Hispanics Gain Ground Within US-Based Venture Capital Firms Amid Lack of Diversity

Hispanics occupied 5% of investment partner positions in the US last year, up from 4% in 2020 and 3% in 2018 a survey by Venture Forward, the National Venture Capital Association (NVCA) and Deloitte reveals

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April 19, 2023 | 04:10 PM

Bloomberg Línea — The presence of executives of Hispanic descent in US-based venture capital (VC) firms has seen moderate growth, and who represented 6% of investment positions in 2022, up from 4% in 2020 and 5% in 2018, according to a new survey.

Furthermore, Hispanics occupied 5% of investment partner positions last year, up from 4% in 2020 and 3% in 2018), while. Hispanic representation among junior-level investment professionals also increased from 4% in 2020 and 2018 to 5% in 2022, the VC Human Capital Survey by Venture Forward, the National Venture Capital Association (NVCA), and Deloitte, reveals.

Hispanic women represented just 2% of investment partners in 2022 however, but which is an increase from 1% in 2020 and 2018. White, non-Hispanic women comprised 13% of investment partners in 2022, up from 12% in 2020, and 11% in 2018.

However, the shift toward greater diversity in the VC sector is slow, as evidenced by women’s representation remaining far from parity, and that of Black professionals remains limited, highlighting the need for firms to embrace diversity, equity and inclusion (DEI) strategies.


“Top management must recognize a moral and business imperative to act on broader social responsibilities,” according to Heather Gates, audit and assurance national private growth leader and managing director at Deloitte & Touche LLP. “While gains have occurred, they have been uneven, and negligible in some cases, highlighting the need for strong leadership with intentionality towards making change,” she added.

Gates remains optimistic however, stating that “the increasing diversity among junior-level positions indicates the potential for greater representation among senior positions as talent matures and rises through the ranks”.

The survey included 315 VC firms, representing more than 5,700 US-based, full-time employees and $594.5 billion in assets under management, and which gathered data confidentially from VC firms of all types and sizes, examining various demographic groups across all positions, and evaluating firm talent management strategies, including DEI practices and goals.


More firms adopting DEI strategies

This is the fourth edition of the survey, and which provides a 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 in the United States.

The survey reveals that more VC firms are incorporating DEI strategies. Nearly one-half (46%) of surveyed firms have a diversity strategy (up from 44% in 2020, 35% in 2018, and 15% in 2016), and 44% have an inclusion strategy (up from 41% in 2020, 31% in 2018, and 17% in 2016). In 2022, 60% of firms said they either have a staff person or a team responsible for DEI, an increase from 55% in 2020, 34% in 2018, and 16% in 2016.

Forty-percent of the firms surveyed in 2022 stated they now have specific DEI goals, while 23% plan to implement goals within the next six months. In addition, more VC firms are seeing DEI interest from limited partners (LPs) and focusing on DEI at portfolio companies, according to the survey.

In 2022, 47% percent of firms said that LPs requested their DEI details within the last 12 months, an increase from 41% in 2020, and 36% in 2018. In 2022, 38% of firms said they requested DEI details from their portfolio companies, an increase from 30% in 2020, and 19% in 2018.


“VC firms are recognizing that not prioritizing DEI is a barrier to funding innovation and achieving higher returns,” according to Bobby Franklin, president and CEO of NVCA. “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.”

Women, Black VC professionals still far from parity

However, the survey reveals the yawning gender gap and the under representation of Black professionals in the VC sector.

Women’s participation is trending upward, with female employees represent 26% of investment professionals in 2022, up from 23% in 2020, 21% in 2018, and 15% in 2016. The proportion of women in junior-level investment positions grew in 2022 to 35%, up from 33% in 2020, 28% in 2018, and 25% in 2016.


Among investment partners, women represent 19%, up from 16% in 2020, 14% in 2018, and 11% in 2016. In 2022, 57% of firms reported they do not have any female investment partners, compared with 65% in 2020, and 68% in 2018.

Only 15% of firms said they had more than one female investment partner, according to the survey.

Racially and ethnically diverse women saw slim gains among investment partners. Black women comprised 1% of investment partners in 2022 compared to 0.25% in 2020 and 1% in 2018. Among investment partners, 5% were Asian/Pacific Islander women in 2022, compared to 3% in 2020, and 5% in 2018.

Female representation among investment professionals with senior decision-making responsibilities saw little or no gains, however. Women constitute a distinct minority of investment professionals with senior decision-making responsibilities such as originating deals (25% versus 24% in 2020), representing the firm on the boards of portfolio companies (20% versus 21% in 2020), serving as a member of the firm’s investment committee (20% versus 21% in 2020), and serving as an owner of the management company (17% versus 18% in 2020).


And representation for Black professionals remains limited, according to the survey.

Black employees comprised 5% of investment professionals in 2022, an increase from 4% in 2020, and 3% in 2018. Black professionals also comprise 4% of senior-level positions (4% in 2020, 3% in 2018), and 7% of junior-level investment professional positions (7% in 2020, 5% in 2018), while 89% of firms report they do not have any Black investment partners (down from 93% in 2020 and 2018).

More diversity among younger, smaller VC firms

The survey also reveals that 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 (8%), Hispanic (8%), and female (22%) as compared to older firms where Black (1%), Hispanic (2%), and female (17%) investment partners were not as prevalent.


A more significant percentage of investment partners at small firms were Black (11%), Hispanic (11%), and female (25%) than at mid-size firms (Black 3%, Hispanic 5%, female 18%), and large firms (Black 1%, Hispanic 1%, female 16%).

The survey highlights the importance of DEI in VC because the 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,” the survey states.


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.

“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, said.