By California Partner Project, CrunchBase, Illumyn Impact
This report was created through a collaboration between the California Partner Project, Ilmin Impact and Crunch-based.
executive summary
If social media has taught us anything, it means that new technology can have widespread and often unexpected effects. They can change not only how we work, but how we think and how we interact with each other.
Artificial intelligence has the potential to be unprecedented, shaping our future in exciting and unexpected ways. As business leaders and government agencies around the world are committed to managing the risks associated with AI's promised compensation, one immediate and evidence-based place to get started is to build diverse boards. However, our research shows that in that respect, AI companies' boards are in a severe shortage.
Boards that do not reflect a wide range of experience or perspectives are not well placed to oversee companies that can determine how their bank loan applications are evaluated, how healthcare issues are diagnosed, or how educational resources are allocated. While there is no single step that can guarantee responsible AI development, diverse board leadership is essential for companies that create technologies that fundamentally reshape how we live, work and interact.
This study examines rationally measurable gender diversity as a proxy for diversity in perspective, life experience, areas of expertise, and other demographics. To understand the gender mix of AI boards, we analyzed the board composition of over 140 AI companies headquartered in California, where venture-supported AI development is concentrated. Our study focused on 102 private companies that raised cumulative funds of at least $50 million. As we have seen many times, transformative innovation can come from today's newcomers, just like they come from established industry leaders. With these companies growing governance, the period before the IPO is just as important as it has been published. We also looked into the boards of 39 publicly available AI companies for comparison purposes.
Our analysis revealed a significant lack of gender diversity among those who control some of the world's most influential AI startups. Women only make up 15% of private companies' boards. Over 40% of these private committees have no female directors.
Two root causes contribute to this gender gap. One is structure and one action. First, investors and founders collectively hold the majority of private company boards, and women are still undervalued in these categories. Second, when appointing an independent director, the board often limits consideration to familiar candidates rather than seeking qualified professionals outside the immediate network.
Good news: At the cutting edge of AI innovation there are a lot of executive women and people of color ready to bring voice and operational expertise to the boardroom.
Companies that prioritize building diverse boards simply look beyond their existing networks to find the rich talent of AI boards. Let's consider this precedent. Five years ago, a third of all public companies in California had no female board members. All-male boards with focus and effort are now a rare exception.
Given the rapid pace of AI development, companies need to act now, but technology and its applications are still emerging. CEOs and executives who bring more women and people of color to the meeting rooms will help create a future that drives productive and healthy AI for all of us.
Important findings
Among the California-based AI companies included in our research:
- 15% of board members of private companies are women.
- 43% of private company boards do not include female directors.
- Women who work on boards of private companies are most likely to hold an independent director seat.
- 26% of private company boards do not include independent directors. and
- Generally traded companies usually have more gender twin committees than private companies, but average only two women per eight-person board.
Women only have an average of one seat in AI conference rooms.
All women surveyed across all California-based AI private companies hold an average of one seat on six boards. Of the 102 private companies, only five boards (5%) have equal or greater women than the men in the boardroom.
Over 40% of private AI companies have an all-male board
Of the over 100 privately-public AI companies headquartered in California in our study, 44 (43%) do not have women in the boardroom.
Gender diversity is slightly higher on boards of companies with more capital. Of those who have at least $50 million in cumulative funds, but under $100 million, 62% have all male boards. For businesses with at least $100 million in capital, that number will drop to 32%. This shift could be attributed to the addition of independent directors that brings operational and market expertise.
Among publicly traded companies, women hold an average of two board sheets, double the average for private companies' boards. Research suggests that the board should include at least three female directors to grasp the full economic benefits of diversity. A small portion of the public companies we investigated meet that threshold.
For private company boards, the appointment of an independent director provides the fastest route to diversity
Most private companies' boards (72%) are held by company executives (CEOs and co-founders, usually) and early investors. Women only hold 10% of these board sheets. This reflects the underestimation of women among venture capital investors and funding entrepreneurs. Women hold less than 20% of the role of investment partners in venture capital companies. Companies with female founders secured just 3% of their AI venture funds in 2023, and have been stagnant since 2015.
More than half (55%) of the female directors included in our survey held independent board sheets. That is, they are not involved in the company's founding or management team or the company's investors. Public companies require a minimum number of independent directors, but private companies do not have such requirements. Therefore, independent directors are usually added later in the company's lifecycle. Often as part of IPO preparation. The proportion of companies without independent directors decreases as funding levels increase. Companies that cost between 36% and 99 million to 21% and over $100 million of people with $50 million.
Our findings suggest that women are likely to be appointed to the Private Enterprise AI Board as their second independent director. On boards where there is only one independent director, women hold 17% of these independent director sheets. Among companies with multiple independent directors, 67% had at least one woman in the role.
summary
Women are underrated at boards of AI companies, especially startups in early stages of growth. Board diversity is not a panacea, but it is one of the key factors for companies developing technologies that have the potential to impact society in a deeper way.
To increase the number of female board members, companies must:
- Accelerate the appointment of independent directors.
- Commit to adding directors to expand diversity of perspective, skills and experience on the board. and
- Reach outside your existing network and identify the right candidates.
Companies do not need to trade off technical expertise and governance experience to bring a diverse voice to the AI executive office. They simply need to look beyond their immediate network.
Methodology
This study follows the methodology used for her annually for him, a crunch-based study of diversity on private company boards.
Using the CrunchBase database, we have identified 409 AI companies headquartered in California. Among them, as of July 1, 2024, 40 public and 369 private companies provided at least $50 million in cumulative funding. To ensure that each company's board profiles are up to date, we only included companies that publish their boards on their website.
The board members were then characterized by reference to the company's website data, Crunchbase profiles and other publicly available information. This investigation included only the board of directors. Board observers and/or advisors were excluded from the dataset. For private company boards, officers were segmented according to the type of board. Executive, investor, or independent. In some cases where the founder and past executives remained on the board even though they were not in the operating role in the company, they acknowledged their original relationship with the company and classified them as “executive directors.” Gender was identified by referring to professional profiles on CrunchBase and by referring to other sites if not available.
About the author
The California Partners Project, co-founded by California's first partners, Jennifer Sebel Newsom and Olivia Morgan, in partnership with the people of California, is dedicated to advocating for gender equity across the state and ensuring that the state's media and technology industry is a force forever in the lives of all children. The California Partners Project offers a comprehensive board playbook series developed in collaboration with Stanford's VMware Women's Leadership Innovation Lab, which tracks and spotlights women's representation on corporate boards, and features strategies for board refreshment and culture building. For more information about the nonprofit, please visit www.calpartnersproject.org. Connect to the California Partners Project on LinkedIn and Instagram.
CrunchBase is a predictive intelligence solution that predicts private market movements using a unique combination of live private company data, AI, and market activity from over 80 million users. It helps investors, dealers and analysts to find and act on opportunities first. For more information, visit crunchbase.ai and follow CrunchBase on LinkedIn and X.
Illumyn Impact (formerly for him) is a social impact organization with a mission to diversify the board's ecosystem that is shaping and shaping healthcare, AI, climate change, and beyond. Drawn from an executive referral-based network of talent, not over 8,000 people, a third of whom are women of color, and Ilmin Impact offers highly curated referrals that bring fresh expertise to the boardroom. Illumyn Impact is proud to partner with over 100 leading private equity and venture capital companies. 501C3 Corporation, Illumyn Impact, will function through founding partners GV, IVP, L Catterton, Mayfield Fund, Silver Lake Partners, ShiltBank, Starboard Value, Tiger Global Impact Ventures, and supporters such as Brad Feld, Amy Batchelor, Reid Hoffman, Jeffweiner, and NASDAQ. Sister organization Ilmin supports underrepresented executives of some of the world's largest companies through the Excellence Fellowship Program in the Corporate Executive Office.
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