Fairview Capital’s 2020 Market Review of Woman and Minority-Owned Private Equity and Venture Capital Firms

This 2020 report by Fairview Capital examines the state of woman and minority-owned private equity and venture capital firms.

The following report shares key trends and data observed by Fairview in 2020.

  • The universe of woman and minority-owned firms now totals over 500 and continues to grow rapidly
  • New firms are raising smaller pools of capital and first-time funds represent a larger proportion of the opportunity set than ever before
  • New firm formation activity is most significant in venture capital, a segment of private equity that has proven highly resilient
  • Diverse managers continue to feature a natural diverse multiplier effect at the portfolio company level, while at the same time, firms explicitly targeting woman and minority entrepreneurs are at an all-time high
  • The need for intentionality and genuine programmatic approaches to backing woman and minority-owned firms is at peak levels

Fairview Capital 2019 Market Review of Woman and Minority-Owned Private Equity and Venture Capital Firms

This 2019 report by Fairview Capital examines the state of woman and minority-owned private equity and venture capital firms.

The universe of woman and minority-owned private equity and venture capital firms closed out the decade with another record year of growth.  At nearly 400 firms, this group is larger than ever, and 2019 marked yet another record number of firms raising capital, with nearly 200 funds in market. With this growth has come increased complexity as market dynamics have resulted in new firm formation in often-overlooked areas of the private markets.

Woman and minority-owned firms remain well positioned to succeed, in part due to this differentiation. Despite the growing opportunity set, institutional investors remain slow to invest capital with diverse firms, due to a number of factors, including continued misconceptions, biases and lack of information. A deliberate, programmatic approach remains one of the best ways to invest successfully with diverse managers.

Table Stakes | Highlighting and shifting the equity gap

Only 1 in 3 people in venture-backed companies is a woman, and women are granted less equity on average. Read the 2019 study using anonymized Carta data to learn what’s behind the gender equity gap.

VCs, Founders, and the Performance Gender Gap

In this paper, Dr. Raina compares the gender gap in performance between startups initially financed by syndicates led by VCs with only male GPs and startups financed by syndicates led by VCs with female GPs.

The author finds a much larger performance gap among startups financed by syndicates with only male lead GPs and shows that this disparity is driven by differences in VCs’ ability to evaluate female-led startups. The author’s findings imply that VCs contribute to the performance gender gap in startups.

ProjectDiane

ProjectDiane is a biennial demographic study authored by digitalundivided. It reveals a snapshot of the state of Black Women Founders in the United States, and the startups they lead.

Gender and Venture Capital Decision-Making: The Effects of Technical Background and Social Capital on Entrepreneurial Evaluations

In the high-tech industry, women without technical expertise are less likely to be awarded venture capital than their male counterparts who lack this same technical expertise. This gender gap does not exist when comparing men and women who both possess technical skill.

This study from the Harvard Kennedy School explores the interaction of having a technical background with gender biases in performance evaluations of male and female entrepreneurs and their proposed ventures through an experimental design.