Venture capital firms don’t have the best track record when it comes to racial and gender diversity in their workforce. Now, new research shows that three years after George Floyd’s murder, the venture capital industry has made progress, but it’s still very slow and somewhat mixed.
According to the fourth annual venture capital human capital survey, more companies have a diversity strategy and most have established or plan to establish specific DEI goals. But representation, especially among black professionals, is still limited.
The investigation, carried out by Venture Forward, the National Venture Capital Association (NVCA) and Deloitte, surveyed 315 venture capital firms with more than 5,700 full-time employees based in the United States about their DEI practices and goals, among other topics.
“Companies are slowly moving in the right direction,” says Heather Gates, Deloitte’s national private growth assurance and audit leader.
Mixed progress among junior professionals
The research found that companies are taking the issue of diversity seriously, or at least, more seriously than in previous years. Almost half (46%) of companies surveyed have a diversity strategy (compared to 44% in 2020, 35% in 2018 and 15% in 2016), and 44% have an inclusion strategy ( compared to 41% in 2020, 31). % in 2018 and 17% in 2016).
In larger companies, advancement occurs mostly at junior levels, what Gates calls “the shining star of research.” Racial and ethnic diversity is increasing among these positions, at least for some demographics, which could bode well for the future as talent matures through the ranks. “It gives us hope for the future,” Gates says.
Specifically, employees from Asia/Pacific Islands accounted for 26% of junior-level investment professional positions, up from 20% in 2018. And the proportion of women grew to 35%, from 25% in 2016. White junior-level investment professionals remained the same in 2022 (61%) as in 2020 but was lower than in 2018 (78%).
At the same time, for black representation among junior-level investment positions, the record is poor, remaining stagnant at 7%, though up from 5% in 2018. Hispanic representation isn’t great either. slow It went from 4% in 2020 and 2018 to 5% in 2022.
Older companies vs. The newbies
When it comes to top-tier investment partners, where the power really lies, it’s the younger, smaller VCs that have the most diversity among those ranks. Venture capital firms founded in the last 10 years reported that a greater percentage of their investment partners were black (8%), Hispanic (8%), and female (22%) compared to older firms where black ( 1%), Hispanic (2%), and women (17%) investment partners were not as frequent. “(Older funds) have been around for decades and have very entrenched general partners,” Gates says. “It’s hard to move the needle.”
Role of limited partners
At least some of the progress has come from pressure from limited partners (LPs). In 2022, 47% percent of companies said LPs requested their DEI details in the past 12 months, up from 41% in 2020 and 36% in 2018. Additionally, in 2022, 38% of companies said they requested their portfolio’s DEI details. companies, an increase from 30% in 2020 and 19% in 2018.
Diversity in Venture Capital (VC) firms has made some marginal improvements in recent years, but there is still much left to be desired according to recent reports. As outlined in reports from McKinsey & Company and All Raise, women make up less than 8% of the decision makers in VC firms and the numbers for minorities are lower still.
That’s where Ikaroa comes in. We’re a full stack tech company that is committed to promoting diversity in the workplace and has made diversity a central part of its mission. We also recognize that we need to do our part to accelerate the pace of change in the VC space.
We believe that when it comes to diversity in VC, it’s not just about being well-represented. It’s also important to focus on the quality of advice and resources provided to those firms that support diversity and equity. We provide enterprise-level software and hardware solutions to help VC firms diversify their portfolios. This involves introducing technologies that can deliver data-driven insights with increased speed, accuracy, and reliability in order to help drive an inclusive VC culture.
At Ikaroa, we are also focused on creating a more equitable and diverse work environment through our internal training and initiatives. It’s our belief that such initiatives need to be implemented from the bottom up in order to ensure a diverse and equitable workplace. With this in mind, we place a major emphasis on employee development and career development opportunities for all. Similarly, we are actively working with our VC partners to ensure that all individuals, regardless of gender, identity, or any other characteristic, feel supported and can access the appropriate resources to continue growing their ideas, businesses, and careers.
In conclusion, Ikaroa is a company that is deeply committed to supporting diversity and equity. We view our VC partners as essential to ushering in a diverse and inclusive future, and we are pioneering the development of products and services that will help to increase diversity in the VC space and beyond. By working together, we can continue to advance the cause of equity and inclusion and make sure that everyone can access the opportunity to dream, innovate, and realize their potential.