Venture Capital: Here’s how VC firms can reduce the gender gap in investing

MUMBAI: The private equity and venture capital industry have become a significant part of economic activity across the world, yet female representation in the alternative investment industry continues to be amongst the lowest.

This issue is becoming more urgent in Asian markets, where the number of companies with PE/VC funding has risen sharply and will continue to do so in the next several years. Limited Partners (LPs) have also started asking questions about diversity, with many requiring periodic reporting on DEI from General Partners (GPs).

WinPE in partnership with Boston Consulting Group (BCG) has launched a report titled, Closing the Gender Gap in Investing – how Indian PE/VC firms can bridge the diversity divide.

To understand how diversification efforts are progressing in India and other parts of Asia, BCG fielded two surveys in Q4 2021. The first comprised 36 PE/VC firms, 29 of which are based in India and seven in Southeast Asia. The second covers over 80 women from the industry in both India and other parts of Asia. The report also includes learnings from interviews with more than 20 PE/VC executives, including women across levels from associates to partners and heads of funds, and men in leadership roles.

The report outlines the current state of gender diversity in the Private Equity and Venture Capital industry in India, the efficacy of different types of interventions that have been implemented by firms and persisting obstacles to improving the representation of women in the investing industry. It also lays out key points for firms as they chart the way forward to bridge the gender gap.

The research indicates that the representation of women in PE/VC firms grew from 16% in 2018 to 25% in 2021, 90% of women feel safe in voicing their opinion at work and 80% say they feel valued and heard. But there is more ground to cover and there are still gaps at mid-senior level roles.

Initiatives to promote gender diversity broadly target four areas:

• Culture: Flexible working hours, locations and support for equal maternity/paternity benefits were rated as highly effective interventions by the women surveyed and offered by over half the firms surveyed. However, women need senior role models to feel more comfortable taking advantage of these initiatives and policies.
• Recruitment: Increasing focus on recruiting women via a variety of initiatives was perceived to be effective. Firms that are making progress in this dimension are doing so by widening the ‘top of the funnel’ – i.e., increasing the number of women they interview for entry-level roles, and widening the aperture to hire women laterally from adjacent industries for mid-to-senior level roles.
• Advancement: According to the firms surveyed, the top reason for attrition of women was a life event such as maternity, with working hours and company culture not far behind. Active talent management for high-potential women and a conscious focus were cited as highly effective interventions to retain and support the advancement of women.
• Leadership: It is important to offer senior role models to women (within/outside the geo or business) and it is critical for senior men to champion and jointly drive the gender diversity agenda within their firms.

In a statement, Nupur Garg, Founder, WinPE said, “WinPE was launched in February 2020 with the vision of enhancing the participation of women in the investing and entrepreneurship ecosystems. Members of the private equity and venture capital industry recognize this imbalance intuitively and corroborate it anecdotally. With this report in collaboration with Boston Consulting Group, we aim to equip them with data that gives shape to the challenge and insights that offer a peek into the solutions.”

“Looking ahead, to continue to maintain momentum in improving gender diversity, PE/VC firms need to work to increase the number of women they are retaining and hiring into mid-to-senior level roles, encourage cultural acceptance of flexible work hours and hybrid working models across male and female employees. Firms should also look to enhance the visibility of senior women role models and build communities. And it is important for senior men to also sponsor high potential women and champion the gender diversity agenda,” said Kanchan Samtani, Managing Director and Partner, BCG India, in a statement.

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