New research into the venture capital (VC) landscape has revealed an extensive gender gap in capital and funding, resulting in a trickle down effect on female-led businesses seeking funding from male-dominated VCs.

According to research from Docsend, all-men-owned management companies raised about ten times more capital and eight times more funds than all-women-owned management companies between 2017-2023.

All-male owned companies also raised 4.5 times more capital than mixed-ownership management companies as well.

The report claims to be the first of its kind to investigate where limited partner (LP) capital has been invested within the last five years, to determine if there were gender discrepancies in where the majority of LP is directed.

Other studies have highlighted the discrepancies of VC funding arriving to male vs female-led companies, but this takes an internal look at VCs themselves, their company demographics, and how this may affect the amount of LP capital they receive, which can have a trickle down affect on further gender gaps in funding.

Only 38% of the total VC workforce are women, the report found, but broken down further, this drops to only 22% with a leadership title.

In fact, women actually make up the majority of non-investment roles in VC funds, at 81%, but drop to 56% and then 45% in junior and mid-level titles respectively.

In senior positions, there is a 60-40 split between men and women, with women dropping to 22% in leadership roles but rising to 27% in advisory roles.

Despite holding titles that may suggest ownership, only 17.7% of individuals with significant ownership of VC firms are women as well, showing an even starker gender gap.

In terms of how this affects funding, the picture seems clear: of the over $6.6bn raised, just 7p for every pound raised goes to all women-owned management companies, and only 17p per pound goes to mixed-ownership VCs.

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Women led, and even women-involved VCs, are receiving less LP money, which is potentially trickling down to startups and small businesses seeing VC investment.

Last year, women-founded tech companies only raised 15% of total VC funding going to tech in the UK, and according to the Rose Review 2023, less than 1% of total VC funding UK-wide went to all-women teams.

The ownership of VC firms also plays into the overall gender balance of the company – at senior and leadership levels, mixed-led and all-female funds consistently get a higher percentage of female representation than their all-male counterparts.

“If we want to have a diverse ecosystem for founders we need more Limited Partners investing more of their capital into a more diverse group of fund managers,” Karariina Helaniemi, head of impact at Illusian Group Oy, said. “This report clearly shows the impact that diversity at the decision-making level has on the underlying companies that get funded.”

The report outlined some very basic recommendations that are often also referred to for VCs themselves, including encouraging LPs to diversify their pipelines and implement gender pay bench markers.

Further, it advices that LPs should sign up to the Investing in Women Code and make concrete commitments to invest in more women-led companies.

In addition, DocSend also calls on government agencies including the FCA, Treasury, and the Department for Business and Trade to promote targets for diverse funding and create intervention to address the lack of diversity in LP funding.