Venture Forward was founded by NVCA to accelerate the success of VC investors across the country—regardless of background or geography—so that the VC industry can maximize innovation, economic impact, and financial returns. Here’s a look at some of the challenges the industry has faced, and the opportunities Venture Forward seeks to unleash.
1. The positive power of VC has not reached and represented all communities across the country.
VC investors shape where and how capital fuels startups, driving innovation and economic growth. However, the makeup of investment decision makers is concentrated in certain demographic groups and geographies, leaving other founders and funders without the opportunity to share in VC’s wealth creation and fuel innovation.
Impact of VC funders and founders over the past 50+ years:
Expanding VC access nationwide can unlock better business outcomes, drive economic growth, and help the U.S. maintain its global edge in entrepreneurship and innovation.
Women comprised only 19% of investment partners (vs. 47% of the U.S. civilian workforce)
Black employees accounted for only 4% of investment partners (vs. 13% of the U.S. civilian workforce)
Hispanic employees made up only 5% of investment partners (vs. 18% of the U.S. labor force)
VC firms outside California, Massachusetts, and New York together account for just 18% of U.S. VC assets under management.
2% was invested in startups led by female founders
1% was invested in startups led by Black founders
1.7% was invested in startups led by hispanic founders
Companies based outside CA, MA, and NY represented 49% of U.S. deal count
2. For VC firms, cultivating inclusive cultures, adopting strong people practices, and expanding representation can uncover new opportunities for innovation and boost financial performance.
3. Intentional talent management strategies and people practices support sustainable generational transition at firms, ensuring strong industry stewardship for the future.
4. Historically, VC has not been accessible to all communities across the country, in part due to the structure of the industry, traditional decision-making practices, and lack of strategies dedicated to people practices.
Structure of VC industry and firms: Venture capital firms are small by design, reducing opportunities for entry, and VC education and information are not easily accessible.
Headcount at VC firms is small by design and turnover is low, reducing opportunities for entry, consolidating opportunities within a small group, and making it even harder for new investors who want to break in.
VC is a risky and long-term asset class, where most investments tend to fail. For someone without financial security or personal wealth (or connections to wealth), the barrier to entry is high and the upside is uncertain.
With small teams and a focus on investment professionals, many VC firms have historically allocated limited resources towards developing best people practices and cultivating welcoming and supportive environments to recruit and retain talent.
VC education and resources have been limited and not easily accessible. VC is rarely taught in a structured format or in a way that is widely available, and the industry’s reliance on an apprenticeship model has created an additional barrier to entry.
Success (and failure) cycles in VC take time—often 10+ years—and this slow cycle limits the pace of change.
Limited Partners (LPs) are the source of capital to VC firms. LPs operate primarily as fiduciaries to their stakeholders, and control where and how much capital is committed to VC firms. In recent years, more LPs have recognized the importance and positive impact of people practices, talent management, and representation on generational change at firm and generating alpha.
Decision-making process: Psychological factors often creep into hiring or investment decisions, detracting from objectivity and hindering opportunities in and access to VC for all communities across the country.
Approaches to people practices: People practices and talent management strategies are not “one-size-fits all” for VC firms, and should closely consider how talent is recruited, retained, and promoted. Furthermore, approaches should be a considered beyond human resources “check-the-box” exercises.
5. Venture Forward’s structure and approach uniquely position us to: 1) expand VC access for all communities across the country; 2) support talent in advancing their careers; 3) connect talent with VC firms; and 4) guide firms in strengthening their people practices.
We’re investor-focused, meaning we’re opening doors and removing barriers to success for investors and fund managers, who will ultimately fund a broader range of founders. We’re providing them with education, resources, and network building, and we also work directly with VC firms to expand their networks and help them build sustainable, long-term businesses.
In just five years, Venture Forward’s work has had a positive impact. We’ve provided education, unlocked opportunities, and supported the growth of people from all communities across the country to enter and thrive in VC. We also continue to track and measure the trends at VC firms.
60% of VC firms have someone on their team responsible for DEI (vs. 50% in 2020, 34% in 2018, and 16% in 2016).
46% of VC firms have a diversity strategy (vs. 44% in 2020, 35% in 2018, and 15% in 2016).
44% of VC firms have an inclusion strategy (vs. 41% in 2020, 31% in 2018, and 17% in 2016).
Still, progress has been uneven in some cases. For example, white women represent the majority of the growth in female representation among investment partners, while women of color have largely been excluded.
But there’s more work to do. Our team, board, donors, and community are committed to making a meaningful, long-term difference, and we’re on a mission to unleash the positive power of VC to help our industry reach its full potential!
