The Rise Of Women In The PE/VC Industry

For decades, the private equity and venture capital (PE/VC) sector has been characterised by a lack of gender diversity. A historical glance reveals the industry’s roots in western markets, where it took shape with strong ties to old family wealth. 

Since finance has been a male-dominated arena for centuries now, the reigns of the PE/VC industry have been predominantly with men. A noticeable shift has occurred in the last decade, with an increasing number of women making their mark and reshaping the dynamics of this ecosystem.

Among the earliest trailblazers who challenged the traditional norms was Muriel Faye Siebert. Her groundbreaking achievement as the first woman to own a seat on the New York Stock Exchange (NYSE) in 1967 marked a turning point in the industry’s history. 

This accomplishment, along with her distinction as the first woman to lead an NYSE member firm, set a precedent for future generations looking to break into the finance sector. Just a few years later, in the 1980s, Barbara Vogelstein made a mark by becoming the first-ever woman venture capital partner. 

As a partner at Warburg Pincus, Vogelstein’s career trajectory shattered barriers and demonstrated that gender should never be a limitation in pursuing success in the PE/VC landscape. 

A Shift Towards Gender Inclusivity

While we have had a few exceptional women break through, gender representation of the industry continues to be skewed in favor of men. According to Preqin, the proportion of women working in the asset class was 19.7% in 2019 and 20.3% in 2020. Representation of women in the industry went from almost negligible in the 1960s to one-fifth of the industry’s workforce in 2020. Progress, though slow.

Recent years, especially on the back of the #MeToo movement, saw heightened awareness about DEI that has catalysed action in companies across the world. The PE/VC industry has not been untouched by this increased focus on DEI, especially when it comes to gender diversity. 

Women are gradually garnering senior positions in the industry, and more than before, are venturing out to raise their own funds. While women investors are making their place in the PE/VC industry, gender disparities still exist.

The Unconscious Gender Bias Still Exists 

70% of PE/VC fund managers have all-male senior leadership teams. Only 2.4% of women are founding partners with control over the firm’s capital. And the percentage of women across the industry workforce continues to hover around 20%, having seen a marginal dip in pandemic years.

Interestingly, women’s participation in PE/VC is much behind that in traditionally male-dominated industries like manufacturing and infrastructure. While manufacturing boasts 25% women in leadership, around 19% of leadership positions in the infrastructure sector are held by women. 

Representation of women in leadership roles in the PE/VC industry is much lower at 14%. Even though gender inclusivity is becoming a practice across sectors, there continue to be traces of deep-rooted biases that portray men as better suited for managing finances and financial ventures.  

Research and experience have established that women  are as skilled at handling startups, finance, capital and business decisions.  Per the report “Creating 10X Women Founders in India”, 18% of India’s 28,000 active technological start-ups had female founders or cofounders. 

Per the same report, 18% of unicorns in India have female founders or cofounders. The report also shows that female founders have the same success rate as male founders and that women led unicorns provide employment and income at a similar rate as those founded by men. Point made. 

Taking this forward, research has also established that diversity leads to better decision making and consequently, to better financial performance. Per the IFC 2019 report, companies with diversity leadership teams gets to higher valuations in a shorter period of time. 

Breaking The Glass Ceiling

It is clear that fostering inclusive growth in the PE/VC and startup ecosystem will lead to better overall outcomes, both financial and non-financial. It is not surprising that key stakeholders and especially institutional investors are increasing the emphasis on enhancing DEI efforts. 

Firms in the PE/VC space have introduced initiatives to build the diversity agenda in their teams and portfolio companies – including increased female representation on boards, access to mentorship programs for women, and adopting gender diversity as a priority for the workforce.  

As we look to the future, it is crucial to continue dismantling the barriers that hold women back. Supporting women in key decision-making roles, nurturing their entrepreneurial spirit, and providing equal opportunities will foster an environment where women can thrive. 

With increased representation and concerted efforts, the PE/VC industry has the potential to become a catalyst for inclusive growth, driving stronger economic outcomes and creating an equitable and diverse ecosystem.

The rise of women in the PE/VC industry is not just a matter of statistics; it signifies a fundamental reimagining of the industry’s composition and culture. The time for change is now, and together, we can build a stronger and more inclusive entrepreneurial landscape.

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