The Gender Problem in Venture Capital Is Really, Really Bad

Ellen Pao. Lauren Simkin Berke

The gender problem in venture capital is really, really bad. Industry-wide, 77 to 79 percent of VC firms have never had a woman represent them on the board of one of their portfolio companies. And more than three-quarters don’t have any women working as venture capitalists at all.

And check this out: Those numbers come from an expert witness called by a venture capital firm to defend it against charges of gender discrimination.

Harvard Business School Professor Paul Gompers was called to the stand yesterday by Kleiner Perkins Caufield & Byers, the storied venture capital firm defending itself against a gender discrimination suit brought by a former partner, Ellen Pao. In calling Gompers, Kleiner was seeking to cast itself in a positive light compared to the dismal diversity record of the industry as a whole.

Gompers said he started with a data set from 2003 and updated his research in 2013 to look at 30,000 venture capitalists in the US. According to the results of his study, the data from 2003 to 2013 was almost the same. Among his findings, he testified, Kleiner Perkins was the only VC firm with ten women on portfolio companies’ boards in 2013, more than any other.

Gompers said he found that women fared better in firms that are larger, older, and have other females working as venture capitalists. He said that Kleiner Perkins “had all of those boxes checked.”

Later, under questioning from Alan Exelrod, Ellen Pao’s attorney, about the statistical significance of this finding, he clarified: “My study says, on average, women perform as well as the men in these types of firms.”

In 2014, Gompers wrote a report analyzing gender effects in venture capital. In that study, he wrote that, if a woman did not have significant prior experience as a tech exec, “better entrepreneurs may be less likely to take money from a female venture capitalist.”

Kleiner attorney Lynne Hermle also used Gompers’ time on the stand to present a chart comparing Ellen Pao’s base salary from 2004 to 2011 to the base salaries of three male junior partners at the firm. The chart showed Pao had a higher base salary in all the years, though by 2011, when she was making about $400,000, the gap with the others had closed significantly.

$900 Per Hour

Pao wasn’t the only one whose pay was put up for scrutiny. Gompers testified that his standard rate is $900 per hour. Under questioning from Exelrod, he said his bill to Kleiner ran to more than $90,000.

“I am not being paid to reach one conclusion or another,” Gompers said.

Gompers said he had a professional interest in determining what factors allowed successful female VCs to thrive. Having women at a VC firm would be beneficial to that firm, he testified. “Venture capitalism is all about collaboration with partners, and you hope there’s a diverse set of experiences at a firm so that people can question new ventures,” he said.

Gompers testified under questioning from Exelrod that he authored twenty-seven articles in refereed journals, spoke at high-profile conferences, and had written a book about VCs. He also said he sits on the board of the US Army’s venture capital fund. “It’s fair to say you are a promoter and a cheerleader for the venture capital industry, isn’t it?” Exelrod challenged him.

“Not a cheerleader,” Gompers answered. “A scholar.”