Laura Behrens Wu, Chief Executive Officer at Shippo, a shipping and data company, voiced a sobering concern: Are female venture capitalists harder on female founders than their male counterparts?
In a Bloomberg article on May 2017, Behrens, who founded her company roughly three years ago, says that female venture capitalists are harder on female founders, claiming, “They do harder due diligence, making sure they're not going to embarrass themselves."
Behrens added: “Maybe they have a chip on their shoulders?" She clearly empathizes with women venture capitalists, understanding firsthand what it's like to feel like they must constantly prove themselves.
The bulk of her investors were male, supplying $7 million from Jeff Clavier at SoftTech VC and Albert Wenger from Union Square Ventures. She's also quick to note that while she has some money from female VCs, they're from the earlier seed stage, when investors typically offer smaller dollar amounts, with minimal commitment.
A new Bloomberg analysis shows that this isn't quite accurate, at least from the top 17 venture firms. Those with senior women partners backed companies founded or co-founded by women at roughly the same rate as firms with no senior female partners.
The group of 17 top-ranked venture firms is based on $1 billion-plus public offerings or acquisitions over the last five years for U.S.-based portfolio companies invested in at early stages, according to data provided by CB Insights.
The traditional school of thought had been that the lack of funding for women at Silicon Valley was largely due to a lack of female VCs, which would be concerning because of a lack of equality. This would mean a lack of diversity, which could lead to companies losing out on attracting the best entrepreneurs and businesses.
Some of the most female-founder-friendly firms have no senior female partners, and in some cases, no female partners at all. When adjusted to compare the numbers of women co-founders to the number of senior partners at any given firm, Felicis, Lowercase, Index Ventures and First Round Capital had the highest proportion of support for women founders. None of these have senior women investing partners, although Felicis Ventures employed one – Renata Quintini, until she departed for Lux Capital earlier this year.
It should be noted, however, that adding female partners to venture firms has not resulted in an increase in funding for female-founded startups, according to a report published this June 1, 2017.The top 10 private companies founded or co-founded by women have not raised any money from a female VC in its Series A or Series B rounds. The analysis found that the top firms with all-male senior investing partners backed proportionately more women-founded startups.
The firms with the most investments in companies with female founders were New Enterprise Associates, Founders Fund, Andreessen Horowitz (A16Z), and Sequoia Capital. All but 16Z have at least one senior female-investing partner.
Firms with no senior female-investing partners who back proportionately more female founders were: Felicis Ventures, Lowercase Capital, Index Ventures and First Round Capital. Again, Felicis had a female investor on its team until earlier this year.
Although many venture firms are working to increase diversity, many have said that their efforts are not necessarily about increasing diversity of the founders. They do acknowledge that ultimately, more diversity among decision-makers brings better results.
Jess Lee, the former CEO and co-founder of the online fashion startup Polyvore, said that her gender gives her a competitive advantage. “I have an advantage in understanding the female consumer," Lee claims. She joined Sequoia Capital as the first U.S.-based female investment partner in the firm's 44-year history.
Sequoia had been trying to convince Lee to join since 2012, before she sold her Mountain View-based shopping site for fashion and home decor to Yahoo (NASDAQ:YHOO) for $230 million in 2015.
Sequoia has been one of the most successful venture firms in the world, backing a number of tech mainstays such as Apple, Google, Oracle, YouTube, PayPal and Yahoo in their early days. More recent hits include WhatsApp and Stripe.
Lee, 34, is its 11th partner and one of the youngest with the firm. Although Sequoia has had five female investors with its funds in India and China, Lee is the first U.S.-based female investor. A lack of diversity has been a growing concern in the VC industry, reaching its apex with Ellen Pao's unsuccessful bias suit against Kleiner Perkins Caufield & Byers in 2015.
PitchBook Data estimates that just six percent of the senior investors at VC firms were women in 2016, up incrementally from the five percent in 2010.
WRITTEN BY
Stephen Doyle