The gender gap in the tech industry doesn’t just exist in the rank and file, or in the hallowed VIP areas reserved for founders, it extends to the very investor class that seeks to fund them. We need to ‘change the ratio’ here as well, argues John Kennedy.
It is often a surprise, even to those familiar with the workings of the tech industry, that Silicon Valley – the epicentre of all thing tech, financial and visionary – is often blind to the realities surrounding it.
At a very basic level, this paradox can be evident in San Francisco where, alongside the gleaming buildings, dot.com ads, shiny black Über sedans, and coders with earphones zipping through the crowds dangerously on scooters, homeless people, people with mental issues and panhandlers warrant barely a glance.
They roam like ghosts, grateful for any acknowledgement of their existence.
Behaviour and attitudes
This blind side extends across a panoply of issues and the one that has been challenged the most in recent years has been the gender divide that extends across leadership, pay and attitudes.
The headlines citing the plight of Ellen Pao at a revered Silicon Valley venture capital firm actually competed with tales of shocking treatment of female workers at various tech firms. And still this hasn’t caused the soul-searching it requires across the whole industry.
At the heart of the matter are a broad range of issues that traverse take-up of STEM subjects in school and college, greater diversity in the ranks and at management level, and, of course, the need for greater racial diversity in the tech sector.
At Siliconrepublic.com, we have played our part in endeavouring to ‘change the ratio’ through our Women Invent campaign and our Inspirefest event, which takes place next June.
Too often, we focus on the broader tech industry without realising that the bedrock of the sector is not only its innovative brains, but ready and perceptive cash to invest in ideas.
At the weekend, reports circulated about comments made by Sequoia Capital chairman Michael Moritz in an interview with Bloomberg’s Emily Chang that sparked a storm of debate, centring on venture capitalists’ attitudes to diversity in their ranks.
“Oh, we look very hard. In fact, we just hired a young woman from Stanford who’s every bit as good as her peers, and if there are more like her, we’ll hire them. What we’re not prepared to do is to lower our standards … If there are fabulously bright, driven women who are really interested in technology, very hungry to succeed and can meet our performance standards, we’d hire them all day and night.”
The remark that caused outrage was the one about not being prepared to “lower our standards”. This unleashed a storm of criticism, with many reading into it that what Moritz meant was that women weren’t up to the job when it comes to holding leadership positions in investment firms, or in science or technology for that matter.
Whether that was what Moritz actually meant to say or not, he still said it and, in doing so, he has prompted fresh debate about an urgent matter.
Meritocracy not ‘mirror-tocracy’
It is not only the wider tech industry that needs to change, it is the investor class itself that needs to change too.
A recent survey by The Information showed that 92pc of executives at top-tier venture capital firms are male. Not only that, but less than 1pc of investment decisions by venture capitalists are by black people and only 1.3pc of investment decisions are by Hispanic people.
Astia CEO Sharon Vosmek told Inspirefest 2015 earlier this year that less than 5pc of funding in Silicon Valley goes to female founders.
‘An attractive white man is 68pc more likely to receive funding than an attractive white woman’
– SHARON VOSMEK, ASTIA
“As you watch women-led companies grow, those businesses that have inclusive teams will generate higher revenues,” Vosmek said. “We as investors are seeking out the next innovation and this requires the best team performance. We look for group intelligence, where team performance leads to innovation.”
Vosmek said that, in Silicon Valley, male investors will tend to favour investing in males who are “a reflection of themselves, their experiences and their values”.
“The fact that belies the reality in my investment landscape. For the last 15 years of Astia, 95pc of partners who make investment decisions are men. Consistently for 15 years this has correlated to the percentage of investment going to men. Just 5pc of venture capital goes to women CEOs.
“An attractive white man is 68pc more likely to receive funding than an attractive white woman.”
Volmek’s comments were echoed in a subsequent panel discussion chaired by Re/code’s Kara Swisher, when Adam Quinton of Lucas Point Ventures said that Silicon Valley is a place that talks about meritocracy but doesn’t practice what it preaches.
“The fundamental problem, especially in Silicon Valley, is that it loves to think it’s a meritocracy, which is bull. It’s not. It’s a mirror-ocracy,” Quinton said.
The storm unleashed by Moritz’s choice of words in the Bloomberg interview caused me to re-read these comments from last year’s Inspirefest event, but also to look over a recent list of 25 sources of funding entrepreneurs in Ireland need to know about that we published recently.
Out of the listing, I spotted a few familiar female names in leadership roles at prominent Irish venture capital firms, including Elaine Coughlan from Atlantic Bridge Capital, Alison Crawford from Business Venture Partners, Sinead Heaney from Development Capital, Kim Pham from Frontline Ventures and Orla Rimmington, Kernel Capital.
Each and every single person is a professional of the highest standard. We need more just like them.
Just like Vosmek said, by increasing diversity in tech firms there are better outcomes, and the same can be true if, across the board, there were also greater diversity in the investor ranks.
As far as I can tell, there are two routes into venture capital. There is the professional route, working up the ranks at investment firms, and this requires firms choosing the right graduates. And there is, of course, the right to be an investor earned by having made a lot of money as an entrepreneur through successful start-ups.
Moritz’s remarks about so-called standards have struck a chilling tone for what ought to be the fastest route into venture capital and, thus, the fastest path to change. The longer route of building an investor class through successful start-ups is happening, but that takes time.
For better outcomes and greater diversity in tech, we need change to happen faster.
And that’s why we need more female venture capital investors.
Inspirefest is Silicon Republic’s international event connecting sci-tech professionals passionate about the future of STEM. Join us again from 30 June to 2 July 2016 for fresh perspectives on leadership, innovation and diversity. Get your Super Early Bird tickets now.
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