Diversity VC — The Next Chapter
TL;DR — We’re new, we’re excited, we’d love you to join us!
Today marks our first official day as the new leadership team of Diversity VC, with Ladi, as CEO and Daisy as COO.
While the specifics of our respective career paths have been quite different, the unifying theme has been a commitment to ‘lead meaningful change’. When you grow up as we have you cannot escape a sense of responsibility. To be aware that the system around you was built to your disadvantage, and to understand that you’ve escaped a worse fate thanks to the hard work of activists and leaders who came before, instills a strong need to continue that work. We’re therefore delighted to be able to focus our efforts on addressing inclusion and ethics in the Venture Capital Industry. By uniting the cause we care most passionately about with the industry that has the greatest potential to facilitate change, we hope to create long-lasting impact, at scale.
Diversity VC started with one simple aim: to make venture capital a fairer and more inclusive industry. Given Venture Capital’s outsized impact on the economy and role in designing the future of industry, it is reasonable to posit that a more inclusive and equitable VC industry would spur on a more inclusive and equitable society. One with true equality of opportunity, and where the companies built to solve problems are all the better equipped to do so by virtue of richly diverse perspectives.
Yet Venture Capital is still a sector with one of the most homogenous workforces in the world and working to the benefit of an equally homogenous category of entrepreneurs. With pervasive inequalities stemming from system design and exacerbated by individual bias and “pattern matching” behaviour. This isn’t just unfair, it’s actively holding us back at a time when, more than ever, we need innovation with fewer blind spots, solutions built with deep understanding of the overlapping causes of the issues, and partnered action to drive change.
Diversity VC has sought to lead this change by highlighting issues and providing solutions to create an industry that is free from exclusion and bias. When we started in 2016, the UK and European ecosystem had little clear data on the scope of the problem: what proportion of capital was going to underrepresented founders, and the composition of teams working at funds. Diversity VC has not only worked to fill the gap in our collective knowledge but to create infrastructure to support much needed progress.
Since then, the world has undergone a cultural awakening and momentum is building behind this critical work. We’ve witnessed heinous sexual harassment scandals at some of the most prominent technology companies and last year racial tragedies in the US — in particular the murder of George Floyd — led to the largest civil rights marches in history and a reckoning with the systemic nature of racial exclusion.
We saw conversations on Diversity, Equity and Inclusion finally take center stage in our collective consciousness. Organisations, businesses, and society in general started to take stock of their responsibility in righting the system as a whole and some took meaningful actions. But truth be told, Venture Capital has not yet made real progress and it’s clearer now than ever that as an industry we are moving too slowly. Lack of diversity in investment teams is still an issue at most funds. According to our research, 85% of investment committees are all-male and only 12% of VC partners are female, a figure that has stayed flat for the last 2 years. Regarding race and ethnicity, only 1% of decision-makers in VC are black, versus 3% of the UK population and 13% of London’s inhabitants.
Consequently, the decisions made by these teams will have great influence on what type of ideas or entrepreneurs are valued, and the opportunities innovators receive. Within the past decade (2009–2019), only 3% of VC investment went to all female teams and contrastingly, all male teams got 68% of VC funding. Founders from BAME backgrounds only received 1.7% of VC investment, which highlights a disproportionate underinvestment in these communities — as ethnic minorities represent 14% of the UK population. 2
The VC sector needs diverse teams, we need diverse communities that are representative of society’s wider fabric — not just because it’s fairer, but because diversity of lived experience and thought contributes to more deals, better decisions, and ultimately leads to better outcomes. An HBR study found that “the more similar the investment partners, the lower their investments’ performance” 3, proving that teams with diverse school and ethnic backgrounds lead to top performing outcomes.
There is cause for optimism, however. Stakeholders across the industry have shown they are committed to address this issue and we have been encouraged by the dedication from industry leaders, government officials and members of the VC ecosystem to work with Diversity VC to tackle systemic bias. Over the last 4 years we have engaged more than 500 stakeholders, expanded our efforts into the US and have built an incredible community.
Our mission is to empower every VC with the information, tools and resources to take the actions necessary to address Diversity, Equity and Inclusion within their firms and across the industry. Venture Capital needs the prompting and the mechanisms to implement systemic change across the industry. Going forward we are prepared to hold ‘uncomfortable’ conversations about DEI, challenge the status quo and build a ‘platform for change’.
We remain committed to enable change through these 3 key pillars:
Awareness & Insights 💡To address the lack of diversity in our industry we need to acknowledge it. Our Research Reports (shoutout to our incredible sponsors over the years) raise awareness of the current state of affairs and deeper understanding of the systemic bias that pervades our ecosystem. Data-driven insights gathered from hundreds of firms enabled us to listen and define priorities across the industry. The results were undeniable. Diversity is no longer an issue we can dismiss or ignore.
Actionable Directives 🗺️ To set about repairing the woeful gaps, inequity and disparity that continues to persist. Together with Diversio, we created the Diversity VC Standard to help members of our community take actionable steps by designing diversity into the operating model & processes of their companies. We have helped to drive change by setting stretching but achievable goals and engaging culture creators across the industry by providing the necessary tools, frameworks, and methodologies.
Access to Talent 🌟 Access to VC jobs is still unequal as most funds’ hiring processes are skewed towards socio-economic privileged backgrounds. 20% of VCs went to Oxford, Cambridge, Harvard or Stanford.4 “Talent is evenly distributed, but opportunity is not.” To create a more inclusive industry we took a proactive approach to addressing the problem. Our Future VC program is building a pipeline of diverse talent with the knowledge, skills, and abilities needed to excel in Venture Capital and is representative of society. Funds that are more representative of society can stay relevant, create more equitable opportunities, and improve fund performance. Companies need to differentiate themselves with inclusion and make it a business differentiator to their target market by accelerating equality for all.
All of these pillars seek to support the community and networks we serve. Our virtual and in-person events inspire active engagement and intentional behavioural change through peer-to-peer networks.
Authentic and long-lasting inclusion and diversity has never been so demanded. As business leaders and industry players, we are at the frontlines of effecting change. Diversity VC has carried the flag for inclusive access, diverse representation, and equitable attainment in the Venture Capital industry.
Diversity VC, the next chapter
In 2021, Diversity VC is doubling down — we are aiming to better support and integrate our community of changemakers, broaden the scope of our reporting, make it easier to access our tools and resources, and expand our impact globally by entering new ecosystems. Accordingly, we will keep growing our core team of inspiring individuals.
So we are also calling out to anyone keen to join the mission and contribute to the change they want to see in this industry and beyond. If you feel you have anything to contribute, in time, effort or otherwise, then sign up here.
Finally, as the sun creeps out and we’re released from lockdown-confines, we’re hoping to gather the community in real life soon, so make sure to keep your eyes peeled.
Thanks for reading,
Ladi & Daisy