Down to Business: Few women at venture capital firms
Robert Chernow said he was going to pose a question in the manner of the late television newsman Mike Wallace, which begged pardon ahead of the zinger: “Forgive me for asking, but … ” Chernow, vice provost for entrepreneurship at Rensselaer Polytechnic Institute, was moderating a panel at the college last week on the topic of funding business startups. The four men flanking him represented venture capital firms, two with local ties and two from the Boston area, who had been invited to the Troy campus to participate in RPI’s daylong Venture Summit. The event included a morning showcase of faculty inventions and student enterprises and an afternoon panel discussion on how venture capital firms make investment decisions.
So Chernow adopted the Mike Wallace technique to signal the tough question he had for his guests late in the session: Was the venture capital industry an old boys’ club?
That characterization cycles in and out of the headlines as surveys take stock of the number of women working at venture capital firms, which pump money into promising companies of various sizes and in various industries, with a goal of getting that investment back — and more — when the business is acquired or goes public. The data show an anemic female presence.
A seminal report by the Kauffman Foundation, which studies entrepreneurship, found in 2004 that fewer than 10 percent of the high-level venture capitalists in the country were women. Last year, the National Venture Capital Association said 11 percent of the professionals in its annual census identified themselves as female investors. More anecdotally, a New York City management consultant, who earlier this year visited the websites of 25 top venture capital firms, said she counted no women among the investment teams at 12 of them.
But the issue is more complex than overt sexism. One of the findings in the Kauffman study was that venture capitalists often had backgrounds in engineering, physics and biotechnology — fields that traditionally saw fewer women. “Because the industry is dominated by men, women trying to launch or further careers as VCs have few first-degree connections with those [men] in positions to hire or promote them,” the study said. And one young female venture capitalist, writing in Forbes last year, lamented that even networking events aimed at nurturing new VCs skewed male when they involved skeet-shooting or poker.
To Chernow’s old boys’ club question, panelist Ric Fulop, a partner at North Bridge Venture Partners in Waltham, Mass., offered that venture capitalists probably don’t ponder the industry’s male-female breakdown because they’re more likely focused on the next hot deal. Fellow panelist Graham Brooks, a principal in .406 Ventures in Boston (the name comes from the 1941 batting average of Red Sox legend Ted Williams) wondered whether the ranks of female VCs would grow as more women succeeded as entrepreneurs in larger and larger enterprises.
Chernow told me later he wanted to be courteous with his question, but thought it important to ask in light of the Kauffman study, which showed not only that fewer women were working as VCs but that they also were leaving the industry at twice the rate of men. Chernow once worked as a senior vice president at Kauffman, where he said he became “very sensitized to all of this.” Male dominance of the industry is “incredibly self-perpetuating,” Chernow said. How can that be changed? By talking more about it.
“They really have to look in the mirror and see it,” he said of venture capitalists.