Why Venture Forward?

Why Venture Forward?
Venture Forward was founded to address serious imbalances within the venture capital industry that prevent it from maximizing innovation, impact, and returns. Learn about these issues, how they arose, and what we’re doing to help.
1. Currently, the makeup of the venture capital industry’s population—and investments—does not reflect the makeup of the U.S. as a whole.
VC investors control where and how much capital is deployed into promising startups that are shaping innovation, driving value and wealth creation, and fueling the economy. But the investor workforce is concentrated in certain demographic groups, leaving others starkly underrepresented. Founders and funders from underrepresented communities and backgrounds have not had equal access to VC or equal opportunity to share in the success of VC’s wealth creation.

As of 2022:

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Women comprised only 19% of investment partners (vs. 47% of the U.S. civilian workforce)

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Black employees accounted for only 4% of investment partners (vs. 13% of the U.S. civilian workforce)

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Hispanic employees made up only 5% of investment partners (vs. 18% of the U.S. labor force)

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VC firms outside California, Massachusetts, and New York together account for just 18% of U.S. VC assets under management.

The composition of the investing class also has profound effects on the types of founders that receive venture capital funding. In 2021, U.S. VC firms deployed $240 billion. Of that:

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2% was invested in startups led by female founders

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1% was invested in startups led by Black founders

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1.7% was invested in startups led by hispanic founders

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Companies based outside CA, MA, and NY represented 49% of U.S. deal count

See the statistics
2. This imbalance stems from the structure of the VC industry, prevailing decision-making factors, and incomplete application of DEI standards.

There are three main reasons for this imbalance:

Structure of VC industry and firms: Venture capital firms are small by design, reducing opportunities for entry, and VC education and information are not easily accessible.

Financial risk and security

VC is a risky and long-term asset class, where most investments tend to fail. For someone without financial security or personal wealth (or connections to wealth), the barrier to entry is high and the upside is uncertain.

Low turnover with few opportunities for entrants

VC firms tend to remain small to maximize the financial benefit for the investors. Therefore the limited number of VC firms, low turnover at existing firms, and the high barrier to entry for new fund managers also means there are few “available” opportunities for anyone to enter.

LPs are capital allocators

Limited Partners (LPs) are the source of capital to VC firms. LPs operate primarily as fiduciaries to their stakeholders, and control where and how much capital is committed to VC firms. Recently, more LPs have started to prioritize DEI when evaluating fund managers or in the GP reporting process, but this remains far from the norm.

A long-term industry means a longer success (or failure) cycle

Success as a VC can take 10+ years to measure, which makes the industry quite unique from other sectors of the economy. It can take years for an investor to see the potential investment upside.

VC firms often lack resources/organizational priority on DEI

Low headcounts and low turnover, coupled with the priority on investment professionals, means VC firms have historically put little resources towards prioritizing DEI.

Limited access to education and information on VC

VC is rarely taught in a structured format or in a way that is widely accessible, and the historically small industry has largely operated through an apprenticeship model. This has been an additional barrier to entry.
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Decision-making process: When hiring or investment opportunities do arise, psychological factors often exclude underrepresented groups from consideration.


Homophily is prevalent as VC investors tend to gravitate towards people who are from the same demographic group.

Unconscious bias

Unconscious bias stems from stereotypes that can influence how investment and hiring or promotion decisions are made.

Pattern matching

This occurs when investors rely on common attributes of past hiring or funding decisions that led to success to inform future decisions.

Network effect

Historically, investors have tended to depend on their existing networks when sourcing talent.

Subjectivity vs. objectivity

Soft skills are frequently cited when VC investors assess talent. However, soft skills are often subjectively measured compared to other objective metrics, increasing the possibility of unconscious bias creeping into talent-related decisions.
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DEI approaches: DEI is not “one-size fits all” for firms, and some approaches have not considered DEI beyond checking a firm’s “diversity hire” box, leading to poor outcomes.

Lack of emphasis on the E and I of DEI

Approaches that have focused on bringing more underrepresented investors into the industry have not fully considered how to support, retain, and promote that talent once acquired.
  • Equity is the outcome of diversity, inclusion, and anti-oppression wherein all people have fair access, opportunity, resources, and power to thrive.
  • Inclusion refers to the actions taken to understand, embrace, and leverage the unique strengths and facets of identity for all individuals so that they feel welcomed, valued, and supported.
  • Both equity and inclusion go beyond representation.

Lack of emphasis on intersectional approaches to DEI

Some industry and firm initiatives that have focused on a specific demographic have not recognized that individual experiences can be based on multiple and intersecting identities that may expose individuals to double or even triple barriers. This can lead to uneven diversity progress.
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3. For VC firms, DEI is crucial: not just to be socially responsible, but also to future-proof the industry and ensure it can maximize impact and returns.
  • VC exists to fund the emerging industries of tomorrow. To avoid developing blind spots on innovation, VC leaders must explore new networks and demographics.
  • Consider that the industry’s remarkable success to date has been achieved without a DEI focus. An industry focused on DEI has the potential to surpass that and unlock its full potential. Diverse teams (at company-level and firm-level) outperform their peers at firms without DEI.
  • As well as helping firms outperform, DEI also increases the firm’s talent pipeline by creating opportunities for skilled individuals who have historically been denied the chance to participate and succeed.
4. Our organization is uniquely suited to address imbalances of representation due to our structure, position, and approach.
We are investor-focused, meaning we can deliver a more diverse set of new investors that will ultimately fund a more diverse set of founders. We remove barriers for new entrants into VC through education, resources, and network building, and we also work directly with VC firms to expand their networks and help them implement DEI strategies.
5. Through the guidance of Venture Forward and other organizations, the situation is improving; representation in VC is slowly starting to mirror the U.S. makeup.
The venture capital industry has seen some progress in recent years that give optimism for an industry moving closer to parity. Firm-level DEI strategies and prioritization have become more prevalent and are an encouraging sign for meaningful change.

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60% of VC firms have someone on their team responsible for DEI (vs. 50% in 2020, 34% in 2018, and 16% in 2016).

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46% of VC firms have a diversity strategy (vs. 44% in 2020, 35% in 2018, and 15% in 2016).

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44% of VC firms have an inclusion strategy (vs. 41% in 2020, 31% in 2018, and 17% in 2016).

Still, progress has been uneven in some cases. For example, white women represent the majority of the growth in female representation among investment partners, while women of color have largely been excluded.

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Thanks to our efforts, there’s a growing understanding of the importance of intersectional approaches to DEI.

Firms are also learning that it’s not enough to get investors from underrepresented communities into the ecosystem—once on board, these individuals must be respected, nurtured, and most of all: valued.

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