A trickle has become a torrent in crypto venture capital. Despite rapid inflation and a bear market, VC investment in blockchain grew to $10B globally in the first quarter of this year. This marks the largest quarterly sum ever at more than double one year ago.
And yet, even as investors stampede towards crypto projects, women will not benefit from the funding bonanza. Less than 5% of crypto founders and less than 10% of crypto fund partners are women. And the numbers aren’t improving.
As one of the few women funding crypto projects, I can tell you that this diversity gap is evident in my day-to-day. For example, out of the roughly 50 DeFi startups that I talk to, just one founder was a woman. This gender skew is now so baked into blockchain — in both funding and founding — it will take many years to undo.
That’s why we must act now before it’s too late. It’s time the industry establishes practices that bring women in on the ground floor. Instead of lip service, codes must be implemented and standards set to stoke diversity. Let’s learn from the mistakes of the tech sector and integrate environmental, social, and governance (ESG) principles into web3.
What Gets Lost in the Numbers
It bears reiterating just how underrepresented women are in web3. The statistics reflect the reality that women are almost always absent from big decisions in our industry. Whether it’s funding or founding, it’s almost always men who build the startups and men who back them.
Sadly, I’m now accustomed to this extreme gender divide. From boardrooms to funding discussions, I’m always dealing with men. In fact, it’s actually a shock when the founder of a project that I’m interested in is led by a woman.
And yet, as more money enters the space, it’s hard to see this gap shrinking without swift action. As things stand, women will miss the coming boom of virtual economies and the metaverse. Conversely, the industry will feel our absence, too. Web3 will lose out on the higher innovation and creativity that is proven to result from greater diversity. It shouldn’t be this way — and the good news is it doesn’t have to be.
It’s Time for Industry Standards and Quotas
Of course, bringing women into the funding and founding funnels will require more than good intentions. Web3 must set industry standards and ensure they’re met.
Public companies, for example, face ongoing investor pressure to improve diversity among their director ranks, underscoring a greater awareness of the need to address ESG issues. And the reason is more than diversity being “nice to have.” A groundbreaking study from S&P Global Market Intelligence found that firms with female CFOs are more profitable and have produced superior stock price performance compared to the market average. The research also showed that firms with high gender diversity on their board of directors have been more profitable and larger than firms with less gender diversity.
In web3, meanwhile, gender quotas and diversity standards are non-existent. Moreover, the vast majority of crypto funds don’t count minimum investment thresholds to back diverse founders. In a nutshell, there are no codes to protect nor encourage women in our space. This needs to change. At the very least, our industry needs quotas to bring more women into the fold and guarantee our numbers grow over time.
There is a burgeoning movement to address these problems in web3. It’s heartening to see members of the community rally to close the gap. From education initiatives to guilds, there are genuine attempts to educate women and ensure they aren’t left out of the web3 gold rush.
A good example is TryCrypto, an inclusive community of builders that seeks to make crypto more gender-balanced. At the same time, though, it’s increasingly clear that larger change must come from the top. Whether this is achieved internally with agreed-upon minimum standards or externally with regulators, there must be a forcing function to ensure evolution.
Diversity is a Strength
As the wider business world attests, diversity quotas can work. California’s law requiring certain publicly traded companies to include women on their boards will more than double the total number of female-held board seats in the state. Quotas, however, are just one part of the solution. The introduction of any rules must come with a genuine desire for change.
Web3 must acknowledge the lack of female leadership and want to include more diverse voices at the table. Instead of being forced by mandate, our nascent sector must recognize that diversity is a strength and fight for inclusion. And unlike the larger tech sector, which is still battling for gender equality many years later, web3 has the unique opportunity to change before it’s too late.
Our community must remember that technology is more than a product. Technology tells a story, connects ideas, and enables change. Without women, I fear that web3 products will only tell one side of the story. Likewise, without true integration, web3 will lack the perspective of women end-users.
For women on the outside looking in, my advice is that it’s never too late to start in web3. You don’t have to have money to participate. Instead, you need a willingness to learn, a support system to grow and a drive to be different. Scholarships and internships are vital to this end, as are overarching diversity frameworks for project funding and founding. Watch this space.