We propose the following commitments that college endowments can pursue as part of the quest to further support a more diverse set of women and BIPOC founders and funders by June 2022:

• College endowments should transparently share the amount of funding going to women and BIPOC funders
• College endowments should formulate a strategy released by June 2022 for investing in emerging women and BIPOC fund managers

As students, faculty, staff, and alumni, we can pioneer this opportunity. As Cornellians, let’s lead this initiative.

A growing body of evidence proves that institutional investors should consider women fund managers to improve their investment outcomes. The evidence suggests that women-led funds perform better, in part because they are more likely to invest in women-founded companies.

Venture capital firms with women partners are twice as likely to invest in companies with at least one female founder and three times as likely to invest in a company with a female CEO. A recent study from Paul Gompers and Silpa Kovvali highlighted that when VCs increased the percentage of female partners at their firms by 10%, they saw an increase in 1.5% in the overall fund returns each year and had 9.7% more profitable exits, which is particularly notable because on average only a third of venture capital investments are profitable. Also Pitchbook found in a 2021 study that female-founded startups exit faster than male-founded startups. From 2011 to 2021, female-founded companies exited in 6.7 years on average, whereas the median time to exit for all US VC-backed companies is 7.7 years.

However, the dominance of the established few venture capital firms crowds out first time funds; these new, emerging funds are more likely to be run by women and BIPOC managers. To clarify, first-time funds are most often relatively small ($100 million or less) and 90% of all women-led funds are considered emerging managers. If institutional investors were more willing to invest in first-time funds, they would find more women and BIPOC-run firms, thus funding more women and BIPOC-founded startups. More competition might also encourage established firms to take diversity amongst their ranks more seriously, particularly if institutional investors make diversity targets a requirement.

Institutional investors should be more willing to consider first-time fund managers, particularly as they deliver comparable, and sometimes better performance than established fund managers. According to Preqin data, “first-time funds not only deliver returns comparable to established GPs, but many times they outperform experienced managers (not based on risk adjusted returns).”

We want to unlock institutional capital to bridge this funding gap, as this will lead to better returns for investors and increased innovation for the general public. Investing in women isn’t philanthropy —it is good business. We know that endowments are continuously assessing ways to improve. Through our research highlighted above, we have seen that emerging women and BIPOC-led venture capital funds that are focused on diverse founders perform better financially. 

Please see this informational document on why investing in women is just good business