It’s not just female founders who struggle to get their fair share of funding. It’s also female VCs.
In the UK, all-male-owned VC funds raised around ten times more capital than all-female-owned funds — and almost five times more capital than mixed-gender-owned funds — between 2017 and 2023.
This means that of the £6.6bn raised by UK-based VCs since 2017, just £462.5m was raised by all-female-owned funds, according to a new report from Ada Ventures, Diversity VC and Google Cloud.
What’s more, the report found that just 23 women have a significant stake in a VC firm in the UK (17.7% of those who have a significant stake in a VC firm).
That, in turn, has a knock-on effect on the number of women with significant stakes in the startups those VCs fund. (Women VCs are up to two times more likely to invest in female founders.)
“Venture capital is ultimately a relationship and networks-based industry (unfortunately), and if the top allocators [the limited partners who back VCs] invest in such a homogenous way, we are never going to get out of the cycle of less and less funding going to diverse founders," says Monik Pham, founding partner of London-based early-stage VC Pact. "We know that, for example, only 2-3% of funding goes to women, but ultimately it’s because there are very few women doing the funding.”
Few women at the very top
The report looked at 156 UK-based VC funds raised between January 2017 and July 2023, which between them have 1,760 team members. It used data from publicly available data sources such as LinkedIn, Companies House and firms’ own websites.
81% of non-investment titles — including legal, marketing, HR, compliance, operations and assistants — are held by women, as well as a majority (56%) of junior titles — analysts and associates.
And despite the UK VC workforce being 38% female, men hold 78% of senior roles.
The ownership that comes with those senior roles — managing partner, founding partner, general partner or partner — varies greatly at each fund.
Of the 487 people it identified as having a senior title, only 130 people (27%) have significant ownership (more than 25%) of the VC management company, the entity responsible for running the VC fund (or funds).
Of the women who have senior titles, just 23 own more than a quarter of the management company.
That’s significant because VC management companies receive management fees from the LPs (limited partners) who invest in VC funds. These are usually around 2% of the fund.
Management entities also receive carried interest — a share of the profits from a VC fund — which is typically around 20%. It is up to those who own the management entity to decide how to divvy up that carried interest amongst the broader VC team.
Greater transparency around who ultimately profits from VC funds would help, say some investors. That can come from VCs themselves — but also their LPs.
“Fees, carry and other comp figures regularly get shared in group chats and emails but no one ever talks about it publicly — it’s time to change this,” says Pham.
“All LPs, but particularly LPs who are publicly funded, should be regularly and openly reporting on the gender breakdown of the funds where their capital is being invested — not just by job title, but by management company ownership, breakdown of carried interest allocation and investment committee membership, disaggregated by gender and other protected characteristics,” says Ada Ventures’ founding partner Check Warner.