Breaking down Venture Capital’s gender and diversity barriers

Published On : 04/22/2022

By Vanessa Stock, Co-Founder & Chief People Officer, Pitch

VC investment has a serious gender problem. According to Bloomberg, female founders secured only 2.3% of venture capital in the U.S. in 2021, the smallest share since 2016 and the second straight year that the percentage has declined. In Europe, that figure is even lower, at just 1.1%. These sobering statistics are a clear sign that recent efforts to diversify the male-dominated VC world are struggling.

We must reverse this trend. Female and non-binary founders often have unique perspectives that translate to proven business advantages in a wide range of sectors and industries. Not only do they personally experience and understand problems that affect a huge number of people globally, but they can solve these problems in ways other business leaders can’t. VCs are overlooking the single biggest opportunity to drive greater returns on their investments, and it’s high time this changed.

An ongoing uphill struggle

The sad fact is that the process and culture of fundraising, as it stands today, disproportionately favours men. According to a recent report by BVCA, not only are 90% of senior investment roles in VC firms held by men, but in 12% of firms, every single member of the investment team is male, a figure that rises to 25% amongst firms with assets under management (AUM) of less than £100 million.

Evidence suggests that gender bias influences VCs at each stage of the pitching process. Female founders routinely report that they feel held to a higher level of scrutiny than their male counterparts, and often endure sexist lines of questioning from VCs who often appear to have made gut-feel assumptions about them early doors. 

This is compounded by the fact that many female-founders are working on products, services, and solutions that are aimed at addressing the needs and issues of underrepresented markets – markets that male VCs may have very little awareness of and can consequently struggle to see the value in from an investment perspective.

These dynamics negatively impact the financial success of female founders and the investors that back them. When we don’t sufficiently fund female founders, they’re inhibited from tackling the big challenges they’ve committed their lives to, and as a result, we all lose.

Seeing is believing

The good news is that despite all this, female and non-binary founders are persevering against the odds and beating them. They’ve proven they can deliver market-leading returns, and more importantly, they’re on a mission to build a brighter future for all of us. 

Among the 80+ respondents to our call was Iris Ten Teije, founder of Koia, an innovative platform that enables users to buy fractions of non-traditional assets, such as watches and whisky via NFTs, all completely hassle free. Koia recently raised $1.4m for its pre-seed round with investors from Seedcamp, RTP Global, and Portfolio Ventures. 

We were also thrilled to showcase May Habib, an expert in natural language processing, AI language generation, and the evolving ways people use language online. She’s the CEO and co-founder of Writer, an AI writing assistant for teams, and her team closed a $21m Series A round in November of last year.

Building towards a more diverse future

Investors must make a conscious effort to invest in people who don’t fit the pervasive stereotype of what an “entrepreneur” looks like. 

Why? Because they risk missing out on great ideas if they don’t. Diverse founders bring different skill sets and perspectives to the table. They think differently, and may understand customer needs in a way that others don’t. 

We’re calling on the gatekeepers of capital to open the doors not just to women, but for people of all classes, races, and genders. It’s time we changed the fundraising odds — not just as a matter of fairness, but in the spirit of progress.

Click here to see the full gallery of pitch decks from female and non-binary founded start-ups, curated by Pitch, and prepare to be inspired.

Uma Rajagopal

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.