A VC Community Introduces a Gender Quota: The Broadsheet

Good morning, Broadsheet readers! J. Crew takes steps toward a Madewell IPO, Emmy nominations are likely to feature lots of female-led comedies, and we learn about a new kind of quota. Have a wonderful weekend.

EVERYONE'S TALKING

- A quota for VCs. Quotas are a concept that pop up plenty in diversity conversations since they've been introduced in some countries—and recently, the state of California—to address the dearth of women on boards of directors. Now, a new initiative in the Netherlands is deploying the tool to target another area of business where women are underrepresented: venture capital.

This week, 25 Dutch venture capital investors committed to a project called #FundRight that aims to bring more women—and diversity more broadly—into the VC ecosystem and fix the underfunding of female founders. "We...believe in equal access to finance and opportunities for all founders, regardless of their background or gender," the participating firms said in a statement. The pledge, to be achieved over three years, calls for the VC firms themselves to achieve 35% female representation at leadership and staff-wide levels, and demands that their future investments go to companies that also have workforces that are 35% female. A "significant percentage" of those portfolio companies should be founded by a woman.

The VC community in the Netherlands pursued the initiative after research last year revealed that 1.6% of venture capital money in the Netherlands goes to female founders; 6.8% goes to firms led by mixed-gender teams. For comparison, in the U.S., 2.2% of all VC money went to women in 2018.

The Dutch firms that have signed up so far manage 1 billion euros, which represents a quarter of the total assets under management by VC investors there. Janneke Niessen, an investor at CapitalT, co-published the study on funding for women with researcher Eva de Mol and helped conceive of #FundRight. She cited All Raise and Founders for Change as inspiration for #FundRight, and says the Dutch effort can apply to larger VC markets like the U.S. "The key is agreeing that there is a huge missed opportunity in the system as it currently is," she told me. And the quota, she says, is a crucial component.

Critics say quotas can lead to tokenism, rather than deeper cultural change. Niessen argues that #FundRight's approach is unique in that it's self-imposed by the industry, rather than mandated by the government. "That means it’s really supported," she says. Without a quota, efforts to address the underrepresentation and underfunding of women remain "vague and voluntary," she says; a percentage goal means progress can be more easily measured.

"We’ve tried the gentle way," she says, "that obviously doesn’t work."

Claire Zillman

[email protected]

@clairezillman

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