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Is There an Equality Problem in Venturing?

Are we seeing a one sided gender bias in venture capital?

9Sep

Much has been made of Silicon Valley’s diversity problem. While the issue has always been a concern, it’s been brought into sharper focus more recently as some of the tech-hub’s most influential players release their hiring updates.

Facebook - according to the Washington Post - has just 81 African Americans in its 5,500 strong workforce, while Hispanics make up just 4% of Yahoo’s staff. Clearly a contentious issue across the entire tech-industry, it’s now the turn of the Venture Capital market to be brought under the microscope.

Experienced venture capitalist, Kerri Golden, understands the industry’s pitfalls more than most. Every time she’s at a conference she jokes that there’s never a line at the women’s bathroom, but that all the deals are happening in the men’s room. There’s been a dearth of women in a number of industries recently, but the venture capital industry, for whatever reason, has managed to dodge much of the criticism which has been targeted at finance companies and in Silicon Valley.

That changed, however, in 2012 when Ellen Pao - who’s now most famous for being controversially ousted as Reddit’s interim CEO this year - filed a lawsuit against Kleiner Perkins Caufield & Byers, claiming that they had unfairly refused her the advancements and compensation she was due. After the case went against her, she was fired, and when she took her former employer’s to court for unfair dismissal, she again lost.

Whilst she was ultimately unsuccessful, the case brought the lack of diversity in the sector to the forefront. Three years down the line, there’s been little progress. Today, the number of women partners in venture capital stands at just 6% - and it was 10% last year.

The issue has real ramifications for the entire tech-industry. Venture Capital remains the driving force behind technological development, and there’s evidence to suggest that men tend to favor male-led projects. This makes it tough for women to get their ideas heard, and if a worthy female-led start-up doesn’t make the cut, it removes what could be an important source of employment.

It might, however, be unfair to brand the industry as inherently sexist. The talent pool is small, with still comparably small numbers of women taking subjects which tend to lead to a career in venture capitalism. With men dominating the industry, there are also a lack of role-models for women to look up to, meaning that most females don’t even see venture capitalism as a career option.

As with most things of this nature, education plays an important role. But a shift in expectations is also required, and that will surely happen as Silicon Valley starts diversifying its workforce. If something isn’t done, we could stand to lose some highly profitable organizations, and that can’t be good for the economy.

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