The case for gender diversity in India’s VC industry

India’s venture capital industry follows Silicon Valley in the tradition of being a boys’ club


Sequoia Capital made headlines on 21 October when it hired its first female investing partner in the US in its 44-year history—Jess Lee, co-founder and CEO of Polyvore, a fashion e-commerce company acquired by Yahoo last year.
Sequoia Capital made headlines on 21 October when it hired its first female investing partner in the US in its 44-year history—Jess Lee, co-founder and CEO of Polyvore, a fashion e-commerce company acquired by Yahoo last year.

Sequoia Capital, the storied Silicon Valley venture capital firm, made headlines of a different kind on 21 October when it hired its first female investing partner in the US in its 44-year history. Jess Lee, co-founder and CEO of Polyvore, a fashion e-commerce company acquired by Yahoo last year, starts work at the venture capital firm early next month, Bloomberg reported. Lee’s induction is a small but important step towards promoting gender diversity at the highest levels not just at Sequoia but in Silicon Valley’s powerful venture capital industry.

Gender diversity or the glaring lack of it in the Valley’s venture capital industry has been the subject of intense public debate and discussion for the past few years. A study published by Fortune magazine using PitchBook data in April this year found that less than 6% of decision-makers at US venture capital firms are women. Sequoia and Kleiner Perkins Caulfield & Byers (KPCB), two of the Valley’s most respected venture capital firms, have been at the centre of the debate. KPCB more so on account of a three-year gender discrimination lawsuit brought against it by former partner Ellen Pao. She lost the lawsuit in March last year. Sequoia drew considerable flak in December last year when chairman Mike Moritz said in an interview with Bloomberg TV that the firm was keen to hire female partners but wasn’t prepared to “lower standards” in that quest.

The lack of gender diversity in the venture capital business isn’t a problem that’s restricted to the Valley. India’s venture capital industry also follows in the tradition of being a boys’ club. This isn’t surprising given that much of the industry in India is largely an extension of the one in the Valley.

Out of the 15-odd most well-known venture capital firms in this market, five—Sequoia Capital India, Accel Partners India, Matrix Partners India, Lightspeed Venture Partners and Mayfield India—are local franchises of Silicon Valley firms, investing in the country through India-dedicated funds. Two—Norwest Venture Partners and Bessemer Venture Partners—are local arms of Valley firms that prefer to invest in India from a global corpus. Out of the seven home-grown firms on that list, only one, Bengaluru-based Kalaari Capital, has a female partner, Vani Kola, who also happens to be one of the founders of the firm.

Incidentally, Sequoia in India scores better on gender diversity than in the US. While the firm’s 15-member India investment team is dominated by male partners, it includes two women—Sakshi Chopra and Anjana Sasidharan—lower down the hierarchy. But India pales in comparison to Sequoia in China. The firm’s 17-member management team in China includes three female partners and two female managing directors, according to its website. The website doesn’t offer a break-up of the investment team within the management team.

What’s more interesting about India’s venture capital industry is that its lack of gender diversity is somewhat at odds with the overall financial sector here. The country’s banking sector, in particular, for instance, has several women who have successfully and consistently broken the glass ceiling to command top jobs. This is true for both public sector and private sector banks. It may be argued that compared to the banking sector, the venture capital industry has been around in India for just over 10 years and the skewed gender dynamics will correct themselves over time.

While there may be some merit to that argument, it is quite easy to throw it out of the window. Here’s why.

The business of venture capital, by the industry’s own definition, is about investing in the future. Disrupting the old, the incumbent, to make way for the new. It aligns itself with progress and innovation of thought. That’s why it takes on the immense and admirable risk of backing businesses at a stage where there’s often not much more than an idea on a piece of paper on the mere promise of disruptive innovation in the far future. Silicon Valley’s celebrated venture capital industry, financier of some of today’s most disruptive and innovative technology businesses such as Google and Apple, has demonstrated that the principles it invests by aren’t necessarily the ones it lives by inside its corridors.

India, according to a study by software industry lobby Nasscom and consulting firm Zinnov, is now the world’s third largest hub for technology start-ups. At an estimated 4,900 start-ups by the close of the year, the country is still far behind the US, which has more than 50,000 technology start-ups, according to the study. However, the number of new start-ups born every year in India is growing at the rate of 8-10%. A factor that the study doesn’t mention is that there is a growing number of female founders at such technology start-ups.

Given the opportunities that lie ahead, the venture capital industry in India still has significant headroom for growth. There is no reason the ongoing start-up wave cannot be more inclusive for women. Importantly, local venture capitalists have a unique opportunity to take the lead and differentiate themselves from their peers in the Valley on gender diversity. In the end, everybody wins.

Snigdha Sengupta is a consulting writer with Mint. She contributes stories on venture capital and private equity.

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