Why venture capital should commit to gender balance

The COVID-19 pandemic has had a devastating impact on women's economic opportunities, mental health, wellbeing, and livelihoods. Female workers were among the hardest hit by the crisis – with over 64 million jobs lost in 2020 – as were female entrepreneurs and job creators. Moreover, the persistent gender digital divide has led to greater inequality in accessing digital devices and online services such as education, healthcare, and credit from financial institutions.

Globally, over $25 billion has been committed for gender-related COVID-19 responses and recovery since the early stages of the pandemic. This includes a range of pervasive issues such as gender diversity, women’s empowerment, inclusive education and work, protection of sexual and reproductive health, food security, gender-based violence, and support for women-owned small and medium enterprises (WSMEs) - which has been the top priority for stakeholders.

However, of the total allocation for gender issues, private sector commitments only account for 2%. Furthermore, it is well-known that globally only 2-9% of venture capital (VC) funding goes to female-led companies. According to a recent report, not only did global venture funding for female-led startups fall this year, but that the proportion of funding also declined from 2.8% in 2019 to 2.3% in 2020.

As we emerge from this unprecedented crisis, venture capitalists – LPs, angel investors, and the media – have a unique opportunity, to not just build back better, but to invest in a resilient recovery for all, especially women. Lack of action to address the growing gender inequities could result in long-term labour market impacts for women, including a reduced or stagnant female labour force participation rate and a reduction in global GDP by 2030.

While an entire industry-wide movement toward gender diversity is needed, VCs can lead this change by investing in gender-focused solutions that can increase access, connectivity, and opportunity for the most vulnerable populations. Venture funding could spur greater public-private partnerships for inclusive and open-source business models and generate locally replicable solutions at a fast pace.

At UNICEF Innovation, we believe that investing in and supporting the growth of female-led companies is smart investing, and is now more important than ever. We need to tap into and support underrepresented innovators and problem solvers to ensure solutions improve the lives of the traditionally underserved. Here is how we’re doing it:

There is a crucial need to invest in women and in solutions that can bridge the gender digital divide. Collaborative creation and the scaling up of digital public goods will help to achieve equity in education, healthcare, and employment. This will contribute to a future where every child, and every gender, can survive and thrive.

We call on the VC community to make this same commitment toward a truly gender balanced portfolio. As a step forward, UNICEF’s Innovation Fund is seeking startups using AI and/or machine learning to improve access to and delivery of digital services and systems, especially focused on education or health. Apply for $100,000 and tailored mentorship now at unicefinnovationfund.org.