U.S. venture capital firms are showing some progress in increasing gender, racial and ethnic diversity, but gains are small and uneven, according to the latest VC Human Capital Survey by Venture Forward, the National Venture Capital Association and Deloitte.
Some 315 venture capital firms representing an aggregate total of $594.5 billion in assets under management completed the survey, which was conducted from Aug. 29 to Oct. 7. The survey has been conducted every two years since 2016.
Some 26% of investment executives at venture capital firms were female in 2022, up from 23% in 2020 and 21% in 2018. Meanwhile, 5% of investment professionals were Black employees in 2022, an increase from 4% in 2020 and 3% in 2018, and 6% of investment executives were Hispanic, ticking up from 4% in 2020 and 5% in 2018.
While there has been positive movement in almost every category, "to be honest I was hoping to see a little more movement," said Heather Gates, national audit and assurance private growth leader at Deloitte, in an interview.
Women made up 19% of investment partners, increasing from 16% in 2020 and 14% in 2018. However, 57% of venture capital firms do not have a single female investment partner, which is down from 65% in 2020 and 68% in 2018. Only 15% of firms that have female investment partners indicated that they had more than one.
Four percent of investment partners are Black, an increase from 3% in 2020 and 2018. Five percent of investment partners are Hispanic, up from 4% in 2020 and 3% in 2018.
A minority of investment executives with senior decision-making responsibilities are female. Twenty-five percent of executives originating transactions are women, up from 24% in 2020; 20% of investment executives sitting on portfolio company boards are female, down from 21% in 2020; 20% of firm investment committee executives are women, down from 21% in 2020; and 17% of management company owners are women, down from 18% in 2020.
At the same time, there was an increase in women as well as Black and Hispanic investment professionals, which is an "encouraging sign," said Maryam Haque, executive director of Venture Forward, in the same interview. Venture Forward is a non-profit launched by the NVCA to further diversity in the venture capital industry.
Thirty-five percent of junior level investment executives were female in 2022, rising from 33% in 2020 and 28% in 2018. Seven percent of junior level investment professionals were Black in 2022, flat from 2020 and up from 5% in 2018.
The increase in diversity among the junior ranks "indicates our pipeline of talent is more diverse and, hopefully, that will lead to more changes down the road," Deloitte's Ms. Gates said.
More limited partners asked venture capital firms for diversity, equity and inclusion data in 2022, In 2022, 47% percent of firms indicated they received such requests within the prior 12 months, rising from 41% in 2020 and 36% in 2018.
An increasing number, 38%, of venture capital firms are asking for diversity, equity and inclusion information from their portfolio companies, an increase from 30% in 2020 and 19% in 2018.
"LPs are starting to recognize that diversity is not only the right thing to do but it is the smart thing to do," with more diverse firms outperforming firms with fewer female and minority investment professionals, Ms. Haque said.
