By Tyler Newton, Catalyst Investors
No one these days needs statistics to show that private equity and venture capital are too male-dominated. But here they are, from Bella Private Markets, showing that females control only 3.4% of the assets in PE.
Go to investment-firm websites and see how many women are on the investment teams. That’s bad enough. Then screen out associates. It’s pathetic.
We are working through a long overdue effort to root out old-school male-dominant culture. Supposedly enlightened communities like Hollywood and Silicon Valley have proved to be some of the worst offenders.
We know it shouldn’t be this way, from a business standpoint and a moral one. Gender inequity is not just grotesquely unfair, it is also bad business.
But while we now are certainly making progress, PE and VC must proactively promote change.
Gender-enlightened cultures are more balanced, fairer and respectful, they have more diversity of thought and they generate better returns. Ditto for portfolio-company cultures, where we have seen strong anecdotal correlation between positive work environments and positive returns.
Diverse and respectful work cultures make recruiting and retaining employees, male and female, easier.
We at Catalyst usually work with portfolio companies for five or more years, and we’ve found that life is just too short to deal with unenlightened execs. Their employees are likely to be unmotivated, turnover will be high and they’ll have difficulty attracting quality recruits, men and women. All of which point to lower performance and returns.
What, as an industry, should we do to promote gender equity?
- Hire more women. This is obvious – but we must do better. We need to create space for women to advance up the ranks. We have to let them talk and be heard (“mansplaining” is real) and we must ensure we amplify their good ideas. Encourage women to participate in gender-focused networking events. Beyond hiring more women, we need to support and mentor them as their careers progress. And since men don’t want to ignore their children any more than women do, we must give all parents the flexibility to have and nurture families.
- Encourage progress at portfolio companies. Firms must openly recruit for more diversity in the senior ranks. PE must encourage their taking the Pledge for Parity (whether formally or informally). Add women to the board. Hire female CEOs and back female founders. (Great resources: The Boardlist, Athena Alliance, Him for Her.) Make sure job descriptions aren’t unconsciously gender-biased. Don’t back jerks. Follow the Glassdoor comments and look for signals about the overall environment. Encourage culture surveys and insist on seeing the detailed results.
- Insist that portfolio companies protect an inclusive work environment. In investment documents, insert a clause that requires the disclosure of sexual harassment, assault or discrimination claims to the board (while protecting privacy). Have zero tolerance for these issues and don’t let potential financial considerations cloud morals. Establish direct lines of contact with human resources and have contact with non-managers where possible. Conduct a gender-parity pay study and fix situations where women are underpaid. Institute standardized pay scales at each level and ensure balance in the performance review process.
There is more, of course, but the above is a start. All of us in private equity live in glass houses when it comes to gender parity, but we can’t be afraid to throw stones and break the glass. It is the right thing to do and it is good business.
Tyler Newton is a partner at Catalyst Investors, the New York growth-equity firm. Reach Tyler at or firstname.lastname@example.org or on LinkedIn.
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