A report by DealStreetAsia found a lack of female VCs in Southeast Asia, with approximately 77% of venture capital (VC) firms in the region lacking a woman in an investment decision-making role. These roles are senior positions, such as sitting on company boards, leading deals or signing cheques.
The report surveyed 380 venture investors headquartered in ASEAN or with a regional base. The respondents included venture capitalists, accelerators and incubators, angel investment platforms, and venture debt providers. The key finding was that females were not as prominent in the top ranks as they should be.
VC firms play a significant role in supporting startups by providing early financial support. However, they can also enhance the gender gap in tech landscapes by supporting companies that are not diverse or do not have female bosses. The report also found that women struggle to raise financing for the startups they founded or co-founded, bringing in just a little over 17% of the total private funding last year.
This dearth of funding is compounded by investment firms, which may not be as diverse or inclusive as they should be when they exclude qualified female VCs from the decision-making process. Among Asian and global VC companies based in Southeast Asia, the report found that about 66.6% did not have a woman in a position of authority.
The global state of female inclusion in senior VC positions
The shortage of women in senior decision-making positions is not just a regional issue, as the report found that only 2.4% of all VC partners globally are women. According to another report by The Information tech news, only 12 of more than 100 venture companies examined in the US had a single female investment partner.
Pinn Lawjindakul, who became a partner at Lightspeed Venture Partners in April, told DealStreetAsia that most venture companies do well in recruiting a diverse workforce at the lower levels but fall short of having women like her in senior positions. Visa Kannan, a partner at Saison Capital, added that companies could do more to ensure that women make up half of the VC workforce.
Fixing the disparity of female VCs in senior positions
According to a Harvard Venture Capital and Entrepreneurship study, women only accounted for 11% of the investing partners at American VC firms, and only 13% of investment dollars went to startups having a woman on the founding team. This finding was surprising because research also showed that companies with 10% more female investing partners had 1.5% higher fund returns in their portfolios and saw 9.7% more profitable exits.
Various barriers prevent women from establishing themselves as equals in senior positions. For one, the VC sector has always been dominated by men, and some would prefer to maintain the status quo. The diversity and inclusion movement is a more recent phenomenon. Still, while it has been gathering steam, it is challenging to enforce because many VC companies are small and have a low turnover.
Moreover, human resource managers at VC companies have failed to prioritise diversity and inclusion. Their talent recruitment strategies for employing women have not been deliberate and structured, and there may be a lack of meritocracy in promotions. Moreover, because men dominate the workplace, the work environment may be hostile and unwelcoming for female employees, and there may be instances of sexual harassment, particularly in more traditional countries.
Decades of women lacking access to education have created the perception that they do not have the qualifications to become partners in VC firms. However, the facts show that women are increasingly highly qualified and are capable of taking up leadership roles if given the opportunity. Women also lack role models who have succeeded in the VC industry, making it more challenging to find inspiration and much-needed guidance on how to navigate a male-dominated sector.
To fix these disparities, VC companies must change their recruitment models and actively seek out qualified women. They should train female employees internally and offer guidance to women in female-led startups. They should consider the investment amounts funnelled into female-run companies and ensure that they are the same as those directed toward a male-run company offering the same products and services.
In addition, human resource managers should establish guidelines on diversity and inclusion to ensure they are tapping into the entire tech talent pipeline, including women. Instead of focusing just on male employees, HR should use performance-tracking solutions to promote employees based on merit.
The gender gap in the tech landscape can be bridged if women have equal access to VC networks and are treated equally when pitching their startup’s value. Having more female VCs in Southeast Asia is extremely beneficial for the region and women globally, as they contribute and add value to the venture investing ecosystem.