Why diversity in VC has to be more than skin deep
An atypical VC’s perspective
I don’t fit the traditional VC image. I’m female, from a disadvantaged background outside of the South-East, educated in a below average state school and only learnt in the last month how to correctly say the word derivative. As a result, my route to making investment decisions in an investment committee on student startups has been far from typical. It’s a sign of the progress we’ve made as an industry and society that efforts to increase diversity with entrepreneurship and VC have a wide-base of support, with large amounts of research highlighting the benefits that such diversity could bring — Credit Suisse in the past decade looked across nearly 2,400 companies, finding that those with women on their board had 40% higher income growth than those without whilst Diversity VC’s recent publication noted those with with ethnically diverse teams had a 22% higher success rate of acquisitions and IPOs (Gompers and Kovvali, 2018).
However, the fact that someone like me in VC is still considered atypical highlights that there’s both work that still needs to be done and a clarification needed of the diversity goals towards which we are striving. Its become increasing apparent that many diversity initiatives in the industry place a large focus on the diversity of physical demographics of individuals, notably of gender and race. In some cases, this has arisen as these characteristics are more easily trackable. However, care should be taken not to forget that one of the key goals of supporting diversity is diversity of opinion — as Mika Cross, an expert on US federal workplaces, notes, ‘The more voices you have at the table, the better. You want someone to challenge the status quo’. Such diversity of voice and opinion arises most effectively by having a focus not only on gender, race and other outward characteristics but also on more ‘hidden’ characteristics from education and political views to sexuality and marriage status.
Having a sole focus on the diversity of outward characteristics to the exclusion of wider focuses on diversity of thought could significantly limit the benefits of programs seeking to increase diversity — although there may be those who are diverse in terms of their physical characteristics, if these individuals come from similar backgrounds and think in similar ways, they could provide little benefit and change to the status quo. Research has noted this distinction, with VC teams from more diverse educational backgrounds being 11.5% more likely to realise an exit on their investment portfolio. Special mention should be made of Wayra, with four of their accelerator programs being based outside of London as well as their ‘Wayra Pledge’ providing disadvantaged students with entrepreneurial work experience
Considering the role that VC’s play in determining the leaders of tomorrow, prioritising a wider definition of diversity to add focus on diversity of thought is essential — VC’s must not only resemble the physical diversity of founders, in their gender, ethnicity, age etc, but also able to understand and empathise with their diverse visions and thought processes. We have the privileged position to enable dreams to become reality. Let’s make sure that in supporting diversity, we are as holistic as possible, to be most effective in supporting the next generation of visionaries, innovators and rule-breakers, whatever their background.
To start your Creator Fund journey, get in touch with a student investor or ambassador on your campus here, or drop me an email at lucy@thecreatorfund.com
~ Lucy, Neuroscience Undergraduate at King’s College London
