Gender diversity at LocalGlobe — team, portfolio, and dealflow
At LocalGlobe and Latitude (our sister breakout fund) we stand for a culture of inclusion, believing that diversity in lived experience is key for diversity of thought, which in turn facilitates better outcomes. But more importantly, it is the right thing to do, and it calls for purposeful action.
In this article we focus on our work and stats related to gender diversity, which we seek to share with founders, fellow investors, and the broader ecosystem. As always, measuring where we stand is crucial to monitoring our progress, guiding our efforts, and holding ourselves accountable.
1. Gender diversity among the LocalGlobe & Latitude team
Our team’s gender split is almost equal — significantly above the 30% average in UK VC, and in line with the UK population. Within our investment team alone, the gender split also outperforms industry benchmarks, and we are committed to continue improving it over time.
It is important to note that as of 2019, 37% of UK VCs still had all male investment teams, and 83% of UK VCs had no women on their investment committees.
Generally, a diverse candidate funnel is a precondition to diverse hiring, so we thought it would also be instructive to share the gender split across the open hiring process for the first cohort of our 2-year associate program which we launched towards the end of 2019. The assessment of applicants up to the video interviews was mostly blind to minimise bias as possible.
2. Gender diversity among founding teams and CEOs in LocalGlobe’s portfolio
This section looks at the 160 founding teams we backed since 2015 at seed or pre-seed stage, including 108 funding rounds we led or co-led, and 52 funding rounds we participated in outside of our core geography.
It is also interesting to look at the share of those companies that have (or had while they were active) a female CEO or Co-CEO.
3. Gender diversity among employees in LocalGlobe’s portfolio
Towards the end of 2020, 104 of the companies above (with at least 5 FTEs) shared with us data on the current gender split of their teams (Female, Male, Non-binary, Unknown), totalling over 6,000 FTEs. To clarify, we haven’t looked into their underlying reporting methodologies.
Breaking these numbers down is quite instructive:
(a) On the aggregate level, there is no significant difference in gender diversity among FTEs between UK and non-UK companies.
(b) a quarter of the companies still have less than 20% female FTEs.
(c) On average, gender diversity notably improves with scale — a difference of 10 percentage points between companies of up to 50 FTEs vs companies with 100+ FTEs. One plausible explanation is that as companies scale, the share of FTEs in tech and product — where gender diversity tends to be especially low — decreases relative to other growing parts of the company, where women are typically better represented (e.g. sales & marketing, operations, HR, finance).
Several months ago we ran a survey among CTOs in our portfolio, in which we also asked them to indicate the percentage of women within their tech teams. Here are the stats based on responses from 71 companies. At less than 7% of companies with more than 10% of women in their tech teams — many of which we know are making substantive efforts to attract female talent — there’s still a long way to go…
4. Company spotlight: how Melio and Zego are championing gender diversity in hyper-growth
One of the ways we as seed and pre-seed investors can support gender diversity within portfolio companies — beyond providing actionable benchmarks — is by simply making it a discussion topic from the very beginning, and asking for it to be tracked in periodic updates. Most founders acknowledge that it’s crucial to get the company culture right in the early days, and generally agree that healthy diversity is part and parcel to that effort. However, with so many priorities to address, founders don’t always appreciate its urgency given that as a company grows with a stark gender imbalance, it may find it increasingly challenging to attract female talent.
We first brought this up with Melio’s (three male) founders when they were just a team of 10 in Tel Aviv. Realising the risk but also the opportunity to build an outstanding company (in yet another way), they’ve made this a priority and have consistently delivered on it since (as they have on any other front):
Many founders worry that ensuring their hiring process truly facilitates gender diversity would end up undermining the speed at which their team should grow. In this regard, Melio’s journey is particularly instructive because they’ve managed to build a team that is both superb and diverse, while growing from 10 to over 250 FTEs in just over two years — having gone from seed through series C and a unicorn status!
Another inspiring example in LocalGlobe’s portfolio is Zego, which also recently raised its Series C and joined the unicorn club. They’ve been committed to diverse hiring since their early days, for example, by over indexing on related benefits such as family leave. Indeed, they’ve shown that not only can this be done, even in hyper-growth, but that diversity can be leveraged to strengthen and differentiate a company’s talent brand, and actually make it easier to attract diverse talent.
5. LocalGlobe’s 2020 dealflow
During 2020 we met for the first time 460 companies raising their seed or pre-seed rounds. This number excludes companies we connected with or were informed of but haven’t gone on to actually meet, and companies we saw only as part of demo days). Based on our understanding of the composition of the founding teams:
Again, it’s instructive to look at the gender diversity specifically among the CEOs in this group.
6. Female Founder Office Hours
Female Founder Office Hours was started in 2018 with the single objective of getting female founders direct access to decision-making partners at VC funds. So far we’ve hosted 10 quarterly events, with 21 partners at VC funds, and over 250 female founders. Those included one-on-one meetings with investors, fireside chats with female founders, topical breakout sessions in small groups, and more.
If you’re a female founder and would like to attend one of those events, please register here.
So what’s next?
It’s encouraging to see diversity, and gender diversity in particular, gradually becoming an explicit priority across the ecosystem, but clearly there’s still significant progress to be made.
First, you may have noticed that we haven’t found any robust up-to-date industry benchmarks to draw like-for-like comparisons on the gender composition of founding teams at seed and pre-seed rounds, nor on the gender diversity among CEOs, leadership teams, and full-time employees over different stages. We’ll be working with key partners in the ecosystem to develop such benchmarks.
As always, we’re keen to speak with founders and operators who’ve led gender diversity initiatives in their companies to learn from their experiences and share success stories and best practices within our portfolio and ecosystem. If you’d like to chat or can suggest relevant people, please reach out at: mish@localglobe.vc
