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78% of high-growth private companies don’t have a single woman of color on their board

March 29, 2022, 1:20 PM UTC

Good morning, Broadsheet readers! President Biden’s budget proposal includes funding for childcare, Huawei CFO Meng Wanzhou returns to the corporate stage, and private company boards lag behind public companies on board diversity. Have a lovely Tuesday.

– Board of it. All-male boards at publicly traded companies have been nearly eradicated in the U.S. Private companies? Not so much.

About 40% of high-growth private companies didn’t have a woman on their board of directors in 2021, according to a new study by the board diversity organization Him for Her and Crunchbase. Worse still, a whopping 78% didn’t have any women of color on their boards. While the numbers are frustrating, they are an improvement from 2020 and 2019, when 50% and 60% of high-growth startups lacked a single woman on their boards.

In 2021, women held 14% of board seats, up from 11% in 2020, while women of color had just 3%—a stat that remained unchanged from the year before. The figures pale in comparison to the Fortune 500, where women secured 26.5% of board seats in 2020 and women of color held 5.7%. Him for Her shared the results of this year’s study with Fortune exclusively.

Researchers analyzed 3,437 board seats at 500 private companies, which altogether have raised $140 billion in funding and employ 180,000 people. While many board diversity rules—like the guidelines set by Nasdaq, Goldman Sachs, and the state of California—target public or soon-to-be-public companies, fixing the board makeup at high-growth private businesses is just as crucial, says Him for Her cofounder Ann Shepherd.

“Those public companies started as private companies,” Shepherd says. “They built the technologies and products that are shaping our lives today when they were private. They created business models that are disrupting industries when they were private.”

Bar chart showing the percentage of women to men directors from 2019-2021
Courtesy of Crunchbase

The prevalence of investor board seats presents a challenge to increasing board diversity. Just 14% of venture capital decision-makers are women, according to All Raise. This means that if investors are nearly all white men, and a check comes with a board seat, boards will reflect the investor demographic. The limitations that investor-reserved seats place on startups are clear: women held just 31% of investor seats last year vs. 56% of independent director seats.

Adjusting the balance of investor to non-investor seats could be a solution, and high-growth private companies have admittedly improved in this area. Investors held 48% of board seats last year, down from 56% in 2019, while the share of independent director seats rose from 20% to 29% during that same time frame.

Shepherd is hopeful that some of the progress public companies have made will soon trickle down to startups. “Board appointments take a long time,” she says. “And we’re seeing indications that companies and their investors are starting to take board diversity seriously.”

Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe

The Broadsheet is Fortune’s newsletter for and about the world’s most powerful women. Today’s edition was curated by Nimah Quadri. Subscribe here.

ALSO IN THE HEADLINES

- Budget boost. President Joe Biden released his fiscal 2023 budget on Monday, which calls for increased domestic funding for childcare. The budget will provide $20.2 billion in discretionary funding for the Administration for Children and Families' early care and education programs, $12.2 billion for Head Start and $7.6 billion for the Child Care and Development Block Grant. New York Times 

- Rules can change. Women will now be included in the Rooney Rule hiring process at the NFL, which requires diverse candidates among interviewees for coaching and front office jobs. Teams won't be required to interview women for the position, but a female candidate will now count toward the rule's diverse slate requirement. The Athletic

- Don't bank on it. Former and current employees at the World Bank allege that former chief Kristalina Georgieva—now head of the International Monetary Fund—failed to take action against a top official accused of sexual harassment during her tenure. Rodrigo Chaves, whose term as World Bank chief for Indonesia was extended under Georgieva, is running for president in Costa Rica and leading in the polls. Chaves has denied the allegations. Wall Street Journal

-Back in action. Huawei's finance chief Meng Wanzhou returned to the corporate stage on Monday, in her first public appearance since her release from Canada in September. The CFO, who is the daughter of Huawei founder Ran Zhengfei, spoke at an earnings presentation and alluded to her detention and legal battles in Canada. "In the few months that I've been back, I've been trying to catch up. I hope I will catch up," she said. Wall Street Journal

MOVERS AND SHAKERS: Dawn Godbolt was appointed director of health equity at Maven Clinic. Basis Technologies announced the appointment of Warner Bros Entertainment SVP Wendy Rubin to its board of directors. Armoire hired Microsoft venture fund M12's Colleen O'Brien as chief communications officer. 

IN CASE YOU MISSED IT

- Signed into law. Florida Gov. Ron DeSantis signed into law yesterday the state's controversial "Don't Say Gay" bill. Public school teachers in the state are now banned from discussing sexual orientation and gender identity in primary school classrooms. Disney, whose initial lack of response to the legislation led to employee protests, has pledged to help repeal the law. NPR

- Marketing madness. N.C.A.A. women's basketball is relishing an endorsement windfall that historically has only been afforded to the men's tournament. Unlike previous years, March Madness posters, logos, stickers, towels and electronic billboards were plastered everywhere at this year's women's basketball tournament, which showcased 68 teams. Players also reported receiving swag bags and better food. New York Times

- Diving in. Victoria's Secret announced an $18 million investment in Los Angeles-based brand Frankies Bikinis, founded by Francesca Aiello—the latest comeback strategy for the retailer. Victoria's Secret will take a minority stake in the swimwear brand, re-introduce swimwear into its product mix, and aims to reach a younger customer demographic. Most of Frankies Bikinis' customer base is under 30. WWD

ON MY RADAR

Women are calling out 'medical gaslighting' New York Times 

The young moms of TikTok work hard to keep it light Romper

Kim Kardashian says 'work' comments to women were 'taken out of context' Good Morning America

Taylor Swift will receive honorary doctorate from NYU Variety 

PARTING WORDS

"I had all these fearless people around me, so what have I got to be afraid of? Let’s all just dive in and see what happens."

-Michelle Yeoh on starring in the new film Everything Everywhere All at Once.

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