All-male venture capital funds raise 10 times more than all-female
A new report has exposed that in the UK, all-male-owned venture capital funds collectively raised around 10 times more limited partner capital than all-female-owned funds.
The Ada Venture-led research revealed that female-owned VC funds raised just 7p in every £1 of the £6.6bn raised, whilst all-male-owned raised 76p.
All-male-owned funds also raised almost five times more than mixed-owned funds, which made 17p.
VC is a form of investment for early-stage, innovative businesses with strong growth potential.
Only an extremely small percentage of women with a senior title in the UK actually have significant ownership of a fund, meaning the “diversity washing” of titles is obscuring the depth of the issue.
Over 150 UK-based VC funds held a “first close” of LP funds between 2017 and 2023, collectively raising over £6.6bn.
This comes despite the masses of evidence that gender-diverse investment teams achieve higher Internal Rate of Return.
Check Warner, co-founding partner at Ada Ventures, claimed that “the conclusions of this report are sobering”.
According to European Women in VC’s 2023 report, the financial performance of European VC funds increases in line with higher representation of women in senior management teams.
Today’s report also looked at the gender breakdown of the wider VC workforce and revealed a “diversity washing” tactic that appears to be taking place across the ecosystem.
Last month, former City minister and chair of the Treasury select committee, Harriett Baldwin, revealed that investing in women at the same rate as men could create £250bn in new value for the UK economy.
Kinga Stanislawska, founder of European Women in VC (LP) adds: “Women manage only 9 per cent of VC assets in Europe and yet every piece of research conducted in any part of the world confirms that diverse and mixed teams outperform on both financial returns and impact metrics.
“A major win is the number of diverse emerging managers coming to market, diversity is developing bottom up. In order to reach parity and open access to capital for all, we must accelerate the speed of change.
“Benefits are numerous, from products and services coming to market that address the needs of a broader population to tackling the world’s biggest challenges thanks to diverse experiences and viewpoints.”
Following the publication of the report, Ada Venture is calling for more transparency from LPs on the demographics of the VC firms and associated management companies they invest in.
This is particularly pertinent given the Defined Contribution reforms recently announced by Chancellor Jeremy Hunt, which may lead to £10-50bn of additional LP capital being invested into VC and the wider private capital ecosystem.
Precious Oyelade, former Google for Start-ups program lead, said: “The gender funding gap in venture capital has a ripple effect, limiting opportunities beyond women.
“The lack of access to capital for women fund managers reduces the number of women in venture and thus access to capital for founders who sit outside of the traditional confines of venture capital — all underrepresented groups.
“Playbooks and networks need to be opened up for the strongest returns.”