A screening system that aims to reduce bias in VC decision making has been found to generate more successful exits and fewer shutdowns than traditional methods, according to new research.
VC group Astia, which aims to increase the supply of funding for women-led startups, analysed the investment decisions made over the past quarter-century using its Expert Sift screening model.
The findings revealed that VC decisions made from the anti-bias process identified more exits (16%) than shut-downs (11%), compared with a 65-75% failure rate in the broader startup market.
Venture capital investments have historically been significantly weighted towards male founding teams. According to Astia’s research, just 2-3% of VC dollars have been invested in startups with women CEOs and just 22.7% to founding teams with at least one woman.
“As investors, we recognise the critical role of proprietary deal flow to fund performance,” said Sharon Vosmek, managing partner and chief executive at Astia.
“Over 25 years, we have proven that our thesis and methodology is robust across market cycles, from the tech boom and bust to the 2007 financial crisis to today’s post ‘Zero Interest Rate Policy’ (ZIRP) period, we provide our investors with the returns they look for.”
Astia’s findings have been supported by major figures in finance and investment.
“Mastercard shares Astia’s commitment to supporting innovative ventures that drive strong growth and economic opportunity for all,” said Sherri Haymond, co-president, global partnerships at Mastercard.
“This latest research underscores the role of Astia’s Expert Sift model in elevating and creating more opportunities for the high-performing companies they serve, helping to uplift and empower a more balanced venture capital ecosystem.”
JPMorganChase’s head of small business philanthropy Shaolee Sen added: “Astia’s research highlights the role investors have to identify and support innovative ventures, as well as generate strong economic returns while fostering meaningful change in the venture capital ecosystem.”
Read more: UK leads Europe on VC funding for women founders – but gender gap remains vast
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