture (Sydney, Australia), global safety operations platform for workplace improvement: $73M led by Insight Partners, participation from Tiger Global, Index Ventures, Blackbird.
- BoostUp.ai (Santa Clara, Calif.), integrated revenue intelligence and operations platform: $6M led by Canaan Partners, participation from Emergent Ventures, BGV Ventures.
- Sorbet (U.S./Israel), platform to mitigate financial risks as employees accrue paid time off: $6M Seed led by Viola Ventures, participation by Global Founders Capital, Meron Capital.
- Prismatic (Sioux Falls, S.D.), embedded integration platform for B2B software companies: $3.25M Seed from Falls Angel Fund II.
- interviewIA (Denver, Colo.), job interview workflow platform to emphasize equitable and efficient hiring: $2M Seed led by The Colorado Impact Fund, participation from FirstMile Ventures, Rockies Venture Club, Outbound Capital, Dasein Capital, Stout Street Capital, Service Provider Capital.
- Heirlume (Toronto, Canada), trademark registration platform for small businesses: $1.38M Seed from Backbone Angels, Future Capital collective, Angels of Many, MaRS IAF, et al.
- Wealthsimple (Toronto, Canada), consumer fintech app with stock trading, crypto-asset sales, and P2P money transfers: $610M (CAD$750M) led by Meritech, Greylock, participation from Inovia, Sagard and Redpoint, Two Sigma Ventures, TCV, Drake, Ryan Reynolds, Michael J. Fox. The company was valued at $4B.
- Bux (Amsterdam, Netherlands), neo-broker: $80M led by Prosus Ventures, Tencent, participation from ABN Amro Ventures, Citius, Optiver, Endeit Capital, et al.
- Bibit (Indonesia), robo-advisor app for stock investing: $65M led by Sequoia Capital India, participation from Prosus Ventures, Tencent, Harvard Management Company, AC Ventures, East Ventures.
- Baufi24 (Hamburg, Germany), estate finance broker for home finance: $8.05M A from BtoV, Helvetia Venture Fund.
- Fortú (Miami, Fla.), digital bank account focused on Latino and Hispanic U.S. residents: $5M Seed led by Valar Ventures.
- Hangry (Indonesia), cloud kitchen startup: $13M A led by Alpha JWC Ventures, participation from Atlas Pacific Capital, Salt Ventures, Heyokha Brothers.
- Prescient (Charlotte, N.C.), off-site manufacturing to enable construction: $190M led by Eldridge, JE Dunn.
- Solid Power (Lousiville, Colo.), producer of solid-state batteries for electric vehicles: $130M B from BMW Group, Ford Motor Company, Volta Energy Technologies.
- Solidia Technologies (Piscataway, N.J.), low-carbon cement and concrete producer: $78M led by Imperative Ventures, Zero Carbon Partners, participation from Canada Pension Plan Investment Board, Breakthrough Energy Ventures, Prelude Ventures, PIVA Capital, et al.
- Emvolon (Boston, Mass.), distributed chemical production from resources that otherwise would be wasted: $1.5M Seed led by The Engine.
- Seven Senders (Berlin, Germany), delivery platform for parcel shipping: $40M C led by Digital+ Partners, participation from btov.
- Avenue 8 (San Francisco, Calif.), mobile-first residential real estate brokerage: $14M A led by Threshold Ventures, Craft Ventures, participation from Zigg Capital, Good Friends.
- Path Robotics (Columbus, Ohio), autonomous robotic welding system: $56M B led by Addition, participation from Drive Capital, Basis Set, Lemnos Lab.
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