How women investors drive diversity in fund management, Plug and Play

Women investors in the venture capital (VC) industry have long faced challenges such as gender bias, stereotypes, discrimination, and a lack of representation. These obstacles hinder the potential growth trajectories of both female investors and entrepreneurs. Low representation persists, with companies founded solely by women receiving less than 3% of all VC investments and women accounting for less than 15% of check-writers among VC investors, according to Pitchbook and All Raise, respectively.

According to a European Survey led by IDC Women in VC, there is a noticeable gender imbalance in management roles within VC funds, exemplified by the representation of females at 23% in General Partner positions across Europe. However, the scenario is more balanced in junior positions, where women comprise 46% of the workforce. This disparity emphasizes the need for increased efforts to address gender diversity and promote equal opportunities in leadership roles within the VC sector. It perpetuates a cycle where predominantly male investors are more inclined to support startups led by men, contributing to the systemic gender gap.

Promoting gender equality in the VC space is not just a moral imperative but a strategic decision supported by evidence. Research indicates that VC firms with a 10% increase in female investing partners achieve greater success at the portfolio company level, boasting 1.5% higher fund returns and experiencing 9.7% more profitable exits. Therefore, advancing gender equality is not only the right thing to do but also a smart approach to enhancing the overall prosperity of the industry.

Despite persistent efforts over the years to enhance diversity within the VC industry, a gender gap exists among decision-makers within VC firms and recipients of VC funding, specifically entrepreneurs. This gender disparity in VC has far-reaching consequences for the tech sector and beyond. VCs are pivotal in determining which ideas, products, and innovations shape our modern economy and society.

However, signs point to a positive shift underway. Various groups and efforts are dedicated to closing this gap and enabling women investors to excel as entrepreneurs. The scene is changing, with more women joining the VC sector as experienced advisors and fund managers. This transformation goes beyond just numbers; it acts as a trigger to unleash the untapped talent that women contribute.

Encouragingly, the changing tide holds immense potential. According to McKinsey, closing the gender gap in entrepreneurship could contribute up to $12 trillion to the global GDP by 2025. This underscores the economic imperative of fostering a more inclusive and diverse VC industry, emphasizing the significance of continued efforts to dismantle barriers, foster accountability, and promote diversity and inclusion.

Addressing the gender disparity among women investors in venture capital

Historically, the VC landscape has been predominantly male-dominated, leading to a pronounced overrepresentation of men as both VCs and entrepreneurs in contemporary times. This uniformity extends across gender, race, educational background, and work experience within VC circles, sustaining a demographic homogeneity that historically excluded women and continues to hinder diversity efforts today.

Many VC firms, characterized by small size and low turnover, encounter challenges in infrequent hiring processes, making the task of diversifying their ranks a time-consuming endeavor. Despite this, a prevailing perception among VC firms persists, suggesting a scarcity of qualified women to contribute to the VC pipeline. Contrary to this perception, available data reveal a significant pool of women with the requisite backgrounds for VC, surpassing the number of women currently holding roles as VCs.

The gender gap in venture funding can be attributed to investor-related factors. VCs evaluate founders through a gendered lens, replicating past examples of success through pattern-matching, leading to female founders being perceived as riskier bets than their higher-status male counterparts. Academic research reveals gender bias in how investors evaluate founders and their pitches, with preferences for male-narrated pitches and biased questioning during the pitch process. Female founders also face limited access to critical VC networks and navigate a fundraising environment strongly associated with masculine domains, further disadvantaging them.

In 2023, female-founded companies in the U.S. secured $44.4 billion out of the $170.59 billion in VC allocated. Notably, companies with all-women founding teams raised approximately $3.1 billion (1.8%), marking a decrease from $5.1 billion (2.1%) in 2022 and $7.3 billion (2.1%) in 2021. This represents the lowest percentage allocated to such teams since 2016. Conversely, mixed-gender founding teams experienced a positive trend, securing 26.1% of all VC allocated in 2023, a notable increase from the 18.2% in the previous year. This pattern suggests that women founders still fare better when partnering with a male co-founder.

6 women investors to keep an eye on in European VC

Amidst a persistent gender gap in the VC landscape, an inspiring narrative is unfolding — one that highlights the significant strides made by women who not only navigate the historical biases of the industry but also emerge as prominent figures. Despite ongoing challenges faced by women in VC, an increasing number are forging influential paths, serving as beacons of inspiration, and challenging established norms. These women are not just reshaping the narrative but also setting a formidable precedent for a more inclusive and diverse future within the realm of VC. In celebration of International Women's Day 2023, we want to highlight some of the most influential investors that are conquering the MIDAS list and driving female initiatives all around Europe:

• Luciana Lixandru, one of the most well-known female leaders in the European Venture space, is currently a partner at Sequoia Europe. She took the 10th rank in the MIDAS Europe list in 2023 and led investments in UiPath, the recently announced unicorn Pennylane, Miro, and many more. She actively speaks out against gender pay gaps and highlights the importance of diverse investment teams.
• Ophelia Brown, Founder of Blossom Capital in 2018 with $745M AuM, made her debut on the MIDAS list just three years after launching her fund in 2019. She has invested early checks in the likes of Checkout.com (valued at $40B) or Moonpay (valued at $3.4B). In a recent interview, she underlined that not just gender diversity is important but also diversity in terms of race, ethnicity, and upbringing.
• Bettine Schmitz & Dr. Gesa (Pelzer) Miczaika launched the first female founder-focused vehicle, Auxxo Female Catalyst Fund, in Germany in 2021. They are active players in the ecosystem, hosting regular meetups, supporting and mentoring female founders, and winning multiple awards for their commitment to more diversity in the industry.
• Deepali Nangia, a Partner at Speedinvest with more than €1B AuM, is one of the largest funds in DACH. She has been an advocate for diversity for years, having launched Alma Angels before joining Speedinvest, a community that brings together business angels to invest in female entrepreneurs.
• Kinga Stanisławska, Managing Partner at Experior VC and an investment committee member in EIC Fund, founded the European Women in VC community. The community aims to increase the number of female partners in European venture funds and helps the entire ecosystem.
• Carolin Wais, a Partner at Plug and Play Ventures. She has been an advocate for diversity since joining the VC ecosystem in 2015 and became the first female investment partner at Plug and Play. She has overseen more than 200 investments in the EMEA investment committee and is actively involved in our initiatives FoundHer and DRIVE that promote more diversity and inclusion.

Beyond advancements in VC firms, there's a growing trend of female entrepreneurs establishing innovative businesses and raising significant funds. Figures like Whitney Wolfe Herd (Bumble), Julia Hartz (Eventbrite), Melanie Perkins (Canva), Robin Chase (Zipcar), Antje Danielson (Zipcar), and Anne Wojcicki (23andMe) serve as impressive examples, showcasing women's influence across various industries. This transformative shift not only reflects changing societal attitudes but also underscores the vast possibilities that arise when women lead innovation.

Empowering women investors in venture capital: Fostering equality and diversity

While there is observable progress, it's crucial to recognize that achieving gender equality in VC is an ongoing process rather than a singular event. As highlighted in various studies, persistent barriers hinder women's access to funding and leadership roles.

These obstacles encompass biases, a lack of networking opportunities, and enduring stereotypes that continue to shape industry perceptions. Despite notable advancements, it's essential to acknowledge that complete equality in VC remains elusive.

Addressing the gender gap requires a collective effort from the entire industry. Establishing mentorship programs, implementing transparent hiring processes, and fostering a culture that values diversity are essential to level the playing field.

In response to these challenges, policymakers, business leaders, and organizations like "Women in VC," "All Raise," and "Bridge Funding Gap" have emerged, providing support through networking opportunities and mentorship for women engaged in VC.

Plug and Play is actively working to bridge the gender gap through the FoundHer program, an integral component of its DRIVE initiative, which stands for Diversity, Respect, Inclusion, Visibility, and Equity. The FoundHer community is dedicated to nurturing female entrepreneurship by facilitating meaningful connections within the extensive global network, comprising investors, mentors, corporates and fellow entrepreneurs.

FoundHer leverages the strength of Plug and Play's global open innovation ecosystem and a proven investment track record across various industries. The primary goal of FoundHer is to mobilize collective efforts in championing female entrepreneurs, providing them with essential support in overcoming the challenges associated with achieving equal access to business growth. This support extends not only within the VC realm but also within corporate ecosystems, ensuring a holistic approach to empowering women in entrepreneurship.

In conclusion, the barriers women face in accessing funding and leadership roles, including biases and stereotypes, underscore the need for ongoing efforts to achieve true gender equality in the VC landscape. At the moment, the gender gap persists both among decision-makers within VC firms and founders; however, while acknowledging the existing disparities, there is hope for positive change in the near future. Through collective efforts, increased awareness, and the implementation of inclusive practices, the hope is that the VC industry will become more equitable, providing equal opportunities for both women investors and founders.

While acknowledging the existing disparities, there is hope for positive change in the near future. Through collective efforts, increased awareness, and the implementation of inclusive practices, the hope is that the VC industry will become more equitable, providing equal opportunities for both women investors and founders.

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