Diversity, equity, and inclusion (DEI) data from 315 venture capital (VC) firms, representing more than 5,700 U.S.-based, full-time employees and $594.5 billion in assets under management, is now available as part of the “VC Human Capital Survey,” powered by Venture Forward, the National Venture Capital Association (NVCA), and Deloitte. This survey series takes a unique approach to assessing DEI in the VC industry. It gathers data confidentially from VC firms of all types and sizes, examines various demographic groups across all positions, and evaluates firm talent management strategies, including DEI practices and goals. The fourth edition of the survey provides a first glimpse into outcomes from initiatives that many VC firms made following the summer of 2020, when social justice and racial equity were a heightened focus for the country.
Key takeaways
More VC firms are incorporating DEI strategies.
Nearly one-half (46 percent) of surveyed firms have a diversity strategy (up from 44 percent in 2020, 35 percent in 2018, and 15 percent in 2016), and 44 percent have an inclusion strategy (up from 41 percent in 2020, 31 percent in 2018, and 17 percent in 2016). In 2022, 60 percent of firms said they either have a staff person or a team responsible for DEI (an increase from 55 percent in 2020, 34 percent in 2018, and 16 percent in 2016). The majority of firms have established or plan to establish specific DEI goals. This new question found that 40 percent of the firms surveyed in 2022 stated they now have specific DEI goals, while 23 percent plan to implement goals within the next six months.
More VC firms are seeing DEI interest from limited partners (LPs) and focusing on DEI at portfolio companies.
In 2022, 47 percent of firms said that LPs requested their DEI details within the last 12 months, an increase from 41 percent in 2020, and 36 percent in 2018. In 2022, 38 percent of firms said they requested DEI details from their portfolio companies, an increase from 30 percent in 2020, and 19 percent in 2018.
Women are far from parity, although their representation is steadily trending upward.
Female employees represent 26 percent of investment professionals in 2022, up from 23 percent in 2020, 21 percent in 2018, and 15 percent in 2016. The proportion of women in junior-level investment positions grew in 2022 to 35 percent, up from 33 percent in 2020, 28 percent in 2018, and 25 percent in 2016. Among investment partners, women represent 19 percent, up from 16 percent in 2020, 14 percent in 2018, and 11 percent in 2016. In 2022, 57 percent of firms reported they do not have any female investment partners (compared with 65 percent in 2020, and 68 percent in 2018). Only 15 percent of firms said they had more than one.
Racially and ethnically diverse women saw slim gains among investment partners.
Black women comprised one percent of investment partners in 2022 compared to 0.25 percent in 2020 and one percent in 2018. Among investment partners, five percent were Asian/Pacific Islander women in 2022, compared to three percent in 2020, and five percent in 2018. Hispanic women were two percent of investment partners in 2022, increasing from one percent in 2020 and 2018. White non-Hispanic women comprised 13 percent of investment partners in 2022, up from 12 percent in 2020, and 11 percent in 2018.
Female representation among investment professionals with senior decision-making responsibilities realized little or no gains.
Women constitute a distinct minority of investment professionals with senior decision-making responsibilities such as originating deals (25 percent versus 24 percent in 2020), representing the firm on the boards of portfolio companies (20 percent versus 21 percent in 2020), serving as a member of the firm’s investment committee (20 percent versus 21 percent in 2020), and serving as an owner of the management company (17 percent versus 18 percent in 2020).
Representation for Black professionals remains limited.
Black employees comprised five percent of investment professionals in 2022, an increase from four percent in 2020, and three percent in 2018. Black professionals also comprise four percent of senior-level positions (four percent in 2020, three percent in 2018), and seven percent of junior-level investment professional positions (seven percent in 2020, five percent in 2018). Eighty-nine percent of firms report they do not have any Black investment partners (93 percent in 2020 and 2018).
Some improvement in Hispanic representation.
Hispanic employees comprised six percent of investment positions in 2022 (four percent in 2020, five percent in 2018), and five percent of investment partner positions (four percent in 2020, three percent in 2018). Hispanic representation among junior-level investment professionals also increased from four percent in 2020 and 2018 to five percent in 2022.
Younger and smaller firms have more diversity among investment partners.
VC firms founded within the last 10 years reported that a larger percentage of their investment partners were Black (eight percent), Hispanic (eight percent), and female (22 percent) as compared to older firms where Black (one percent), Hispanic (two percent), and female (17 percent) investment partners were not as prevalent. A more significant percentage of investment partners at small firms were Black (11 percent), Hispanic (11 percent), and female (25 percent) than at mid-size firms (Black three percent, Hispanic five percent, female 18 percent), and large firms (Black one percent, Hispanic one percent, female 16 percent).
Why this matters
The VC industry plays a critical role in identifying and funding innovative startups that create jobs and economic value—and in the process, improve people’s personal and professional lives. A startup ecosystem with investors and innovators that better reflects the demographics of the country has the potential to unlock opportunities for even greater success, wealth distribution, and economic value.
In addition to benchmarking data on gender diversity, racial diversity, ethnic diversity, age diversity, talent management and DEI practices—this year’s report provides strategies and insights to help VC firms improve and promote DEI to continue moving the needle.
Next, read The Tech Industry Talks About Boosting Diversity, but Research Shows Little Improvement for more research and discussion on DEI.
Key quotes
“Top management must recognize a moral and business imperative to act on broader social responsibilities. While gains have occurred, they have been uneven, and negligible in some cases, highlighting the need for strong leadership with intentionality towards making change. There is optimism for the future. The increasing diversity among junior-level positions indicates the potential for greater representation among senior positions as talent matures and rises through the ranks.”
– Heather Gates, Audit & Assurance national private growth leader, and managing director, Deloitte & Touche LLP
“In addition to creating the systems and processes that advance equitable outcomes, it’s imperative for organizations to create a culture of inclusion and belonging where all individuals are empowered to thrive.”
–Kavitha Prabhakar, chief diversity, equity and inclusion officer, Deloitte LLP
“This survey is a critical component to holding the industry accountable and measuring its DEI progress. While it’s too soon to see outcomes of 2020 commitments and strategies focused on racial and ethnic diversity fully reflected in the latest data, there continues to be important—albeit small—gains. Even during challenging times, VCs must continue to prioritize DEI to maintain momentum and ensure progress does not regress.”
– Maryam Haque, executive director of Venture Forward
“VC firms are recognizing that not prioritizing DEI is a barrier to funding innovation and achieving higher returns. At a high level, the data showed improvements across most categories, however, if the industry truly wants to make meaningful progress and reach its fullest potential, it needs to build upon this positive momentum and commitment around DEI efforts.”
– Bobby Franklin, president & CEO of NVCA
Report methodology
The “VC Human Capital Survey,” powered by Venture Forward, NVCA and Deloitte, assesses the state of DEI in the VC industry. The fourth edition of the ongoing series provides a source of information that allows firms to benchmark themselves against industry practices and helps them identify innovative approaches to promote DEI. The survey was conducted from August 29 to October 7, 2022, and was completed by 315 venture capital firms, representing an aggregate total of $594.5 billion in assets under management, on the demographics and talent management practices of approximately 5,700 employees.
Diversity can be described as the representation, in a group, of various facets of identity, including (but not limited to) race, ethnicity, nationality, gender identity, LGBTQ+ status, socioeconomic status, ability, religion, and age. Inclusion can be described as the actions taken to understand, embrace, and leverage the unique strengths and facets of identity for all individuals to feel welcomed, valued, and supported. “Investment partners” are defined as employees with the titles of managing general partner, managing partner, general partner, founding partner, or managing director, or were partners who were designated as senior-level employees and as investment professionals with senior decision-making responsibilities.
About Venture Forward
Venture Forward is a 501(c)(3) nonprofit founded by NVCA to support both current and emerging venture capital investors by addressing imbalances of access, resources and opportunity. The organization’s vision is to see more women, people of color and underrepresented people in investment positions of power who will ultimately fund a more diverse set of innovative founders, helping the ecosystem reach its fullest potential. For more information, visit ventureforward.org.
“People of color” is defined as Asian American/Pacific Islanders, Black and African American, Native American, or American Indian and Hispanic or Latino including people of white descent who identify as Hispanic or Latino.
About NVCA
The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the U.S. venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about the NVCA, please visit www.nvca.org.
About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90 percent of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s approximately 415,000 people worldwide connect for impact at www.deloitte.com.
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