October 27, 2020
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Venture Capital Needs More Women

Data Shows that Women Improve All Aspects of Diversity

“For top-performing LPs, lack of diversity and inclusion is a risk factor,” says Lisa Calhoun, General Partner of Valor Ventures.

She continues, “Nobody argues for financial control or data access rights today. It’s taken for granted that you get detailed and accurate reports from your GPs. We are starting to see the top LPs ask for inclusion reporting as well – the progressive LPs know that inclusion leads to better financial outcomes.”

The Kauffman Fellows Research Center (KFRC) has previously explored multiple facets of startup diversity, including geography, ethnicity, education, and gender.

We found that gender-inclusive founding teams perform better, startups with 1 female founder hire up to 2.5x more women, and women venture capitalists invest in up to 2x more female founders.

Moreover, our research has shown that there is not a pipeline problem, referring to a lack of eligible employees or founders. In particular, that report by the KFRC found that U.S. startups need 6.7x more Latinx and 5.6x more Black executives to match the current working-age U.S. demographics.

The reasons above – and a whole host of others – should be obvious reasons to support more women as they build companies and break into venture capital. But we are not seeing the industry change fast enough.

Our new position is the most direct we have taken: Venture capital needs more women.

This paper explores how women improve all aspects of diversity, both within startups and at venture capital firms.


  • All-Male Founding Team: A startup with only male founders.
  • Gender Diverse Founding Team: A startup with at least one female founder.
  • All-Male Executive Team: A startup with only male C-level executives.
  • Gender Diverse Executive Team: A startup with at least one female C-level executive.
  • Male VC Partner: A male venture capital partner with the ability to write checks.
  • Female VC Partner: A female venture capital partner with the ability to write checks.

Women Improve All Aspects of Diversity

Gender Diversity

First, we explore the impact that female founders have on gender diversity within startups.

In a previous report, we looked at All Male Founding Teams compared to founding teams with at least one female founder and All Male Executive Teams compared to executive teams with at least one female executive.

We found that many teams only have a single woman onboard, so they count as diverse but they do not have true diversity. In our current analysis, we looked at what compromised the majority of executive gender.

Chart 1 shows that Gender Diverse Founding Teams have truly diverse executive teams, including scenarios where the majority of executives are female.

The difference between All Male Founding Teams and Gender Diverse Founding Teams is a massive 15-18x delta.

Chart 1: In technology, business, and healthcare, the majority of teams analyzed had more female executives than male executives.

Ethnic Diversity

Women also contribute to ethnic diversity at all levels of the organization (Chart 2).

Gender-diverse founding teams have more ethnically diverse employees (24% compared to 19%), executives (24% compared to 21%), and boards (14% compared to 13%).

Chart 2: Having women on the founding team increases the ethnic diversity of the employees, executive suite, and board of directors.

Women in VC

More women are needed in investing roles at venture capital firms as well. As shown in Chart 3, there are large differences in the composition of the teams that get funded.

At the Seed stage, Female VC Partners back almost twice as many Gender Diverse Founding Teams than Male VC Partners (32% of all Seed deals versus 17%). This trend continues for Series A, where the delta is 25% compared to 12%.

Chart 3: Women VC Partners back more Gender Diverse Founding Teams, particularly at the Seed and Series A stage.

Conclusion & Discussion

As an industry, venture capital invests in innovation. But the VC model has been broken for decades. We are long overdue for a change.

Our position is clear: Venture capital needs more women. For the good of consumers and startups, we need to create opportunities for women to start and scale companies.

“VCs write checks into companies, then turn around and have a hand in hiring key executives,” said Lisa Calhoun. “How dare you throw your hands up and say that you cannot help women or underrepresented minorities.”