| What the numbers say: Findings from the recent VC Human Capital survey conducted by Venture Forward, NVCA, and Deloitte show that the VC industry has made progress in increasing gender, racial, and ethnic diversity since 2016. The survey shows that 26% of investment professionals across the 315 U.S.-based VC firms surveyed were females. Female representation had steadily improved from 15% in 2016 to 23% in 2020. Why it matters: One study referenced by the report demonstrated a 5.8% increase in success rates in diverse investing teams compared to homogenous teams. Another study showed a 1.5% increase in overall fund returns and a 9.7% increase in profitable exits in VC firms that increased their female partners by 10%. Having diverse teams in VC firms helps increase the number of investments in startups led by underrepresented founders. What happened: VC firms have an average of 20 employees and rely mostly on personal networks to fill open positions. This poses a challenge to increasing diversity in organizations.
Where to see the impact: 46% of surveyed firms had a diversity strategy in place, whereas 44% had an inclusion strategy. Setting DEI goals, actively seeking candidates outside personal networks, and developing objective metrics for promotion are a few of the recommendations provided by the report to increase diversity in VC firms. |
