For the past several years, women have played a key role in tech innovation. Why is that so? Well, their creative thinking and unwavering resolve were molded through the challenges they’ve faced in the world of venture and entrepreneurship through the years.
Yes, gender diversity is definitely a current cross-industry trend. However, in the world of venture capital and startup development, female leadership is a rarity. And all of the top research outlets claim that women currently make up less than 10% of tech entrepreneurs.
On the bright side, female participation and success rates are spiking year over year. Read on to find out about the role of women in VC and entrepreneurship, how it changed throughout the years, and the influence women have on the VC industry.
Status of women in the venture: before and now
The US venture ecosystem dates back to its inception in 1957 and was conceived as an open, unconventional system meant to support innovative business ideas.
However, the radical approach was stifled by the lack of true diversity. Particularly, women were always the most restrained among the demographics of VC and entrepreneurship.
According to a TechCrunch report, in 2016 only 38% of firms were helmed by women. At the same time, a research paper from Harvard’s Business School found that, at the time, over 80% of VC firms never hired a female employee.
Funding for women was nearly nonexistent back then and most early-stage female-led startups had to bootstrap their way through to develop their products.
Fast forward to the present day, Deloitte reported that in 2022 women made up 47% of the total workforce in VC, slightly increasing from the 45% they recorded for 2016, 2018, and 2020. As for investment partners, in 2022 the number jumped from 16% to 19%.
Funding of women-led startups has risen significantly over the years but still remains frail compared to the massive numbers of male-funded investment capital and deal count.
Pitchbook gives a great rundown comparison of both metrics:
Geographically, women-helmed businesses are spread rather evenly throughout the US. However, Deloitte noticed that females hold a more significant portion of the workforce at companies headquartered in the West (49%), the Midwest (45%) and the Northeast (46%). The South is less representative of women, but also considerable (39%).
As for the investment practices, Pitchbook illustrates which of the states are current hotspots for women-helmed startup funding:
Pitchbook also illustrates how funding for female-helmed startups changed throughout the years, quarter by quarter, from 2008 to 2023. As we can see, the numbers are growing, save for the recession of 2022:
At the same time, as we compare these figures to the billions of dollars invested in male-led startups, it’s clear that the VC world is still dominated by men.
And it shouldn’t come as a surprise. Deloitte points out that women represent a distinct minority of investment professionals with senior decision-making responsibilities:
25% (up from 24% in 2020): experts in originating deals
20% (up from 21% in 2020): board members of portfolio companies
20% (down from 21% in 2020): members of the investment committee
17% (down from 18% in 2020): owners of the management companies.
So we can clearly see the VC and enterprise world getting much warmer for women as gender inclusivity becomes institutionalized all around. However, it’s still a long way to go for women having the same opportunities as men.
Obstacles for women entrepreneurs and VCs & how to overcome them
Unfortunately, businesses founded by women find more obstacles on their way to success compared to those founded by men. Among the blockades set up for women are difficulty in securing capital, gender bias in the business community, and limited networking opportunities.
On the VC horizon, less than 70% of firms look externally for hires, while most others rely solely on their social networks. This situation creates another gap when female candidates, hired externally, are at a serious disadvantage, with a dire success rate of less than 50%.
Despite these challenges, many women-owned businesses find their way around pitfalls and thrive, making significant contributions to tech innovation.
Expectations are much higher
Women have to prove themselves much more than men. Leslie Feinzaig, founder and managing director of the Graham & Walker venture fund, says:
We tend to want to underpromise underpromise, and over-deliver over deliver. Venture capital is not the place to do that.
SO:
Don’t be scared to pitch big.
As we’ve seen, just 2% of venture capital goes to women-led companies. During a first pitch, when women present their ideas, venture capitalists tend to focus more on the risks, instead of expressing genuine enthusiasm.
The expectations are much higher for women, and investors need solid proof, or else they refuse to invest. So how do you survive in this harsh environment? Leslie provides the key pillars of entrepreneurship for women:
Make sure to establish a formidable network well in advance and keep in mind not to approach it purely for transactional purposes.
After building a network, seize every opportunity to demonstrate your execution skills in order to attract potential investors.
Don’t shy away from sharing regular investor updates and highlighting achievements, like successful product launches and positive press coverage.
Approach fundraising as you would a tight sales management process, maintaining multiple conversations at the same time.
The barriers to securing funding led women to have more grit and a stronger foundation. They’ve also found a genuine passion for innovation and pushing boundaries, developing concepts that propel the industry into the future.
Continued bias towards women
According to a recent survey conducted by Harvard Business Review, women who receive early-stage funding from female VCs are much more likely to face troubles in securing further investment rounds.
The continued bias toward women is all-encompassing and spreads beyond just one particular facet.
For instance, Helen Wang, the CEO and founder of a Seattle-based after-school activities platform 6Crickets, says despite being obviously gifted, having the experience and technical skills, it was difficult for her to raise venture capital for her startup:
Investors bet on people, not just their immediate ideas. Evaluating founders can be subjective and influenced by subconscious biases. A lot of things are not fair, but we just have to be resilient.
Helen Wang has a PhD in computer science from the University of California, Berkeley. Before betting on her company, she held the principal researcher and manager position at Microsoft for close to 15 years.
Defying all odds, 6Crickets went on to raise thousands from angel investors alongside capital provided by friends and family. The company managed to collect an impressive tally of $2.5 million to date.
Hope for new beginnings
In the midst of all the hardships, sometimes projects emerge that light up the venture scene with a bright glimmer of hope for women. Isabella Mandis’ “Girls Into VC”, a community that fosters mentorship opportunities and guidance for young women entrepreneurs, is a great example.
Isabella Mandis is a rising star at Harvard’s School of Engineering and Applied Sciences. She discovered the venture world through her friend at Stanford and fell in love with it.
In the pursuit of learning more about that world, she started joining clubs like The MBA Fund and Venture Capital Group. It was then that Isabella realized how badly the venture capital industry was lacking in female representation.
I loved working for female founders when I was younger, and I’m really passionate about supporting them. I wanted to build a community around women, which didn’t really exist.
Mandis dedicated her winter break to creating a website and reaching out to numerous women (students, established VCs, and entrepreneurs) about the possibility of joining.
And so, the community now has over 2,000 members. “Girls Into VC” produces podcasts, blog posts, newsletters, social media, mentorship, ambassador, and scout programs to give aspiring women in venture hands-on experiences.
“Girls Into VC” has led to several of its members securing internships at VC funds and one of the founders secured their first investment. Isabella has ambitious plans to broaden the club's initiatives this year, with the exciting prospect of organizing an in-person conference.
Such initiatives bring hope to the women's community of the venture world.
Inspirations: Successful women leaders and their influence in VC & entrepreneurship
Female business leaders are still a minority compared to men when it comes to technological startups. However, every female individual in the community inspires future generations to break boundaries and fight tooth and nail for their place in the industry. The same goes for women VCs.
What’s more, firms with a higher proportion of women on their boards are inclined to invest more in innovation. A recent study found that a mere 10% surge in female representation on these boards resulted in a notable 7% augmentation in innovational patents.
But that’s not all that women bring to the table. It’s been proven that women also demonstrate superior leadership values.
A national survey by the Pew Research Center ranked 2,250 adult women better than or equal to men in seven of the eight primary leadership traits assessed throughout their survey. That being said, 38% of respondents from the survey view women as smarter, more compassionate, outgoing, and creative.
Some would ask, “But won’t having a woman leader be a detriment to overall efficiency?” Turns out it’s the opposite! A report by Morgan Stanley Capital International shows that having women on board boosts productivity:
So who are these brave women-founders and VCs, making a difference? Let’s take a look at some of the top female leaders in the industry.
Jess Lee – VC partner at Sequoia Capital
Jess Lee’s Polyvore startup was acquired by Yahoo! for $230 million back in 2015. Since then, she’s been a proud member of the VC community, joining Sequoia Capital as an investing partner in 2016. Accomplishing this, Jess made history as the first senior female US investor in the firm's 44-year existence.
As part of Sequoia Capital’s team, Jess led many notable funding campaigns, including investment in Embark Trucks, Pendulum, Wonolo, and Maven. But being the voice of women in the VC industry is not all for Jess.
She frequently speaks and gives interviews to share her experience with young founders and aspiring female VCs. One of her discussions was at The Commonwealth Club of California, where she plunged into the topic of women in venture capital and tech:
Jess is also the co-founder of All Raise, a community aimed to cultivate an innovation culture for women and non-binary individuals where they not only have a prominent presence but play a leading role in developing and financing groundbreaking products.
Melanie Perkins – co-founder and CEO of Canva
Melanie Perkins was the youngest woman CEO to develop a unicorn tech startup, which is none other than the “coolest tech business of 2015”, a visual platform so loved by designers and regular users alike – Canva.
Her well-known inspirational speech at the Sunrise Conference embodies the tale many female entrepreneurs can relate to. It’s a story of hard work, perseverance, and contemplating failure:
Melanie is certain that the entrepreneur’s insecurities come from comparing their qualities and all the wins and losses during their startup journey with the highlights of successful, established businesses.
She thinks founders should never discourage themselves, especially young women. One of her key messages to aspiring founders is:
Young IT girls should know that they can realize their ideas, through hardship and constant attempts.
Dana Settle – VC co-founder and managing partner of Greycroft
Dana Settle is regarded as one of the most influential venture capitalists in the world. She took part in many notable investments, including Pulse (acquired by LinkedIn), Maker Studios (acquired by Disney), and Trunk Club (acquired by Nordstrom).
She started Graycroft together with Jan Sigalow and Alan Patricof, with a hefty bag of venture experience behind her back: working hard as a venture partner at Mayfield and then as a partner at VSP Capital.
Since its inception back in 2006, Dana’s prime creation, Greycroft has made 776 investments, raised 14 funds, and made 127 exits, according to Crunchbase. It’s a definite force that drives innovation and promotes gender inclusivity at the same time.
Recently, Dana had an interesting conversation with Gwyneth Paltrow about the entrepreneur’s journey in today’s world at the Venture Houston Convention:
As a veteran of the VC world, Dana gives words of wisdom for aspiring female leaders:
You have to reinvent yourself all the time. You have to be innovative and entrepreneurial even within the companies you work for.
Dana Settle is constantly involved in female mentorship and is part of the All Raise community created by Jess Lee.
Odunayo Eweniyi – founder of PiggyVest and FirstCheck Africa
Odunayo Eweniyi has entrepreneurship ingrained into her blood. Being only 24 years old, she created PiggyVest, the first online application for personal savings and investment in West Africa. Currently, it’s one of the most successful FinTech startups in the area.
Another one of her endeavors, FirstCheck Africa, an angel fund and investor community led by women was founded in 2021. It’s aimed at investing in women-led startups from the very beginning, in the idea or seed stages, staying alongside throughout their journey and helping them develop their products.
Odunayo has come a long way, building a tech startup in such a region as Africa, and she was eager to share her struggles and experiences during a candid interview with Big Tech This Week:
In an interview with Techcabal, Odunayo credits her success to her addiction to learning and her perseverance:
I’ll learn anything I need to learn as long as it moves the needle. That’s just how it is. If I need to be X company’s COO, best believe I will learn everything I need to be that company’s COO. I don’t have a lot of life philosophies, but one of them is to do your absolute best in anything you’re doing. Anything at all.
Sarah Hawley – serial entrepreneur and founder of Growmotely
Sarah Hawley is a serial entrepreneur and she started her star-blazed founder journey with Grow My Team, a recruiting company for hiring and integrating qualified remote talent worldwide. Since then she went on to found 8 companies in total!
Her latest creation is Growmotely (launched in 2020), the world’s first all-in-one global platform for sourcing, growing, and managing remote teams. A timely decision to go back to her roots, since remote work is quite a lively market to target at the moment.
In a recent podcast on how to form a business with a remote team, Sarah gave an interesting perspective on leadership styles and qualities, as well as how to balance entrepreneurship with being a mother:
Sarah is also driven to provide opportunities and empower young women who come from a stark background and aim to follow in her footsteps:
I came from a broken home, barely graduated high school, and due to poor grades, wasn’t accepted into any university or college programs as a school leaver.
Sarah’s track record is living proof you don’t need to be Ivy League material or a rockstar to achieve success and leave your mark in this world.
Conclusion
Women entrepreneurs in tech and VCs are still not as dominant as men, but they play a very important role. Not only are they amazing role models for young girls with a founder’s mindset, but they are also the driving force behind true innovation.
Running a startup is not an easy job. Not even for a man. It requires hard work, perseverance, sacrifice, and costs you many sleepless nights. Indeed, women face greater obstacles on their way to success, but the path is open for them to conquer.
Our Go Global World community welcomes young women founders along with VCs to join a platform where we foster communication and help build strong relationships, so finding capital for founders and acquiring top-of-the-list portfolio companies for investors becomes a seamless process.
Our article is meant as an inspiration for young women to push on and continue breaking boundaries on the way to technological advancement.