Conference Presentation, Panel
Women: Key Players in High-Growth Investment Strategies
- The 18th annual Milken Institute conference is expected to feature highly innovative topics regarding gender inclusivity in investment strategy, yet the statistic that less than 5% of venture capital flows to women-led companies has remained stagnant for 20 years despite 1,200 early-stage deals ready for investment annually.
- Progress is anticipated through structural changes such as implementing "Rooney Rule" style board interview requirements, adopting the 30% Club model used in Europe and the U.K., and establishing standards where the next hire in infrastructure groups cannot be another white male to prevent groupthink.
- Corporate governance expectations include a shift toward accepting candidates like VPs, CFOs, or COOs rather than solely former CEOs, with a prediction that corporations will need to move closer to implementing quotas or new standards to break current stagnation.
- The "Girls Who Invest" initiative aims to create a massive pipeline of women by engaging high schools, colleges, and business schools, while a "fast track" mentoring program is predicted to help women advance faster than on a "slow track."
- Financial incentives are expected to drive cultural change, specifically through compensation structures that measure mentorship and sponsorship, making men care about these behaviors to secure larger bonuses, alongside institutional investors holding companies accountable quarterly to ratchet up energy around the issue.
- Accountability is predicted to expand via the "three Ps" (People, Philanthropy, Purchasing) by ensuring diverse vendors who can support the company, and through investors requiring entrepreneurs to address team diversity, which could force a "power shift" in Silicon Valley where deal flow determines success.
- A network effect involving supporters at every level is currently too small and must be socialized at a greater scale to prevent the startup ecosystem from failing to grow from infancy to acquisition, while entrepreneurs prioritizing diversity could compel investors to undergo introspection.
- Wealth transfer from Baby Boomers is expected to make women more vocal about investment choices, potentially forcing the financial services industry to recognize the need for more women to service these customers, with the prediction that asking for women-owned firms will cause the world to react.
- Equity crowdfunding faces risks of raising only 1/25th the capital of male counterparts and remains at a micro-level insufficient for the $10 to $100 million rounds required for high-growth scaling, though it could eventually change the game.
- A critical fear exists that without female-led firms available for follow-on rounds (Series A and beyond), female-founded companies will continue to die out at that stage, and without change at the very top echelons of the industry, no change will occur below in venture capital.
- Specific demographic data indicates an "attractive white female" is the least likely to get funded in the venture world, cited as having a 60% higher likelihood of funding for white males, and there are currently not enough women allocators of capital at the LP level to help women fund managers reach larger thresholds.
- Delays in starting families until age 44 or 45 are seen as having some career benefits compared to rushing, while institutional push is deemed necessary to get youth into math and science to break the "logjam" of bias.
- The worst-case scenario involves organizations placing a minority or woman on the board merely to "check it off" while nothing happens; real progress requires board members willing to walk away or challenge these issues, and successful executives may eventually admit diversity policies are not important if no action is taken.
- Women who rely on equity crowdfunding risk raising significantly less capital, and the "full circle of a startup" faces failure if the ecosystem does not work together, necessitating a shift where men mentoring women is promoted as a necessary behavior for success.