The report "Women in UK Venture Capital“ covers the gender breakdown of Venture Capital (VC) funds that receive Limited Partners (LP) capital was published by the venture firm Ada Ventures and supported by Diversity VC and Google Cloud. It’s a first-of-its-kind report and examines the gender breakdown of where Limited Partner Capital has been invested in recent years.
The report reveals that the volume of capital raised by all-men-owned VC funds between 2017-2023 in the UK is around ten times higher than the one raised by all-women-owned VC funds.
The report examined data from publicly available data sources such as fund websites, LinkedIn profiles, and Company House records, and covered 156 UK-domiciled VC funds which had held a first close raising over £6.6 billion between 2017 and 2023.
By analysing these VC funds, the report reveals, unfortunately, the expected facts:
Men are more represented in the total VC workforce than women, especially when it comes to the higher roles within the companies.
All-men-owned management companies raised around 8 times more funds, and around 10.3 times more capital between 2017 and 2023 compared to all-women-owned.
Only 17.7 percent of women (23) have significant ownership in management companies that raised a fund between 2017 – 2023.
Even though the UK and European VC market is maturing, it is clear that there is still a gender fund gap. According to the IDC European Women in VC Study (2022), out of 303 European venture funds and 122 VC respondents of funds over €25 million assets under management, 85 percent of VC General partners were men, while just 15 percent were women.
The 2023 report on European Women in VC shows that the financial performance of European VC funds increases in line with the higher representation of women in senior management teams. And, having in mind these facts, this report also highlights that mixed and all-women-owned funds also consistently outperform all-men-owned funds at getting a higher percentage of women represented at middle and senior levels.
Commenting on these findings, Check Warner, Co-founding Partner at Ada Ventures, says:
"The conclusions of this report are sobering. This is the first time we’re seeing just how stark the gender divide is amongst the VCs successfully raising capital from LPs. This lack of gender diversity has consequences for the whole technology investment pipeline.
"It directly impacts the likelihood of diverse startup teams, particularly women-led teams, getting funded. It also leads to worse financial performance. Change needs to start right at the top."
VC “gender washing” issue seems to be dominant across the ecosystem
The gender distribution of the larger VC workforce was also examined in the report, revealing a practice known as "diversity washing" that seems to be prevalent across the ecosystem.
By analysing 156 VC funds with 1760 team members, the report highlighted that 38 percent of the total VC workforce are women. Women are more represented at junior and non-investment levels, while senior and leadership levels show a far higher percentage (over 70 percent) of male representation.
When analysing the senior level in a VC firm, 21 percent are women, and the titles include 'Partner', 'Founder', 'General Partner', 'Managing Partner' etc.
Who are the owners of the firms?
Ownership diversity has an impact on the gender balance within the VC firm. Thus, mixed-owned and all-women-owned funds outperform all-men-owned funds at getting a higher percentage of women at middle and senior levels.
In mixed-led and women-led funds, women are better represented in senior roles. The report highlighted that, at the leadership level, mixed-owned and all-women funds both have around 35 percent women, while all-men funds at the same (leadership) level have 19 percent women.
Being aware of these numbers, the report highlights the need for more transparency from LPs on the demographics of the VC firms and associated management companies they invest in. This is particularly important considering the Defined Contribution reforms announced by Chancellor Jeremy Hunt, which may lead to £10-50 billion of additional LP capital being invested into VC and the wider private capital ecosystem.
How does this gender divide impact the funds?
As stated in the report, all-men-owned management companies raised around 8 times more funds, and around 10.3 more capital between 2017–2023 compared to all-women-owned companies.
This means that in every pound raised from LPs in the last six years:
7p has gone to all-women funds,
17p has gone to mixed-gender funds and
76p has gone to all-men funds.
It is clear that job titles don't always convey the same access to ownership and economics in a fund between women and men. Thus, women are less likely to be significant owners of a fund despite having a job title that would imply they did. This finding was confirmed by the European Women in VC study (2022), which showed that 91 percent of male GPs have access to carried interest, while only 70 percent of woman GPs do.
Check Warner stated some of the recommendations specifically to the LPs stating that they should make a public commitment to invest in a more diverse set of managers. She also added that:
“All LPs, but particularly LPs who are publicly funded, should be regularly and openly, reporting on the gender breakdown of the funds where their capital is being invested - not just by job title, but by management company ownership, breakdown of carried interest allocation and investment committee membership, disaggregated by gender and other protected characteristics.
"They should also be encouraged to sign the Investing in Women Code. Capturing data can make a seismic difference; influencing policy, catalysing action and ultimately moving billions of dollars in capital. And this needs to happen soon, before key changes such as pension fund reforms see more money flowing into the UK and European ecosystem.”
Lead image via Ada Ventures