Less than 9 percent of unicorn board members are women, SharesPost analysis finds
August 22, 2018 | Blog

Less than 9 percent of unicorn board members are women, SharesPost analysis finds

Last year, women in corporate America reached a significant milestone: women crossed the 20 percent threshold of total board seats among the Fortune 1000 companies, compared to 14.6 percent in 2011.

That’s a promising development among our largest, publicly traded companies. But when it comes to unicorns, the situation is pretty bleak.

Of the 107 private growth firms in the United States worth at least $1 billion, women held only 8.5 percent of board seats, according to a SharesPost analysis of data from Pitchbook. Even more distressing: nearly two-thirds of the unicorns do not have any female board members.

“We have a long way to go,” said Johanne Bouchard, a Bay Area corporate governance expert who serves as a consultant to several boards.

The size of unicorns and the enormous valuations they command require a board with a broad range of perspectives, especially as they prepare to go public.

But among “IPO boards,” directors that lead a company into stock offering, women are nearly invisible. Of the 75 largest IPOs from 2014 to 2016, nearly half, or 37 companies, went public with no women on their boards. Another 25 percent, or 19 companies, had only one woman, according to a report by Women on Boards 2020.

In other words, three fourths of companies with the largest IPOs went public with one or no women on their boards. And this period represents perhaps the most crucial stage in a company’s history when it needs competent director oversight and guidance to ensure a successful transition to the public markets.

“We hoped that at the point of going public, companies would recognize that board diversity is essential to success,” the Women on Boards 2020 report said. “Not so.”

Need for independent directors presents opportunity for women

In many ways, the lack of women on unicorn boards is not surprising. White men dominate Silicon Valley, especially among venture capitalists who fund startups and therefore sit on the boards.

The need for better board oversight at unicorns presents a significant opportunity for women as companies need to recruit more independent directors to strengthen corporate governance, Bouchard, the consultant, said.

Although the ranks of women among venture capitalists and startup founders is rather thin, there’s plenty of female board candidates with leadership and management experience, she said.

“If they have been a great executive, they have the ability to serve,” Bouchard said.

When it comes to experience, female directors at unicorns are a diverse lot

Interestingly enough, the nearly 60 women who hold unicorn board seats almost equally fall into three groups: VC and investment professionals (Mary Meeker of Kleiner Perkins Caulfeld Byers, Maria Cirinio of .406 Ventures), current and former CEOs (Ursula Burns of Xerox, Maggie Wilderotter of Frontier Communications, Michele Burns of Mercer), and top managers (Facebook chief operating officer Sheryl Sandberg, Square chief financial officer Sarah Friar, Leslie Kligore, former chief marketing officer at Netflix).

Unfortunately, they are overwhelmingly white with black and Asian women accounting for only 22 percent of board seats. There are no Hispanic/Latino female board directors.

The vast majority of female directors only sit on one board. Women who serve on multiple boards include Heidi Roizen, a partner at Draper Fisher Jurvetson (16), Maggie Wilderotter (9), former DuPont CEO Ellen Kullman (7), and Catherine Friedman of Morgan Stanley (4).

Board diversity is a matter of shareholder value, not political correctness

Studies and experts have said a diverse board, whether by race or gender, can boost corporate governance and ultimately shareholder value by offering a broader range of perspectives, skills, and experiences.

However, companies today still don’t quite grasp that connection. A recent survey of 300 executives and board directors by Wakefield Research found that while 95 percent said they need to seek candidates with a diverse set of skills and experiences, they don’t think board diversity is a big problem.

“It would be unfortunate if a focus on diversity of skills and perspectives were to undermine or cloud the focus on gender and racial diversity,” the report said. “In fact, typical definitions of board diversity include a demographic component.”

Now that corporate boards are finally recruiting more women, private firms should follow suit.

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CONFLICTS

This report is being published by SharesPost Research LLC, and distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own personal financial advisors before making any investment decisions based on this report. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.

This report does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or advisability of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

ANALYST CERTIFICATION

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about any and all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be, directly or indirectly related to the specific views contained in this report.

Analyst compensation is based upon various factors, including the overall performance of SharesPost, Inc. and its subsidiaries, and the performance and productivity of such analyst, including feedback from clients of SharesPost Financial Corporation and other stakeholders in our ecosystem, the quality of such analyst’s research and the analyst’s contribution to the growth and development of our overall research effort. Analyst compensation is derived from all revenue sources of SharesPost, Inc., including brokerage sales.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, or security. The opinions expressed in this report reflect our judgment at this date and are subject to change. The information contained in this report has been obtained from sources we consider to be reliable; however, we cannot guarantee the accuracy of all such information.

Any securities offered are offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk. It should only be considered as a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and you should complete your own independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or other investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2019. All rights reserved.

Thomas Lee

Thomas Lee

Thomas Lee is the Senior Writer at SharesPost. He was previously a business columnist at the San Francisco Chronicle. Lee has written for the Star Tribune in Minneapolis, St. Louis Post-Dispatch, and Seattle Times. He is author of “Rebuilding Empires” (St. Martin's Press), his book on the future of big box retail in the digital age.
PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

CONFLICTS

This report is being published by SharesPost Research LLC, and distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own personal financial advisors before making any investment decisions based on this report. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.

This report does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or advisability of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

ANALYST CERTIFICATION

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about any and all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be, directly or indirectly related to the specific views contained in this report.

Analyst compensation is based upon various factors, including the overall performance of SharesPost, Inc. and its subsidiaries, and the performance and productivity of such analyst, including feedback from clients of SharesPost Financial Corporation and other stakeholders in our ecosystem, the quality of such analyst’s research and the analyst’s contribution to the growth and development of our overall research effort. Analyst compensation is derived from all revenue sources of SharesPost, Inc., including brokerage sales.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, or security. The opinions expressed in this report reflect our judgment at this date and are subject to change. The information contained in this report has been obtained from sources we consider to be reliable; however, we cannot guarantee the accuracy of all such information.

Any securities offered are offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk. It should only be considered as a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and you should complete your own independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or other investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2019. All rights reserved.