VCs sound off on how restrained funding could affect female founders - Business Insider

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Wary VCs are pulling back into their close circles of trust. That's bad news for women founders and other long-excluded entrepreneurs, one study finds.

. In the absence of face-to-face meetings, some have fallen back on founders they have worked with previously, or they want a warm introduction from early-stage investors they trust in lieu of meeting a new entrepreneur in person. But that can spell trouble for early-stage founders who don't belong to those traditional social groups.people tend to revert to hiring, backing and choosing people like themselves, within their tight networks,'' the Jane VC report observed.

Hazard is also a member of X Factor Ventures, a Boston-based fund that promotes and invests in the underrepresented founders that are most at risk. But Hazard said that the changes taking root in the venture ecosystem right now could be a benefit to them in the long run. In 2020, white female founders raised $0.38 for every male founder's $1. The gap is even larger for black female founders, who raise just $0.02 for every male founder's $1. Even the smallest decrease in funding to underrepresented and minority groups could have devastating impacts down the line.

Over the last several years, diversity has become something of a rallying point for founders and investors alike, with smaller niche venture firms like Jane VC cropping up to support the growing network of female and minority founders. Their investment thesis, as Bannon explains, remains strong even in times of crisis — a diverse team of operators and investors is more likely to have better outcomes than homogeneous groups when measured by revenue, exits, and overall returns.

 

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