Still, a number of women have decided to skip the bureaucracy and start their own venture capital firms, leading to a 73% increase to 275 in the number of female-led venture capital firms founded in the last five years, the Women in VC report shows.
There are three "proven" paths for a woman or minority to become a check writer at a venture capital firm with a fourth just emerging, Mr. Greene said.
The top three paths are hiring and promotion at a venture capital firm; an executive leaves a venture capital firm with a track record and starts her own firm; and an angel investor starts a venture capital firm, he said. The fourth and newest path is when a founder at an established venture capital firm hires a female and/or minority celebrity, entertainer, athlete or a corporate development or consulting executive to run a new fund, Mr. Greene said.
But creating a successful venture capital firm and getting the first commitments from limited partners is not an easy road either, according to speakers on a panel at the Milken Institute Global Conference in October. Women and minority investment executives face extra hurdles in fundraising for their firms because investors see them as bringing another element of risk to their calculations, said Meme Scherr, an investor, former hedge fund executive and member of venture capital firm Plum Alley Investments, at the Milken Institute panel.
It can take longer, sometimes three to four years, for women- and minority-owned venture capital firms to raise a first fund, which puts up a barrier to entry, said Tracy Gray, founder and managing partner at venture capital firm The 22 Fund, speaking on the same panel.
Firms do not get access to management fees until they close a fund and investors don't want executives at new firms to hold down a second job, Ms. Gray said.
"It's very difficult if you don't have personal wealth," which is a barrier for aspiring new venture capital firm founders, Ms. Gray said.
What's more, most investors don't want to be a manager's first investor, she said. And women- and minority-owned firms are held to a higher standard, Ms. Gray said.
"I'm not sure LPs trust women of color. ... We're constantly having to bring up research" that women-owned firms perform as well or better than firms owned by white men, Ms. Gray said.
Ms. Gray is also a lead partner at venture capital investment and investment education company Portfolia Inc.'s Green & Sustainability Fund and an executive-in-residence at the Los Angeles Cleantech Incubator. She is also the first social impact fellow at the UC Berkeley Haas School of Business' Center for Equity, Gender, and Leadership. She is also an engineer who worked on the space shuttle program at NASA.