Fewer than one-quarter of venture investments in the US go to start-ups with a female founder, and only one out of every seven goes to a female-led company, according to the latest All In report from Pitchbook and Microsoft.[1] At Working Capital Fund, our portfolio reflects a significant improvement on this industry statistic. We want to share the questions we’ve been asking ourselves and what we have learned as we dug into the data behind the leadership by gender in our fund.

At all times since we started investing, at least half of our companies have had a female founder or CEO.  Currently, of our nine portfolio companies, five were founded or co-founded by women. have female CEOs or founders.

We committed at the outset to apply a gender lens to our investments, but do not have a mandate to invest in a specific number or percentage of women-led companies.  We have no benchmarks for choosing female-led startups above male-led startups when all else is equal. And yet we are pleased to see a gender balance among our investments.

As we try to understand our progress, we dug into the data to make sure we aren’t missing out on the next Jessi Baker (CE-O and founder of Provenance), Jessica Green (CEO and founder of Phylagen) or Nora Levinson and Heidi Lehmann (CEO and CCO of Kenzen).

Because the portfolio is a culmination of our pipeline and due diligence, analysis of gender balance in leadership is important to us at the pipeline stage, as well. How might the composition of our pipeline affect the gender balance of our portfolio. Are we investing in female-led companies because we are seeing more female-led companies in the pipeline? We took a look at the leadership teams of the companies we have evaluated in the last six months of 2020 and were struck by the results.

Note: Total of 66 companies included in this sample; 19 have women founders or C-suite executives; 47 are male-only at the C-suite or founder level

Our pipeline is almost three-quarters start-ups which do not have any women leaders. The stark difference between the gender compositions of our portfolio and our pipeline made us decide to look deeper. After all, the entire point of the pipeline is to see quantity in order to arrive at quality. Were the women we were seeing leading more dynamic, successful companies and therefore disproportionately attracting our investment?

We broke down the sample pipeline companies by the source of the relationship. How did we meet the startups in our pipeline? And what did that say about the gender of leadership? This segmentation showed something interesting: our highest quality sourcing channels – through direct, warm referrals and through our industry ties and networks – are yielding more women-led companies. The companies that come to us through direct referral, often by those who know us well, are more likely to be companies that are led by women. At the other extreme, no female-led companies made a cold outreach to us.

Note: Total of 66 companies included in this sample; 19 have women founders or C-suite executives; 47 are male-only at the C-suite or founder level. By source, 14 were referrals, 18 came through industry ties, 17 came through networking, 7 came from news or broad research, and 10 came from cold outreach.

Our impact thesis and theory of change are the core of our investment philosophy, and impact fit is the strictest criteria in our investment process. We passed on 51% of the hundreds of companies we have reviewed since inception because they did not fit our impact thesis. Because of the impact emphasis of our investment thesis and the specific niche that we occupy (there are no other labor right funds focused on supply chains out there, as far as we know), our portfolio skews heavily towards companies that come to us from trusted or affiliated sources. Two-thirds of our portfolio (six companies) have come from either referrals or from industry ties and groups. Three of our companies came to us through our networking and market research, or by cold outreach. Two of those three leadership teams are all-male.

When comparing our current portfolio to our pipeline, we didn’t quite know what to make of the differences in gender leadership. With women-led companies underrepresented in our current pipeline, would that affect the gender balance of the portfolio in the near future? Are we losing our gender balance as dealflow ramps up and we make more investments? Should we be considering gender more explicitly in our investment criteria?

We re-cut the data again and took another swing: what’s the gender leadership breakdown for those which we decided were worth deeper assessment or further due diligence after an initial review? Of the companies we are most likely to invest in next, how many are women-led? The results were encouraging.

Note: Total of 13 companies included in this sample; 9 have female founders or C-suite executives; 4 are male-only at the C-suite or founder level

To reiterate the context with wider industry trends, venture-backed companies with at least one female founder comprise about 23% of all venture-backed startups and get about 13% of venture dollars across the industry.[2]

We have not seen data on how women-led, social impact start-ups fare in venture funding compared with the rest of the social impact startup landscape, but we can see some patterns in the broader venture capital funding environment. Companies with female CEOs  account for a higher share of venture deals in impact-adjacent industries like education (19%) and biotech/pharmaceuticals (15%) than the venture universe as a whole, where just 11% of all companies that are venture-backed have women in the CEO role.[3]

Note: Source: “All in: Women in the VC Ecosystem”, All Raise & Pitchbook, 2019

Note: Source: “All in: Women in the VC Ecosystem”, All Raise & Pitchbook, 2019

Before we analyzed the data, the WCIF team hypothesized the reasons we ended up with gender outperformance in our portfolio companies’ leadership teams. Was it because women are more drawn to mission-focused startups? Is it because half of our investment team is female? Are the women who do enter our pipeline of a higher caliber than the average founder/CEO? Is there something about how our fund works with prospective and current investees that is more inclusive? Are we simply less biased against women-led businesses, perhaps in part because we adopted a gender-lens at the outset? We don’t frankly have answers to these questions, in part because they would be difficult to prove, but we surmise that all of these hypotheses might be at least partially true.

What is perhaps most exciting about our exploration of this data is this: we ended up with a gender-balanced portfolio without putting significant explicit effort into recruiting, reaching out to, and supporting specifically women-owned and –operated companies. We have demonstrated in a modestly-sized sample that there are high-quality companies out there, worthy of investment, led by women in at least equal measure to those led by men. What could we do with a more intentional, effortful sourcing and investment process aiming at inclusive and diverse leadership teams?

There are ample data that suggest that diverse leadership teams outperform those that are not diverse. Companies with diverse leadership teams develop and release more innovative products.[4] When teams are in the top quartile in terms of diversity, they have a 36% likelihood of financial outperformance compared with teams in the bottom quartile of diversity.[5] Publicly-traded companies with at least one female board member report higher return on equity and net income growth than those without.[6] Given all of this, we at Working Capital Fund remain committed to and excited about the diversity in our portfolio and finding new entrepreneurs who align with us to move the world forward and create incredible impact.


[1] https://pitchbook.com/news/reports/2020-all-in-female-founders-and-ceos-in-the-us-vc-ecosystem

[2] https://pitchbook.com/news/reports/2020-all-in-female-founders-and-ceos-in-the-us-vc-ecosystem

[3] https://pitchbook.com/news/reports/2019-pitchbook-all-raise-all-in-women-in-the-vc-ecosystem

[4] https://hbr.org/2016/11/why-diverse-teams-are-smarter

[5] https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters

[6] https://hbr.org/2016/11/why-diverse-teams-are-smarter