Venture capitalists (VCs) dominate the boards of venture-backed private companies today. In a 2017 study that looked at more than 26,000 such boards over three decades, researchers found that VCs took 50 percent of total board seats. That fraction is the result of many things: VCs requirement to take board seats as a condition to funding, limited planning for the most effective board composition, and a lack of concern for what type of background board members need to best serve the organization. It reflects what happens when companies follow the currently accepted practice of distributing one or two board seats to the lead investor in each funding round.
This March, Alpha Edison launched the #StartWithEight initiative, challenging our colleagues in VC to join us in taking meetings with eight women from outside our usual networks during the month of March. As we noted then, the statistics about women in venture capital are dismal. In 2017, only 2 percent of venture capital funding went to female founders, and only 8 percent of partners at the top venture capital firms were women. Meanwhile, Only 18 black female founders had raised more than $1M of venture capital for their startups, ever.
These numbers aren’t a secret; it’s widely known that women and minorities face prodigious barriers to entry in VC, but so far, a solution to correct the inequity has been elusive. The #StartWithEight campaign is a first step in correcting the historical imbalance and opening up pipeline access. The next step focuses on the other half of the equation: addressing and reducing bias.
The statistics about women and venture capital have been widely documented. Only 2% of venture capital funding went to female founders in 2017. Just 8% of partners at the top venture capital firms are women. Only 18 black female founders have raised more than $1M of venture capital for their startups (ever).¹ The data highlights a critical issue, but so far solutions and tangible action have been insufficient.