More women entrepreneurs winning venture capital, but gender gap persists

Women venture-capital partners are becoming scarcer even as more women entrepreneurs are winning venture cash, according to a report from Babson College.

The report, “Women Entrepreneurs 2014: Bridging the Gap in Venture Capital,” paints a picture of a start-up environment that is making strides in some areas, such as backing female entrepreneurs, even as the percentage of female venture capitalists slips.
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About 15 percent of U.S. companies receiving venture-capital investment, meaning cash injections from venture firms in a business’s early days, included at least one woman on the executive team, according to the report. That compares with just 5 percent in 1999.

But just under 3 percent of companies receiving venture cash had female chief executive officers, according to the report.

At venture-capital firms globally, about 6 percent of partners were women, compared with 10 percent in 1999, the study showed. The numbers jibe with a Reuters study last month that showed that declining percentages of venture capitalists are women and that many top firms have no female partners at all.

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Many female entrepreneurs say that buttressing the numbers of women venture capitalists is key to advancing the numbers of female entrepreneurs.

The Babson report seemingly backs that up, with women venture capitalists more than twice as likely as men to invest in start-ups with a woman on the management team. Larger, more established venture firms were also more likely to do so.

The report comes at a time when difficulties facing women in technology have hit the headlines.

Examples include statistics showing low numbers of women at companies such as Facebook Inc and Google Inc; a lawsuit by a female founder of dating app Tinder alleging she was pushed aside; and three suits brought by female employees at venture firms alleging harassment or discrimination, or sometimes both.

The report’s authors recommend steps such as encouraging the investors who allocate their money to venture-capital funds to put pressure on venture firms to invest in more start-ups with women on the executive teams. Investors in venture-capital funds are typically endowments, pensions and the like.

Around the United States, women entrepreneurs are majority owners of an estimated 10 million businesses, or 36 percent of all businesses, the report says, citing data from the Small Business Administration.

The authors studied almost 7,000 U.S. companies that received venture funding from 2011 to 2013. For the statistics on percentages of female partners at venture-capital firms, they studied 2,234 firms in the United States and internationally.

Reuters