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Shocker: The VC Industry is Very Male and Very White

By NexChange
Venture Capital, Capital Markets

You may want to sit down for this: It turns out the venture capital industry is overwhelmingly white and overwhelmingly male, according to a new analysis by Richard Kerby.

Okay, this isn’t surprising at all if you’ve been paying attention to industry trends – and sexual harassment/gender discrimination¬† scandals – over the past several years. But just how bad is the lack of diversity in the industry?

According to Kerby’s analysis, the racial breakdown of VC firms in 2018¬† is 70 percent white, 26 percent Asian, 3 percent African-American and 1% Hispanic. While this mostly represents a slight improvement over Kerby’s 2016 analysis (except for Hispanics) – when the racial breakdown was 74 percent white, 23 percent Asian, 2 percent African-American and 1 percent Hispanic – it’s clear the VC industry is nowhere close to where it needs to be with diversity.

The same is true for gender diversity: In 2018, men comprise 82 percent of the industry, while women make up only 18 percent. According to Kerby’s 2016 analysis, gender breakdown was 89 percent men and 11 percent women.

Kerby added a a new data set point to his 2018 analysis – which was not included in the 2016 edition – by looking at the academic background of ~1,500 investors. Shockingly, Kerby found that about 40 percent attended either Stanford or Harvard.

Kerby writes:

With 82% of the industry being male, nearly 60% of the industry being white male, and 40% of the industry coming from just two academic institutions, it is no wonder that this industry feels so insular and less of meritocracy but more of a mirrortocracy. This is most clear when looking at the educational backgrounds of black investors. Over 50% of black investors in venture capital went to Harvard or Stanford. The bar to create a more diverse industry is difficult when one looks for folks that most resemble themselves; and while talent is evenly distributed, unfortunately, opportunity is not.

“This insularity of the venture ecosystem has ripple effects throughout the tech industry,” Kerby adds. “It is not a coincidence that the amount of capital raised by minorities and women closely resembles their representation among venture capitalists. And furthermore, it is no surprise as to why the demographics of most venture-backed startups also reflects the demographics of the venture capitalists that fund these companies”

You can find Kerby’s complete data set here.

Photo: Getty iStock

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