Much attention has been paid to women in technology – as founders, investors, employees, and corporate leaders. But the attention has not closed deep and persistent gender gaps throughout the private and public company landscape and across the capital markets spectrum. These range from an enormous gap in women’s access to banking and digital finance in the developing world, to a continual lack of investment in women founders and barriers to equality in venture capital firms, to gender gaps in the workforce and leadership of publicly traded technology companies.
In Part A below, we provide snapshots of key gaps for women in technology and in private sector technology investment, as well as calls to action toward narrowing the gaps. Part B examines a suite of leading technology-focused equity funds and ETFs through a gender lens on both fund holdings and management teams.
Part A – Snapshots on women in technology
Snapshot: Venture capital funding for and by women
According to PitchBook, women founders garnered record numbers of deals and deal value in 2021, an outsized year for venture capital (VC) funding. For the year-to-date (YTD) period through September 30, 2022, women founders have closed more in deal value than all other full-year periods through 2020, despite the downward pressures on venture capital activity this year. However, female-founded companies with mixed-gender teams received only 25.5% of all deals for the first three quarters of the year. In the continuation of a stubborn trend, startup companies with all-female founder teams still received a low 2.3% of VC funding for the YTD per5iod. On the other end of the deal making, the share of women decision-makers in U.S. VC firms stood at 16.1% as of September 30, 2022. This is a little higher in firms focused on commercial products and healthcare.[i]
Never-ending gap
The low level of funding for all-female founder teams has not pushed above 2.9% over a 14-year period.
Snapshot: Women founders make their mark
According to Crunchbase, in 2021 a record 595 companies joined The Crunchbase Unicorn Board, its list of the world’s most valuable private companies. The list is comprised of companies by year of first equity round of funding at a post-money valuation of at least US$1 billion. On the 2021 list of Unicorns, 83 had a woman founder or co-founder, a jump from 18 such companies in 2020. A woman is at the helm as CEO of 16 of the 83 women-founded Unicorns. Among 124 Unicorns to go public in 2021, 19 had women founders and seven of those had female CEOs. On the list of approximately 100 companies added to the Unicorn list in 2022, ten have at least one woman founder.[ii]
US$2 Trillion
Earlier this year, analysis by Citi concluded that gender parity in business growth could raise global GDP by US$2 trillion, or approximately 2-3%, in addition to at least 288 million jobs. Citi recommended that financial institutions should:
- maintain gender data on investment portfolios,
- make sure that start-up support is inclusive,
- work with women entrepreneur networks, and
- set targets for achieving gender parity.[iii]
Women founders have been making their mark in health care for women. In 2021, funding for FemTech companies – health-related businesses founded by and for women – crossed the US$1 billion threshold.[iv] Femtech companies provide products and services in a range of healthcare areas, including reproductive health, pregnancy and maternal health, mental health services and benefits platforms, telemedicine, genetic testing services, and menopause health. The opportunities for women-centered investments health care research, products, and services – including medical care itself – are significant. Research by McKinsey has demonstrated that only 1% of health care research and innovation is invested in non-oncology conditions specific to women.[v]
FemTech IPO ahead
Health Care is the third largest AUM-weighted sector for the GLEF group. Gender lens equity funds should invest in FemTech as the industry develops and startups go public.
Another area of opportunity for women founders and investors is fintech. A 2020 report by Deloitte shows that only 12.2% of total fintech startups in 2019 had a woman founder, a slow increase from 10.9% in 2010.[vi] Deloitte pointed to the increased demand for financial innovation following previous global crises as creating the possibility for a faster pace of financial innovation following the COVID-19 pandemic. Crunchbase data shows that financial services was the biggest sector for VC investment in 2021, but that fintech funding slowed earlier in 2022 along with global venture funding as a whole.[vii]
Black women founders need capital
Data collected by Harlem Capital shows that nearly 900 companies with Black, Latino, or gender-diverse founders raised US$28.8 billion since 1995, with median funding of US$5.5 million. Total capital raised in 2021 was $8.2 billion, up from $2.7 billion in 2020. Only 33% of the companies on the overall list were founded by women – with those companies receiving only 20% of funding. Men have raised 1.8 times more than women, with Black men raising 2.3 times the median capital raised by Black women.[viii]
Snapshot: Women in the Information Technology workforce
Deloitte estimates that women will reach 33% of the global technology sector workforce by the end of 2022. However, women are only slated to reach 25% of technical roles. Both of these figures lag women’s workforce representation. The firm’s recent research indicates that large technology companies have been working to keep women’s representation on an upward trajectory, while smaller technology companies are at risk of seeing progress stall. Deloitte’s research shows that less than a quarter of senior roles in the sector are held by women.[ix]
Tim Cook: There are no excuses
In a September 2022 interview with the BBC, Apple CEO Tim Cook lamented the lack of women in the technology workforce, saying there is no excuse for the gap. Apple is only slightly above the global average for women’s representation, and the company has seen its own share of male-centric product launches that fell flat with women customers. But his point is well taken. He stated that technology’s beneficial effect on humanity will depend on women being at the table.[x]
A detailed look by McKinsey at the Women in the Workplace 2021 report found that women hold fewer entry level engineering and technical roles than in the dataset as a whole, leading to an even more pronounced broken rung at the first level of management, where women hold 26% of such roles in tech-related work. The study recommends skill-building opportunities and taking a structured approach to early promotions as ways to address the gap.[xi]
Women are more likely to invest in women
Research by How Women Invest, a women-led VC firm, highlights a key trend. Women-led VC funds are twice as likely as funds led by men to invest in a start-up with a woman founder. They are also three times more likely to invest in a woman CEO. The report advocates for more women to participate in early stage investments. According to the research, among investors unlikely to invest $25,000 in a start-up, more women than men are likely to invest if regulatory minimum thresholds were reduced to $10,000. Women also report stronger interest in values-aligned investing.[xii] Thus, women investors are an important source of funding for women-led ventures. In 2021, one-third of angel investors in the United States were women. Women-led angel networks have also been growing in emerging markets. A leading membership firm for women VC investors, Women in VC’s global directory shows that its over 4,000 members represent more than 2,500 funds and are located in 65 countries and over 20 cities.[xiii]
Part B – Technology Equity Funds and ETFs through a Gender Lens
All figures as of September 30, 2022 unless otherwise noted.
Source: Parallelle Finance research.
A review of top-rated publicly traded technology funds, both broad-based and thematic, through a gender lens offers an indication of whether they capture the benefits of diverse leadership for investors. For this analysis we reviewed 33 broad technology funds and 23 thematic technology funds. Our research was based on publicly available information about the funds as of September 30, 2022. The funds range in size from two with over US$30 billion in AUM to four with less than US$20 million in AUM. There are 30 asset management firms represented in the dataset. (See Appendix A for a list of all funds by segment.)
The thematic fund groups in this analysis are:
- Semiconductors: 4 funds
- Cloud Computing: 3 funds
- Robotics and AI: 4 funds
- Software: 4 funds
- Cybersecurity: 5 funds
- FinTech: 3 funds
Technology funds top holdings through a gender lens
Based on available data, there are 195 unique top ten holdings for this combined group of technology funds. We conducted an analysis of those holdings against several leading gender equality indexes and datasets, as well as against the suite of gender lens equity funds.
Again, the answer is yes
The investments of gender lens equity funds are capturing a higher level of women in leadership, including at technology companies.
In one key finding from the analysis, Figure 1 summarizes the WIL of select GLEF technology holdings. The data shows that women CEOs are higher than market averages for this group of holdings, in keeping with the overall GLEF top ten data. For this technology group, female CFOs are far above market averages and also in keeping with the overall GLEF data. Female executives are higher than average also. Board representation for this group of holdings is slightly above S&P and Russell averages and well above the global average.
Tech companies with a gender lens
Our analysis identified 58 publicly traded technology companies that demonstrate relative strength in gender equality. We look toward an increase in the number of such technology and tech-related companies. Investors stand to gain from a wider gender lens investment universe of technology companies. Contact us at info@parallellefinance.com for further information on the 58 gender lens technology holdings resulting from this analysis.
Figure 1: Women in leadership at GLEF technology holdings
Leadership Position | Count | Percentage of Total |
CEO | 3 | 14.3% |
Chair/Vice Chair | 2 | 9.5% |
President | 2 | 9.5% |
CFO | 8 | 38.1% |
COO | 3 | 14.3% |
More than one of the above | 4 | 19.0% |
None of the above | 8 | 38.1% |
Board parity (50%+) | 1 | 4.8% |
Female board members | 32.6% | |
Female executive | 27.9% | |
Source: Company public disclosures |
Gender diversity in portfolio management of technology funds
In addition to stalled progress for women in banking leadership, progress has halted for women in fund management. The results of Citiwire’s annual survey of women in fund management, Alpha Female Report 2022,[xiv] were dismal. In the study of over 27,500 funds, the slow progress women have been making came to a complete stop. Female managers have increased by less than 2% since 2016, and only 10% of new funds are designated to women. Despite the lack of progress for women in these roles, the Citiwire analysis showed that mixed-gender teams produce good returns at lower risk, a result that was consistent with previous surveys. One bright spot is that large U.S. investors are dialing up pressure on asset managers to increase the gender diversity of fund management teams.
Recent research by Vanguard of over 2,600 actively managed U.S. equity funds shows a correlation between gender diversity and improvement in fund returns.[xv] An Investment Metrics study of YTD returns for active large-cap equity portfolios through September 2022 found that women-led portfolios had a median return of -2.6%, compared to -5.9% for male-led portfolio teams. Women-led teams made up only 14% of the 90 portfolios from 73 global asset management firms.[xvi]
For the group of 56 top-rated technology funds, most have publicly available data on portfolio management teams. Figure 6.2 summarizes the gender make-up of the teams. 69% of the funds with available PM data are managed by all-male teams. Another 10% have one-third female representation or less. The ARK Fintech Innovation ETF is managed by one woman. The average female representation for this dataset is 15.1%. This low score is slightly higher than the 11% women portfolio managers in the U.S., a figure that has not seen significant improvement in the last decade.[xvii] Both measures are in sharp contrast to the average 51% women on gender lens equity fund teams.
Several firms have achieved 50% female manager representation for funds in the dataset. The largest of these is BlackRock, which has eight funds in the group. While one of the BlackRock funds has a sole male at the helm and another is managed by two men and one woman, the six iShares funds in the dataset are managed by four-person teams with 50% women. The other firms in the group with 50% women on their PM teams are: Nationwide, Jennison Associates, and Virtus Zevenbergen. One of the four Fidelity Investments funds has two-thirds female representation. State Street Global Advisors has three funds in the group with PM teams of one-third women.
In this dataset, funds with all-male portfolio teams are managing 60% of the US$109 billion in technology AUM. Based on the ongoing research showing the investment benefits of gender-diverse PM teams, investors in many of the top-rated technology funds are missing out on risk management and returns. As technology shares have declined on various pressures throughout 2022, what does this say about risk management best practices for these large funds?
Figure 2: Women on technology fund PM teams
WIL in PM Teams | Count | % of Funds | AUM | % of AUM |
No women | 35 | 63% | $108,889 | 60% |
Up to 20% women | 1 | 2% | $ 30 | 0% |
Over 25% to 35% | 4 | 7% | $ 41,042 | 23% |
Over 35% to 50% | 9 | 16% | $ 17,887 | 10% |
Over 50% to 67% | 1 | 2% | $ 4,800 | 3% |
Only women | 1 | 2% | $ 760 | 0% |
Undisclosed PM team | 5 | 9% | $ 7,487 | 4% |
Total | 56 | 100% | $180,895 | 100% |
Figure 3: The all-male PM teams include funds from the following asset managers
Asset management firm | # of funds in dataset | # of managers on all-male team |
First Trust Advisors L.P. | 5 | Seven on 4 of the 5 teams |
Columbia Threadneedle Investments | 2 | Six men on both teams |
Variable Annuity Life Insurance Co. | 1 | Five men on team |
Invesco Capital Management, LLC | 5 | Four men on all 5 funds |
Oak Associates Funds | 2 | Three men on both teams |
ETF Managers Group, LLC | 1 | Three men on team |
Vident Investment Advisory | 1 | Three men on team |
BNY Mellon Securities Corp. | 1 | Three men on team |
Macquarie Asset Management (Delaware Funds) | 1 | Two men on team |
DWS Group GmbH & Co. | 1 | Two men on team |
Goldman Sachs Asset Management | 1 | Two men on team |
Janus Henderson Group | 1 | Two men on team |
MFS Investment Management | 1 | Two men on team |
TCW Funds | 1 | Two men on team |
The Vanguard Group | 1 | Two men on team |
Fidelity Investment | 4 | One male manager for 3 of 4 funds |
Putnam Investments | 1 | One male |
T. Rowe Price Investment Services | 2 | One male for each fund |
VanEck Associates Corp. | 1 | One male |
The case has been made
Diverse leadership is beneficial in wide-ranging ways, including in fund management. For the benefit of investors, asset management firms should incorporate diverse teams into best practices for fund management.
[i] Gabbert, J., Tarhuni, N., and Cox, D. (2022, Nov 2) All In 2022. PitchBook. https://pitchbook.com/news/reports/2022-all-in-female-founders-in-the-us-vc-ecosystem
[ii] Teare, G. (2022, Mar 21) The Herd of Female-Founded Unicorn Companies Continues to Grow in 2022. Crunchbase. https://news.crunchbase.com/business/top-women-led-unicorn-companies-startups-2022/
[iii] Miao, H. (2022, Mar 7) Closing the gender gap for women-led businesses could boost global GDP by $2 trillion. CNBC. https://www.cnbc.com/2022/03/07/closing-gender-gap-could-boost-global-gdp-by-2-trillion-citi-says.html
[iv] Vedantam, K. (2022, Aug 1) Materna Medical Raises $22M as Femtech Becomes a Billion-Dollar Sector. Crunchbase. https://news.crunchbase.com/health-wellness-biotech/materna-venture-capital/
[v] Kemble, E., Perez, L, Sartori, V., Tolub, G., and Zheng, A. (2022, Feb) Unlocking opportunities in women’s healthcare. McKinsey. https://www.mckinsey.com/~/media/mckinsey/industries/healthcare%20systems%20and%20services/our%20insights/unlocking%20opportunities%20in%20womens%20healthcare/unlocking-opportunities-in-womens-healthcare.pdf?shouldIndex=false
[vi] Eckenrode, J. (2020, Oct 1) Achieving gender equity in the fintech community: Enlisting key stakeholders to drive change. Deloitte. https://www2.deloitte.com/us/en/insights/industry/financial-services/women-in-fintech.html
[vii] Glasner, J. (2022, Mar 7) Fintech Funding Takes a Tumble. Crunchbase. https://news.crunchbase.com/business/fintech-funding-declines-startup-seed-vc/
[viii] Linara, A., Johnson, D., and Pierre-Jacques, H. (2022) 870 Black and Latino Startups That Have Raised $1M+ of Venture. Harlem Capital. https://harlem.capital/870-black-and-latino-startups-that-have-raised-1m/
[ix] (2021, Dec 1) Women in the tech industry: Gaining ground, but facing new headwinds. Deloitte Insights. https://www2.deloitte.com/us/en/insights/industry/technology/technology-media-and-telecom-predictions/2022/statistics-show-women-in-technology-are-facing-new-headwinds.html
[x] Kleinman, Z. (2022, Sep 27) Tim Cook: ‘No good excuse’ for lack of women in tech. BBC. https://www.bbc.com/news/technology-63033078