Experts discuss how technology and AI can improve gender equality in the industry
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The gender gap still looms large in alternatives assets. Women account for only about 22% of the workforce in alternatives, according to Preqin’s upcoming Women in Alternatives 2024 report (Fig. 1). As more businesses investigate retention and diversity, equity, and inclusion (DEI) strategies, technology is playing a significant role in efforts toward gender equality.
Fig. 1: Female employees in alternatives as a proportion of total employees by asset class, 2020 vs. 2024
Source: Preqin Pro. Data as of January 2024
Even amid fundraising constraints, VC is becoming integral to the workplace. More recently, industries are incorporating artificial intelligence (AI) into their operations across multiple sectors. Forbes conducted an online survey of 600 American business owners currently using or planning to use AI in the following six months. Over half of respondents said they use AI for cybersecurity and fraud management, while nearly 97% believe ChatGPT will help their business going forward.
Despite these advancements, the amount of funding for female-founded tech start-ups and proportion of women in tech positions is still considerably low. Female-founded AI start-ups won just 2% of funding deals in the UK over the last decade. According to the World Economic Forum, only 26% of data and AI positions are held by women. The technology sector showcases the depth of today’s gender gap, but it can also become part of the solution.
As the alternatives industry strives to close the gender gap across all asset classes, experts discuss how technology is aiding equality efforts.
Coming from a National Security background, I worry AI developed by bad actors could create category leading tools that dominate critical sectors – deliberately discriminating against disfavored groups.
Ensuring that we have diverse teams working on AI problems offsets two of the most present dangers I see from the shift toward AI: technically inferior AI tools that inadvertently underperform or exhibit bias when faced with complex, real-world problems; and tools built under regimes that serve unethical agendas.
Statistically, companies with employees from different backgrounds have been shown to be more innovative, and more likely to create tools adapted to the reality of a complex, diverse world. Quantifiable metrics like race or gender can be used as proxies to assess this, but the goal should be to invest in teams that can leverage diverse perspectives and talents to drive results.
Over time, I think AI- enabled capabilities will play a significant role in bridging the gender gap among the builders and founders of companies. AI can liberate women from the rote tasks like schedule keeping that they are disproportionately burdened by, allowing women to engage with the higher-value projects that can evolve into leadership roles.
Technology is a powerful tool to gradually narrow gender disparities and empower women through directing increased dry powder into ventures led and managed by female professionals. Technology serves as a valuable ally in both investment and operational due diligence, enabling the identification of investments that align not only with defined risk-return ambitions but also DEI and cultural values.
Technology helps define, measure, and enhance the transparency of key performance indicators (KPIs), thus promoting continuous organizational improvement. Integrating AI in this landscape has the potential to reduce conflicts of interest, minimize information asymmetry, and ultimately foster alignment between GPs and LPs.
However, the journey toward achieving these advancements is not without challenges. Addressing the evolving needs of the industry requires continuous development of technology and a simultaneous elimination of the hidden biases of existing algorithms, as well as reduction of any type of ‘unbalanced noise’ that could compromise the system, distracting it from the ideal path. One of the primary difficulties lies in combatting unequal representation and misalignment to ensure that technological advancements can contribute meaningfully to bridging the gender gap in alternative investments.
I grew up in an era when female students in universities’ technology and engineering faculties were rare. Apart from the few trailblazers, those who decided to make a career out of their passion in technology faced an uphill battle. From what I see today and what the data is suggesting, progress in the alternative assets industry has been incremental in embracing female talent in technology. That said, a substantial gap remains between the ideal and the reality. It is also crucial for companies to have access to talent. We must widen the hiring pipeline by focusing on skills rather than degrees to make it possible for more women to come through, making female representation a priority and actively pursuing gender equality by tracking the percentage of women in leadership positions.
From digital entrepreneurship platforms that empower women to create their own businesses to remote work opportunities that accommodate childcare responsibilities, technology has played a key role in furthering gender equality over the last few years. As it continues to provide us with valuable data that can be used to identify and address gender bias, technology will remain an essential tool to increasing the representation of women in business.
Driven by innovation, my career trajectory shifted from the corporate world to the intersection of cutting-edge technology and building a better future in VC. Technology played a crucial role in facilitating this career pivot and the launch of our inaugural fund.
Global platforms opened doors to essential insights from industry leaders, while social media connected us with a vibrant community of like-minded professionals, investors, and groups like Global Women in VC. These connections and knowledge proved invaluable.
Tailored platforms like Global Fund Women Week fostered supportive environments and valuable collaboration, specifically for female investors. Many of them now offer to facilitate GP-LP introductions, providing access and visibility to both sides. Peer-to-peer networking and mentorship opportunities, facilitated by AI match-making platforms like ORBIIT, further expanded my network across borders and time zones, which is crucial for fundraising efforts.
Technology has lowered the entry barriers, but diverse experiences, role moddels, and inspiring success stories remain essential for attracting more women to VC. We must work together to dismantle persistent bias by amplifying the visibility of female industry leaders and highlight compelling narratives through our interconnected networks. We have more work to do, and we’re committed to playing our part.
The opinions and facts included in the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin, SolidIntel, CAIA Association, Harneys, and Alfastar Ventures accept no liability for any decisions taken in relation to the above.