Diversity will lead to uniformity, feel women leaders in PE and VC

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Diversity in workforce and decision-making will not only lead to a more holistic approach and enable deeper perspectives within companies, big or small, but also help achieve better returns on investments in the long run, feel women leaders in the private equity and venture capital industry.

Although many women have made inroads into, and achieved excellence in traditionally male-dominated PE/VC circle, but the hard truth is that their percentage is still very low. This International Women’s Day, DEALSTREETASIA takes a sneak peek into how these women have attempted to break gender stereotypes, and are addressing challenges and hurdles facing them, and the road ahead.

Skewed Proportion

Venture capital firms have made a notable improvement in the hiring of women in senior positions in the past few years. As per a 2016 Preqin report, Asia-based private equity firms have consistently had the highest average proportion of female senior employees, and the trend continued in 2016 with 11.9 per cent of senior roles being held by women. Across other regions, the average proportion of female senior employees grew slightly, and stood at a little above 10 per cent in 2016.

Infrastructure, real estate and venture capital firms had all seen increases in the average proportion of women in senior roles from 2015 to 2016, the report said. However, the sectors continue to be ruled by the opposite gender.

 

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preqin-2preqinWhen asked the reason for lesser women in senior roles, Josephine Price, co-founder of Anthem Asia said, “There is the same debate in relation to the number of women on the boards of public companies- why are there so few when all the evidence suggests that diversity including gender balance produces better decision making and better boards?”

“We, at Anthem, prefer to demonstrate that women in private equity and diversification generally are a very good thing in practice, not just talking about it,” Price added.

Of the top 100 venture firms that Tech Crunch reviewed in its CrunchBase Women in Venture report 2016 globally, about 7 per cent of the partners, or 54 of 755, were women, and 38 per cent of the top 100 firms had at least one female partner. Twenty-eight firms have one, while seven have two.

Sequoia Capital was one of the firms with two female partners, both based in China. Canaan Partners had three, while Qiming Venture Partners, based in Shanghai, has four. NEA topped the chart with five female partners, with one partner based in India, the report said.

“Only 10 per cent of the ecosystem is represented by women led startups. The problem lies from school level, high school and college level participation of women. It is a slow and steady movement, but there needs to be equal representation of women in sciences and math and there needs to be enough programs to educate about the same,” said Ankita Vashistha of Saha Fund.

A study by Grant Thornton released on International Women’s Day last year brought out that India ranks third lowest in the proportion of business leadership roles held by women for the second year consecutively, and added that 34 per cent of the Indian businesses surveyed have no women in leadership. The survey was conducted among 5,520 businesses in 36 economies.

Challenges & Hurdles

Some of the factors that have restrained women from entering the sectors include preset notion that men are better with networking and fund raising, major calculations require math that is opted for by fewer women, unconscious bias towards men, general hitch, etc.

“The false perception (not fact) that this is a ‘man’s job’ and too difficult for women. Women bring a different perspective and are very often better at forging and maintaining relationships—a critical success factor for the PE industry,” said Ritu Kumar, Director (Environmental and Social Responsibility) at CDC Group.

“Like most things nothing much will change unless until LPs/shareholders make it a requirement before funding,” Price added.

A McKinsey & Company report suggested that companies with higher numbers of women at senior levels are also companies with better organizational and financial performance. Essentially, the significant lack of female representation, especially women partners in the industry, has reduced its ability to reach market potential, employ top talent, and as a result, limits industry growth.

“Gender is the first thing noticed, coded, and categorized during social interaction. Thus, we should expect a bottlenecking of cognitive bias toward one gender or another. Many a times women feel that the entrepreneurs did not treat them in the same way as their male colleagues,” Archana Priyadarshini, venture partner at Unicorn India Ventures said.

“According to research, financial characteristics common to women are described as the instinct to save, feeling insecure about money, being nervous about the future and willingness to get the market returns. More and more women categorize themselves as savers versus investors. Only 5-8% women hold partner position in VC,” she added.

However, some feel that it’s the burgeoning startup ecosystem in Asia that is giving fillip to women be a part of the growth story, and hence more are looking at a career in the PE/VC industry. However, family commitments, lack of education, and role models in decision-making circles is restricting them from doing so.

“Investing business does need extensive networking and sometimes, this can be a challenge for women as they juggle multiple roles in life. However, social media / online connectivity, this gap is somewhat narrowing,” says Padmaja Ruparel of Indian Angel Network

Road Ahead

Having more women role models and mentors would bring about a change in perception as well as industry dynamics, these women feel. This will in turn motivate more women to join the industry.

“We need to create more female focused events to build awareness that women exist in this industry. We need more speaker series, sharing sessions, etc. led by women active in the sector to share their experiences, and provide advice to other women interested in pursuing a career in a startup or PE/VC firm,” says Geraldine Oetama, executive director at Skystar Ventures.

Adds NEA India managing director Bala Deshpande, “Many researches and studies have shown that diversity of work force, in general, leads to a more holistic approach and enables deeper perspectives within companies, big or small. For a PE/VC firm, having a deep perspective is a big differentiator and a significant competitive advantage. It follows therefore, logically speaking, that having gender diversity would help a VC firm.”

The journey to becoming a VC or PE is very atypical – one can become a VC after being an entrepreneur, an investment Banker, a Corporate professional with deep domain expertise etc. The first and foremost mindset that needs to change is that the VC career is like other careers – it is a different world and anyone who aspires to enter it, must understand the different dynamics that drive it, she added.

Some also felt the need for the government to come into action in this regard.

“There should be affirmative action while government schemes for startups and women fund managers,” said Rema Subramanian, Co-Founder and Managing Partner at Ankur Capital.

“With half the global population being women, they form an important set of consumers. Gender diversity is required to ensure products and services are designed for their needs. This is very critical for a startup,” she added.

Also Read: 

Having more women role models will help: Rachel Lau, RHL Ventures

No glass ceiling for women in VC/PE, it’s just percieved so: Cradle Seed Ventures CEO Dzuleira