It's Almost 2019. Is the Glass Ceiling Finally Beginning to Crack?
In October, California took the historic step of becoming the first state to require publicly held corporations headquartered in the state to include women on their boards of directors. The new law requires companies by the end of 2019 to have a minimum of one woman on their boards; two years later, companies with six or more directors must include a minimum of three women.
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Some have questioned whether this type of mandate is necessary in this day and age. The answer is a resounding yes. Women are still vastly underrepresented in business. We hold just 18 percent of positions on the boards of the 3,000 largest publicly traded U.S. corporations. In 2017, 624 public companies had no women on their boards at all. The venture capital outlook for women is equally bleak: According to data from PitchBook reported in Fortune, women-led startups received just $1.9 billion of the $85 billion total invested by venture capitalists in 2017 -- that's equal to 2.2 percent of 2017's total pot.
Given this landscape, the California legislation represents a watershed moment in corporate governance. The fact that public companies in Silicon Valley -- the capital of technology and innovation -- are mandated to be more inclusive will help accelerate changes that have been underway for some time, somewhat akin to how affirmative action has been used in recent decades to realize the goals of the civil rights movement.
The last decade has seen a slowly escalating movement toward more women joining the ranks of corporate leaders and innovators, as well as efforts to spur additional investment in women-led companies. A small number of new venture firms have launched recently to support women and minority-led startups and to help them attract a higher proportion of venture capital. In addition, women are finding other ways to increase the odds of securing the funding necessary to help their ventures reach their potential.
Leading the charge
Opportunities for women are increasing, if gradually, as a result of a small but growing number of venture firms that specifically aim to support female entrepreneurs. In October, two more of these firms made their debuts: Leadout Capital, started by Ali Rosenthal, and Jane VC, co-founded by Jennifer Keiser Neundorfer. Both of these new firms aspire to support women as they endeavor to launch new companies and redefine the leadership landscape in Silicon Valley and beyond.
One groundbreaking example of the trend to invest in diverse founders is Backstage Capital, a venture capital firm founded this year to promote underrepresented founders, including women, people of color and members of the LGBTQ community. The firm recently launched a new $36 million fund that will invest exclusively in black female founders.
Arlan Hamilton, the fund's founder and managing partner and a "proud, queer woman of color," started the venture capital firm from scratch when she was still homeless. She is now paving the way for others like her to succeed.
Dedicated funds aren't the only ways to support women in entrepreneurship. Emily Melton of DFJ Capital is one of many female venture capitalists in Silicon Valley who recently came together to create All Raise, a consortium of women in venture capital, whose stated mission is to "connect initiatives with outcomes to engage more women and minorities in the founding and funding of technology-driven companies." One of these initiatives is to offer one-on-one mentorship at a place where entrepreneurs can ask other founders or VCs anything about fundraising or company building.
Increasing the odds
Few female founders have the time to wait for a completely level playing field. For some companies, there are more immediate ways to secure the funding their ventures need and deserve. The first and most obvious approach is specifically to seek out firms that focus on giving women a fair shot. To that end, Pitchbook offers a list of the venture firms that are most likely to invest in women.
Regardless of where they pitch, it's essential for entrepreneurs to be fully prepared for the types of questions they are likely to face. One study reported in Harvard Business Review found that women tend to be asked about risk management and the security of their company's futures, while men are asked about their long-term aspirations. Steering the conversation in a direction that clearly illustrates a startup's path to a successful exit could result in more funding and more favorable deal terms.
Women are also finding success in obtaining seed funding from newer sources like crowdfunding campaigns. In that realm, they are actually outperforming male founders. A study published in Administrative Science Quarterly found that on Kickstarter women are 13 percent more likely to meet their fundraising goals than men, and the effects are particularly evident in areas like technology. While less than 10 percent of the technology projects on Kickstarter are led by women, 65 percent of the technology projects founded by women reached their fundraising goals -- compared with just 30 percent of male-led ventures.
Women in executive leadership positions are still vastly outnumbered, but one thing is clear: Some of the invisible barriers to success are slowly beginning to unravel. Whether it takes strong legislation or the efforts of a growing number of grassroots organizations determined to turn the tide, I believe that smart, capable women will soon have a shot at leading the corporate world into the future. And while their "mandated" presence may not be welcomed with open arms by some colleagues, strong performance ultimately transcends gender, in the boardroom and elsewhere.