Gender diversity in the UK Venture Capital Industry: what we now know
Diversity.VC recently published a report on the state of gender diversity in the UK Venture Capital industry. As part of the team that worked to produce the report, I want to highlight some key statistics and offer my view on what we can do next, both to improve gender diversity and diversity more broadly in the venture / tech ecosystem.
I joined the Venture Capital industry just over one year ago, straight from a graduate programme at a strategy consulting firm. Over the last year, I have had the privilege of meeting with exceptional entrepreneurs, investors and technologists. The people I’ve met have had many things in common; dynamism, intellect, passion. They’ve also been, majority men. Looking at the stack of business cards on my desk in front of me, a rough count shows ~80% are from men.
I find the lack of diversity within the tech and venture industries troubling; it is well evidenced that more diverse groups of people create better results. Diversity of experience allows for diversity of thought. How can you truly diligence a business if you are not challenged by colleagues around the table? By remaining homogenous you are missing opportunities to learn from being challenged by those with different experiences and thoughts.
Technology firms are rapidly changing every facet of human life and the Venture Capital industry is a major source of funding for these innovative businesses; the people involved in deciding which businesses to fund have a disproportionally large impact on technological change. The importance of the Venture Capital industry in driving innovation means a diverse ecosystem is critical. This is also true for technology firms, which suffer the same lack of diversity.
I believe that the gender ratio in VC needs to be challenged and it’s why, when Travis & Check approached me last year looking for volunteers to help collect data on gender diversity within the VC industry, I jumped at the opportunity!
As part of the project, myself and several other volunteers from the venture community, profiled ~1,600 employees over 160 Venture firms in the UK. Craft.co provided the scraped raw dataset which we then used as the basis of our report.
We found that of the ~1,600 employees only 27% were female. This narrows further when considering only investment professionals; 18% are female. If you take just decision making investment professionals (defined as partner or equivalent), 13% are female.
While I did not find the results surprising, it is still challenging to have the answer confirmed so clearly through data. A small positive in the data showed that at junior and mid-level investment roles; female representation rose to 29 and 25% respectively.
So what can we do?
The results very clearly indicate a large gender diversity gap in the Venture Capital industry, especially in decision making roles. Action is now required to not only shrink this gap at all seniority levels but also to ensure that the current generation of junior and mid-level females do not reach a floor in their progression.
I believe that this can be achieved in the followings ways;
Targets: we now have clear data on the proportion of female decision making investment professionals. We can use this as a base to target improvements. We suggest a target of 20% female decision making investment professionals by 2020, in line with Level20, the initiative set out in the private equity industry.
Improve the funnel: overall, there are fewer women at all levels working in venture capital. At a firm level, VCs should take positive action in recruiting a gender balanced team. At an industry level, associations such as the BVCA should work to improve awareness of Venture Capital as a profession for women to typical feeders; universities, consulting / banking and technology firms.
Shatter the glass ceiling: the drop-off of female investment professions between the mid to senior ranks is significant. Mentoring initiatives across the industry are required to support career progression. Likewise, initiates within funds need to be put in place to support women through maternity leave and beyond. VC firms on average comprise of 9 people which makes it challenging when a member of the team takes parental leave. However, initiatives have been successful in other industries and I believe can have a positive impact here.
The report is narrow and focuses exclusively on women within the Venture Capital industry. Further reports are required to investigate the lack of ethnic and socio-economic diversity in VC. Stay tuned for more…
A huge thank you to Travis, Check and the team at Diversity.VC for spearheading the report. Additional thanks to the team at Craft.co and the BVCA for their continued support
The full report can be viewed online here: http://www.diversity.vc/women-in-uk-vc/