A new study examining venture capitalist (VC) investment in AI by sector has found that despite an influx of funding in investment capital, female-led start-ups are at a disadvantage. The study showed that the gender gap is particularly large in the AI software sector: Only 0.7% (£72.9 million) of the total capital invested since 2010 (£10.5 billion) has gone to female-led start-ups. This accounts for just 4% of the total number of start-ups in this sector. All-male founding teams, on the other hand, account for 78% and thus almost 77% of the total capital invested.
According to Judy Wajcman, lead author of the report and professor at the London School of Economics, the lack of diversity in the VC ecosystem hurts both women and the economy. Director of the Public Policy Program at the Alan Turing Institute, Professor Helen Margetts, added: "The lack of gender diversity in technology, and particularly in AI, limits the diversity of perspectives needed to drive innovation."
The study's researchers recommend that it should be mandatory for investors to report their diversity data, especially when investing in new technologies. They suggest integrating inclusion into everyday culture and practice across the AI ecosystem. It is recommended that the government and other funding bodies provide education and mentoring for investment in AI to increase networking opportunities for women in the tech industry.
Dr. Erin Young, research fellow at the Alan Turing Institute and co-author, believes that policy reforms must focus on the inclusion of women and underrepresented groups in the field in order to have a tangible impact on equity and innovation.
While the number of companies founded by women doubled in 2022, the percentage share barely changed during this period: around 11% of start-ups with at least one female founder receive funding. According to analysis of previous work by the research team, this is less than 3% of VC funding for AI start-ups with female founders.
