As the Web3 ecosystem evolves and expands, promising radical new applications involving the metaverse, blockchain, and crypto, one aspect of the industry remains stuck in the past: the vast underrepresentation of women among founders and investors. This lack of diversity raises concerns that we risk building an online world that replicates, rather than counters, the same biases that plague the physical world.
A recent study by BCG X, the tech build and design unit of Boston Consulting Group, in partnership with People of Crypto Lab, analyzed the gender diversity of founders and investors in nearly 2,800 Web3 startups worldwide, with concerning results. The study found that only 13% of Web3 startups have a female founder, and within that group, 10% of founding teams include both men and women, and only 3% of companies have a team that is exclusively female. The gender disparity extends to the overall Web3 workforce, with women often clustered in nontechnical roles such as HR and marketing.
In funding, the split is even wider, with all-male founding teams raising nearly four times as much, on average, as all-female teams. Among companies that have raised more than $100 million, the percentage with all-female founding teams is zero. These findings highlight the critical underrepresentation of women, which is often masked in other studies that only look at mixed-gender teams. This underrepresentation has many costs, as companies with diverse leadership teams are better at innovation and more profitable.
The gender imbalance in the Web3 ecosystem has clear implications for how people represent themselves online, transact business, and interact with each other. The impact of this underrepresentation may be potentially greater than those of earlier-generation web businesses, as brands and digital platforms entering Web3, spaces designed predominantly by white men—with greater usage rates by white men—will forego a huge business and monetization opportunity from the start.
The default avatar options in the metaverse are often male, white, and cisgender, making it essential that Web3 offerings are designed by diverse groups of people who understand the lived experience of the target users. However, the good news is that because the Web3 ecosystem is still early in its development, there is time to fix the problem.
Several measures can help address this issue. First, there needs to be granular, objective measurement and reporting about the representation of women and other aspects of diversity across the entire ecosystem of company founders, employees, and investors. This measurement is crucial to solving the problem effectively.
Second, companies need to ensure that women are represented on investment teams to prevent unconscious bias from swaying funding decisions. Some VC firms now require that investment teams include at least one woman.
Third, companies creating a digital presence in Web3 should ensure that they are creating the widest range of experiences for the broadest possible base of consumers.
Fourth, companies need to invest time and resources in ensuring that female founders and investors in the Web3 space can tap into strong networks that are diverse and inclusive. Mentorship—from women and men—is especially important in opening doors for aspiring female founders and investors.
Finally, companies and investors need to partner with regulators as governments and nonprofits focus more on environmental, social, and governance issues. They are developing stricter reporting requirements and other measures regarding the gender makeup of companies and industries. Companies and investors have an opportunity to proactively collaborate and help shape those regulations.
The Web3 ecosystem represents the first major advance in technology since the #MeToo movement and the women’s rights movement more broadly. Unfortunately, the investment ecosystem is still wired in favor of men. Building a Web3 with diverse startup investors, designers, and more is not only a moral imperative, it is critical for business success and the future of innovation.
