How do women investors perform in

venture capital industry?

July,2016

InpartnershipwithPEHubandVCJ(VentureCapitalJournal).

WOMEN.VC,RenataGeorge2016
Allrightsreserved.
Shortsectionsoftext,nottoexceedtwoparagraphs,
maybequotedwithoutexplicitpermissionprovided
thatfullcredit,includingnotice,isgiventothesource.

Abstract

There isaplethoraofdifferentstudiesandresearchesonwomeninventurecapital,
and venture capitalfinanced entrepreneurship. Though these studies provide us
withvaluable observations, notmuchisknownto havebeendonetochangethese
trends.

The main goal of the study of WomenVC was not to compare women investors
against men, but to analyse the data that could help us to understand the
performance of women venture capitalists, which has been never done before,as
wellassuggestpossiblemeasurestostrengthentheirpositioninindustry.

Whatweanalysed
First, none of the existing data bases private or public, freeor paid,containfull,
accurateanduptodateinformationonventurefundsandtheirportfolios,andeven
less on their partners and executives. Therefore, we used several sourcesofdata:
Pitchbook, CBinsights, Crunchbase, LinkedIn, funds websites, Google Search,
corporate and personal blogs, social media accounts, as well asdirect interviews,
andcrosscheckedallofthemseveraltimes.

Second,we neededtofindall activeventurefunds and partition themfromallthe

inactive ones, as well as from other types of investment firms, such as PE or
venture debt firms, angel groups, acceleratorsandincubators(unlesstheyoperate
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as a typical venture fund). We considered a venture fund active if it had new

deals in 20152Q2016, appeared on the news, had their websites, and/or social
mediaaccountsupdatedwithinthesametimeframe.

Third, we had to scan the teams of these active venture funds to find women
makinginvestmentdecisions: wewilladdressthemaswomenventurecapitalists
hereafter. This was not an easy task, as none of possible titles at a venture fund
necessarily connotes active deal sourcing and investment decision making.
Therefore, we considered representative only women who were mentioned as
members of investment committees, and hold seats on boards of companies
associated with them, or women that were leading partners on their investment
rounds (hereafter, portfolio companies). Its important to mention,thatwetook
into consideration only the companies associatedwiththese women investorsthat
were backedbythefundstheyworkedfor, eliminating theirangelinvestments,or
othertypeofassociationwithstartups.

Finally, we compiled their profiles with the following information: year of birth,
education, working location, angel investing experience, continuance of their
career in venture capital, number of years with voting rights, associated venture
funds,careerstartas associatesor analysts, whethertheyfoundedventurefundsor
belong to corporate ones, their industry investment focus, associated companies
andmediapublicity,amongsomeotherdata.

Careerpathofwomenventurecapitalists
Thereisanopinionthathavingangelinvestingexperiencewillhelpyougetinto
theventurecapitalindustry.However,lessthan15%ofactivewomenventure
investorsinvested,orarecurrentlyinvesting,asangels.

Anothercommonperceptionofagoodwaytostartacareerinventurecapitalis
gettinganassociateoranalystpositioninitially.However,only25%ofactive
womenventureinvestorswereonthispath.

Itisworthmentioning,thatthesetwooptionsforgettingintoventurecapital
industryarepracticallymutuallyexclusivethepercentageofwomenventure
investorswhowerebothangelinvestorsandassociates,beforebecomingventure
capitalists,isinsignificant.

Noneofthesepaths,however,canberegardedasasurethingforwomento
becomefoundersoftheirownventurefunds.Animpressive30%ofallcurrently
activewomenventureinvestorswere,orcurrentlyare,foundingpartners.Lessthan
10%ofthosewhostartedasangelinvestors,associatesoranalystsmadetheirway
tobecomingfoundersofventurefunds.Allothersareliterallyselfmadeventure
capitalists.

Wefoundmanywomenventurecapitalistsincorporateventurefunds,who
transferredtothispositionfromallsortsofotheroccupationsinsidecorporations.
Therefore,thereisnosetruleforbuildingacorporateinvestorcareer.However,no
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matterwhatroleawomanplaysbeforeshebecomesacorporateinvestor,
statistically,shehastoworkforthecorporationforatleast4yearsonaverageprior
tothat.

Anotherinterestingobservation,isthattherearemorewomenventurecapitalistsin
healthtechandlifesciencesectorscombined,thaninsoftwaretoday:31%against
15%respectively.Thisisconsistentwithhistoricratiointhesesectors,however,
withtheITsectorgrowingandbeingfilledinwithsuchindustryverticalsas
fintech,edtech,mediaandentertainment,etc.weuseitasastandalonesectorfor
thepurposeofthisstudy.SoasnottoinventnewdefinitionsofsoftwareandIT
sectors,weusedtheonesadoptedbyPWCMoneyTree.With42%ofwomen
ventureinvestorsfocusedonInternetenabledservices,itisfairtosaythatITis
noweatingtheworld.

Howdowomenventureinvestorsperform
Themaingoalofourworkwastocalculateperformanceofwomenventure
capitalists.Todothis,wehadtoanalysetheirportfoliocompanies.Assuch,we
consideredcompaniesthatarenamedasassociatedwithwomenventurecapitalists
ontheirfundswebsites,companiesatwhichtheyholdseatsonboards,and
companiesthatwomenventurecapitalistswereleadingpartnersontheir
investmentrounds(portfoliocompanies).
Itisagainimportanttomention,thatwepickedonlythosecompaniesthatwere
fundedbytheventurefundsthatwomenventurecapitalistsworkedfor.Thus,
sortingoutangelinvestmentsofthesewomenventurecapitalists,aswellasthose

companiestheyholdseatsonboardof,representingthemselvesoranyother
organizationsbesidestheventurefundstheyworkedfor.

Themostcommonevidenceofventurecapitalistssuccessisareturnon
investmentsoftheventurefund(netreturnmultiple).However,sinceweneeded
tocalculateonlywomenssuccess,andtheydonotnecessarilymakeinvestment
decisionsonallormostoffundsinvestments,wehadtocalculatethevaluations
andreturnsoninvestmentsonlyfortheirportfoliocompanies.

Thoughweextractedmorethan3,000companiesassociatedwithnowactive
womenventurecapitalists,weconsideredonlythosethatmeetthefollowing
conditions:(a)allthenecessarynumbersneededforcalculationwereavailablefor
thecompanies(totalfundsraisedtodate,valuation,exitdealamount),and(b)the
exitevents(M&A,IPO,liquidation,etc.)havetakenplaceafter2010andbefore
July2016.Forthecompaniesthathaventhadanyexitevents,weusedthemost
recentdealsvaluationtocalculatetheircurrentvalue,comparedtototalfunds
raiseduptodate.

Theoverallperformanceofwomenventurecapitalistsportfoliocompaniesis
3.78x(totalvaluetototalfundsraisedbyportfoliocompanies).Notonlydoesthis
calculationincludeportfoliocompaniesthathavebeenliquidateddueto
bankruptcyorotherwise,butwealsopaidattentiontodownrounds.Ergo,their
totalfundsraisedamounts,withnoreturnsorlosses,negativelyaffectthepositive
performanceofothercompanies,givingusaprettyrealisticpictureontheiroverall
performance.Ifweconsiderpossibleerrors,andadjustthiscalculationasifitwere
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onemassiveventurefund,includingallmanagementfees,carriedinterestand
possibleexpenses,thereturnmultiplestillremainsabove2x(totalvaluetopaidin
capital).Wetriedtoremainconservative,andassumedthatthemanagementfeeof
suchafundwouldbe2.5%,andthecarriedinterest25%.Sincethesenumbersare
commonlylowerinreality,wecouldexpectanevenahigherreturnmultiple.

AccordingtotheKauffmanFoundation,theaveragenetreturnmultipleofventure
fundsintheUSis1x<2x.Therefore,theabovecalculatednetreturnmultipleof
womenventureinvestorsportfoliosbelongstoanevenbettergrade.Ergo,women
ventureinvestorsperformanceispositive,andmorepromisingthantheaveragein
theindustry.

Thisdataistimesensitive,andwewillcontinuemonitoringandupdatingthe
portfoliocompaniesofwomenventurecapitaliststoshowtheirperformance.In
orderforustocalculatethisasaccuratelyaspossible,westronglyencourage
womenventureinvestorstoatleastsharewithusthenamesoftheirportfolio
companies.

Wedeliberatelyrefrainfromcomparisonofwomenandmenventurecapitalists
performance,becauseitistheinitialpositionofWomenVCCommunitynotto
opposemen,buttocooperate.Wechosenottocontinuewhiningandobsessing
overnumberdifferences,buttohighlightthewomenwhohavealreadybecome
membersofthis"boysclub"ofventurecapital,andwhofeelcomfortablethere.
Wewanttoreplacewordswithrealnumbers,somethinginvestmentprofessionals
aresupposedtodo.
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Suggestedmeasures
Professionaleducationisimportant
Eventhoughmostofnowactivewomenventureinvestorshaveenoughexperience
inventurecapital,learningthisartwithinestablishedventurefirms,Michael
Moritzsstillmadehiswellknownremarkaboutlackofprofessionalwomenin
venturecapitalwhenitcametohiringmorewomenatSequoiaCapital.
Consideringthat,aswellasthefactthatasubstantialpercentageofwomenventure
investorskeepstartingtheirownventurefunds,professionaleducationinventure
capitalwoulddefinitelycontributetotheperceptionofwomenintheindustry.We
havepreparedabriefoverviewofexistingeducationalprogramsonventurecapital
forreferenceonwww.women.vc.
Womenventureinvestorssuccessshouldbemorevisible
TheaveragenetreturnmultipleamongventurefundsintheUnitedStatesis1x<2x.
Aswehavecalculatedfromtheavailabledata,thenetreturnmultipleofwomen
ventureinvestorsportfoliosisconsistentwiththisnumber,oroutperformsit.
Therefore,womenventureinvestorsperformanceisworthyofmorerespect,
however,itisalmostinvisibleinmedia.Thismaypartlybeexplainedbythefact
thatsuchfieldsashealthtech,biomedandpharmaaremorecommoninvestment
focusesamongwomenventureinvestors,thansoftandhardware.Theformer
industriesdonotappearofteninpopularmediaduetomanyreasons,therefore,
successesofwomenventureinvestorsgetlittleattention.However,theoverall
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percentageofwomenventureinvestors,aswellasthepercentageofthosefromthe
ITindustry,whoaredeliberatelyactiveinthemediaisstillprettylow.Therefore,
thisisanotherbarrierthatsupportsexistingbiasaboutwomenventureinvestors.
Ourlistofactivewomenventureinvestors,opportunitytocontactthemrightfrom
ourwebsite,andoursocialmediaupdatesontheirsuccess,shouldraiseawareness
andencouragethemediatodevotemoreattentiontowomeninventurecapital,
whichwillturnthenegativetrendsintheoppositedirection.

Women.VC20152016
Web:www.women.vc
Email:to@women.vc