What are we actually doing to tackle inequality in venture capital?
What do Elon Musk (Tesla, SpaceX), Mary Barra (General Motors), Ana Botín (Santander Bank) and François-Henri Pinault (Groupe Artémis, Kering) have in common? Apart from being some of the most successful entrepreneurs and leaders in their respective fields, they all share another quality: multicultural experiences. Musk was born in South Africa to Canadian parents, and he studied in the US. Barra’s family comes from Finland, she’s a second-generation immigrant born raised in Michigan. Ana Botín, born in the north of Spain, studied both in the UK and the US. Pinault is French, worked in Africa for several years and now lives in London.
Do you know what else they have in common? They had the opportunity to shine.
It’s no secret ethnic minorities and women are underrepresented in venture capital firms. Although statistics are improving, there’s still a long way to go. We can’t plateau now, and there’s a real risk of doing so.
Even in 2020, most deals are closed thanks to personal connections within your network. It’s normal. We all tend to be more comfortable with people who speak our language, went to our same school, eat the same food, wear the same clothes, support the same football team, etc.
Sure, you might be able to work better with people you have things in common with, but it also comes with a disadvantage. Our brain needs to work out to get stronger. Comfort handcuffs creativity.
So, how do we get in touch with people who are not connected to us?
Changes are being made. The industry is looking into using data and technology to discover new startups and profiles eliminating biases. However, other tangible initiatives need to be established to ensure access for all types of profiles.
That’s exactly why initiatives like Included VC make sense now more than ever. Included VC is a 12-month venture capital program where fellows gain education and knowledge, but more importantly, access to Europe’s best VCs and their portfolio companies.
Here are three reasons why Mangrove Capital Partners decided to be a founding member and support this initiative.
1. It has an honest purpose
The main goal and mission long-term is to increase the number of underrepresented communities within the venture capital ecosystem. Something we are particularly proud of is the blind selection process. It identifies profiles that could be traditionally overlooked due to their background and education. Stanford is sexy, we get it, but if you want to get the best fish, you need to aim at the whole ocean, not just a fishbowl.
2. It makes sense for business
It’s no secret that companies that rely on eclectic teams are successful all over the world. Take for instance the U.S. Immigrants are almost twice as likely to become entrepreneurs as native-born American citizens, according to Harvard Business Review.
Cross-cultural experience increases the ability to recognize entrepreneurial opportunities. You will find this fact to be true in different prestigious reports, but also in real life. At Mangrove, we are used to working with ambitious tech entrepreneurs, so it wasn’t a surprise for us when we read that between 2006 and 2012, 25% of all American technology and engineering companies had at least one immigrant co-founder.
Many of the founders in our portfolio confirm this data. For instance, Omer Kucukdere is Turkish, came to Germany to build Nestpick, the largest search engine for furnished apartments, and recently moved to New York to drive international expansion. Anthony Watson is the first non-US citizen to join the board of LGBTQ advocacy group GLAA.
Truth is, Mangrove is proud to build an eclectic portfolio. Laura Urquizu from Redpoints and Julia Bösch from Outfittery are good examples of our female founders. But this is not enough. We also encourage our founders to make these policies part of their inner culture. Many of them have increased their ratios: Redpoints (47%), Walkme, Wix (40%), Sybel (43%), Travelnest (50%), Outfittery (57%). Good news is that this process still goes on, and initiatives like Included make it a lot easier.
3. The fellows from the inaugural cohort are spectacular
Included VC 2020 received over 1400 applications for 30 places. The
cohort has a mix of gathered individuals from 9 different countries, 60% female and 56% black, Asian or mixed. The list includes refugees, PhDs, human rights activists and global thinkers.
People like Joshua, who left school when he was 13 with no qualifications and very low literacy due to severe dyslexia; Bayo, who started her entrepreneurship journey at the age of 16 as an AVON salesperson, or Wendy who spent the early years of her career working with political prisoners on Robben Island.
To summarize, we have seen first hand that the VC industry is heavily dominated by very similar profiles, and we want to be part of the movement to change this. Multiculturalism only serves to make our teams, our companies and our businesses stronger.
