Startups need to start investing cold, hard cash in diversity
Paying lip-service isn’t enough: Diversity VC’s Francesca Warner shares her tips for startups and investors looking to make their teams more diverse
Diverse teams lead to better company performance – that’s the verdict of 90 per cent of people surveyed for Atomico’s State of European Tech report in 2018.
However, the 2019 report suggests startups still have a long way to go. The proportion of women in executive positions in venture-capital-backed companies has actually fallen to 8 per cent. Moreover, 84 per cent of the founders surveyed self-identified as white, while just 0.9 per cent self-identified as black; and 82 per cent of founders said they were university educated.
Diversity VC is a non-profit organisation set up in 2017 to promote diversity and inclusion in venture capital firms. Founder Francesca Warner says that startups have not done enough to make their teams more diverse. “I don’t really see enough founders and leaders in tech really taking a leadership role on the topic,” she says.
Warner says that startups should proactively prioritise the question of diversity, and make it a clear objective from the get-go. “They should be putting a budget behind it and measuring success month on month and year on year, and making it a standing agenda item in board packs,” she says.
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Setting the right company culture is also crucial. “I think [startups] should be making sure that they are talking about it all the time in their team – and building a culture in which people can voice if they feel like they’re not being included, or they’re not being heard.”
She warns about the dangers of prioritising one group over another: “As a founder, I’d advise an intersectional approach from day one.”
This isn’t just about founders: VC firms can have a disproportionate impact on diversity in the startup ecosystem. “It’s a tiny industry, but the companies that they fund – they’re going to be the Googles, the Facebooks of the next 10 and 20 years – and they’re going to be employing tens of thousands of people,” Warner says.
What characteristics should VCs be looking for in founders?
I think a lot of VCs use shortcuts to evaluate founders based on where they worked or where they went to university or who they know in their networks, and I think that VCs should think about more objective criteria that are to do with aptitude.
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How do you think the startup ecosystem has changed since 2010?
There’s certainly a much better understanding of why it’s important to create an inclusive industry, but we’re still woefully behind when it comes to meaningful impact of the actions that people are taking to change the way that the industry is set up.
What trends should VCs be watching for over the next ten years?
I think where the real opportunities lie are in markets and in sectors and in founding teams that are not obvious, and I think that one of those areas could be women – as a whole customer group. More money has been invested in the vaping company Juul than has been invested in the whole of femtech, and I think that that’s a huge opportunity.