Empowering Diversity in the Venture Capital Industry

by FEI Daily Staff

New survey results are a catalyst for advancing dialogue around diversity and the impact of human capital strategies.


Diversity is critical to the competitiveness of the U.S. entrepreneurial ecosystem, as venture capital (VC) firms support entrepreneurs, and should remain focused on the cutting-edge of innovative companies. With this in mind, we sought to uncover the current state of diversity across the VC industry and collected data from 217 U.S. firms on employee demographics and firm talent management practices. The National Venture Capital Association (NVCA)-Deloitte Human Capital Survey adds to the growing body of research on diversity and inclusion (D&I) in the VC industry. Our new report helps firms take a proactive approach to increasing the representation of women and minorities in the industry by exploring the impact of formal talent strategies and programs – a lens that sets our research apart.

Studying diversity and inclusion in venture capital

Diversity and inclusion are business imperatives. Having a diverse and inclusive workforce is proven to enhance innovation and bottom line performance – and is crucial for organizations that want to attract top talent. Conversely, a lack of diversity could result in missed opportunities to capture new markets, attract diverse customers, and find successful investments.

The study captures valuable insights about the talent management practices VC firms are using to promote diversity. These insights suggest that the presence of a human capital strategy – along with talent programs, such as recruitment or mentorship – is highly correlated with greater diversity on VC teams. This suggests that an organization has the power to change its diversity performance, an important finding for all types of organizations, not just venture capital firms.

Women in the VC industry

The survey found that women comprise nearly one-half (45 percent) of the total VC workforce; however, few hold investment decision-making positions. Women are consistently overrepresented in administrative functions and underrepresented in investment functions. Women comprise 95 percent of administrative roles and 75 percent of investor relations, communications or marketing roles, but only 15 percent of investment professional roles. Looking specifically at investment partners or equivalent on investment teams, women comprise just 11 percent.

According to the survey, there are significant differences by firm size, location, and investment focus. Generally, the smaller the firm, the smaller the percentage of women on teams. For firms with five team members or fewer, women comprise 29 percent. At firms with 6-20 team members, women represent 41 percent of the workforce. In firms with 21 or more team members, women comprise 47 percent of team members.

Minorities in the VC industry

Racial and ethnic minorities comprise a smaller proportion of the venture workforce than women overall. According to survey findings, non-white employees comprise only 22 percent of the venture industry. However, not all ethnicities have the same experience in venture capital.  Black employees total 3 percent of the venture workforce, Hispanic or Latino employees 4 percent, and Asian/Pacific Islander employees 14 percent.

By role within their firms, Black team members are 2 percent of investment professionals; 3 percent of finance roles; 3 percent of investor relations, communications or marketing roles; 4 percent of administrative roles; and 5 percent of operations positions. Further, 2 percent of senior positions across all functions are filled by Black team members, compared to 4 percent of junior positions.

Impact of talent strategies

In addition to assessing the demographic makeup of the VC industry, the NVCA-Deloitte Human Capital Survey gauges the adoption and impact of talent management practices, and diversity and inclusion programs at venture firms.

The survey findings exhibit a strong correlation between VC firms that have a human capital strategy in place and their representation of women and minorities.  Firms with a human capital strategy average 54 percent female and non-white employees overall, conversely firms without a human capital strategy average only 41 percent female and non-white employees.

Moreover, findings suggest that the existence of a human capital strategy translates to better representation of women in senior positions across all functions. Firms with a human capital strategy have 4 percentage points more women in leadership than those without a strategy; firms with a diversity strategy have 10 percentage points more women in leadership than those without a strategy and firms with an inclusion strategy have 7 percentage points more women in leadership. Similarly, firms with a human capital strategy have 13 percentage points more minority employees than those without; firms with a diversity strategy have 12 percentage points more minority employees than those without; and firms with an inclusion strategy have 14 percentage points more minorities than those without.

Examinations of relationships between formal mentorship and recruitment programs and the representation of women in senior leadership positions at VC firms were also illuminating. Firms with formal mentorship programs have 16 percentage points greater representation of women in leadership and firms with formal recruitment programs have 9 percentage points greater representation of women in leadership.

Taking action

The following four-step methodology that can help organizations achieve greater diversity and inclusion.

  • Set a target: Develop D&I strategy
Recognizing that D&I is a journey, first establish a strategy to address D&I in the context of the VC business. Our study findings indicate that the presence of a human capital strategy—better yet, a D&I strategy component—has a relationship with the representation of women and minorities in VC firms. Developing a talent strategy that addresses issues of D&I is typically a first, critical step for firms seeking to enhance diversity.
  • Test best practices: Design and implement programs that target employee recruitment and development
Programs to enhance diversity in employee Recruitment and Development are proven to increase the representation of women and minorities in firms. Our findings show that firms are often still looking inside their own networks to source employees, rather than expanding the pool of potential candidates. Taking a closer look at the profile of female VC employees, it is clear that the demands of family and dependent care have varying impacts on the progression of men and women. Specific strategies and programs to help employees negotiate work and family life may have the potential to increase women’s participation overall and in leadership.
  • Measure results: collect D&I data over time
Continuous assessment and data collection is a critical component that will allow firms to measure D&I in the future. Increasing demographic data collection can help firms better track representation going forward and measure improvement over time. Only two-thirds of firms collect Race/Ethnicity demographics. Going forward, we suggest firms collect this data, along with additional demographic characteristics, in order to truly measure representation.
  • Iterate to success
Most important, the results of D&I programs should be measured regularly to inform the firm about where to enable sustainable improvement and results. There is no set of programs that fits all firms, but it will be critical to the industry’s long term viability to commit to moving forward and measuring how well we are doing and innovate/iterate to success. For larger firms, this may include dedicated staff for D&I, formalizing informal programs, and tracking data over time. Assessing current practices such as promotion criteria, for bias is one first step many firms can take when reviewing systems and practices.

A prime opportunity

Regardless of size or location, all firms can strive for inclusion. And it begins with ownership—of the data, and the culture—and having honest discussions about how to address D&I challenges throughout the employee lifecycle. We challenge each member of the VC community to initiate honest conversations and grow our innovation potential.

Maryam Haque is vice president of research, National Venture Capital Association. Heather Gates is managing director, west region, and emerging growth company practice leader, Deloitte Services LP.



This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.