Despite two years of greater awareness over a lack of gender diversity in the UK venture capitalist industry, the number of women in investor roles has remained pretty much static, according to the latest industry figures collected by Diversity VC.
The London-based non-profit organisation was founded with the intention of countering what they saw as a lack of diversity in the UK venture capital industry. It released its first report in 2017, looking exclusively at the gender diversity of the industry, and the statistics were damning: only 18% of investment teams were women. Then, on the other side of the table, for every £1 of VC investment made, all-female founder teams received less than one pence.
This new report, sponsored by Silicon Valley Bank and published today, analysed 183 British venture capital firms, employing more than 2,110 people between them. It shows that the number of women in investing roles has risen by just 2%, from 18% to 20%, and at the senior level this figure has remained stubbornly at 13%, with nearly two-thirds of firms (63%) having no senior women in their investment teams at all. The number of firms with all-male investment teams has dropped since the 2017 report, from 48% to 37%.
The report also analysed investment committees for the first time - the most senior group of investment professionals at a firm - finding that women only accounted for 13% of these, based on a sample of 146 committee members across 58 firms. Furthermore, more than 80% of funds surveyed reported they have no women on their investment committee.
"In the last two years we have had the #MeToo and #MovingForward movements, increased pay gap reporting, so much narrative, especially in VC, around diversity and inclusion and that seems to have not translated to the senior level or on investment committees," Diversity VC cofounder Check Warner told Techworld this week.
"That is a disappointing finding and definitely one we need to have more focus on as we talk about inclusion beyond getting people in the door and ensure they are supported to reach the senior level," she added.
The factors Warner highlights have all brought venture capital into the spotlight for its homogeneity, a trend that is even more alarming when you consider the influence these funds have over which technology companies win and lose.
Author of the report Travis Winstanley, research lead and cofounder of Diversity VC, wrote: "It is our hope at Diversity VC that the venture capital industry is moving towards a more responsible and sustainable form of investment, where attention is paid not just to generating financial returns, but to the holistic impact that the firms and the companies they run have on the world around them. We believe that responsible investing is the future of the venture capital industry and diversity and inclusion as an important component of that future."
The business benefits of diversity and inclusion have also become more apparent in recent years. A Harvard Business Review study into venture capital last year specifically concluded that "diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns."
It's not all doom and gloom, however. There has been something of an influx of women into the industry at the junior levels, with the research showing the number of women in analyst, associate or similar roles has jumped 8% in the two years since the last report. So, can we expect to see a jump in those more senior roles further down the line?
"There has been a big jump at junior level, we can see that anecdotally and with the [Ladies in VC] WhatsApp group and just looking around at events and seeing that they are oversubscribed and the fact that you no longer see the same people every time," Warner said. "So I think it will be a case of people working their way up and even starting funds of their own."
This is reflected in the research, which found that it takes on average five to eight years to reach a senior role in venture capital, so there is some time to see this needle move in the years to come.
Career background, education and ethnicity
The report also expanded its remit beyond just gender diversity to also include career background, education and ethnicity for the first time.
It found that a third of UK venture capital firm employees graduated from a business school or one of Oxford, Cambridge (18% total between them), Harvard and Stanford universities.
It also found that 8% of junior level women in the industry have a PhD or similar qualification, compared to just 1% of men. Although these figures reflect a smaller sample size of women in the industry, it does reflect what Warner calls "a broad point that comes through", which "implies how much more women have to do to get into the industry."
It also hints towards a prevalence of women venture capitalists that focus on areas like life sciences, where "having a PhD is more frequently required to do diligence there," Warner added.
Suranga Chandratillake, general partner of Balderton Capital commented on the findings: "The incoming generation of venture capital professionals are beginning to get closer to parity from a gender perspective but educational background remains stubbornly biased those from privileged backgrounds."
In terms of previous experience, most UK venture capitalists come from consultancy backgrounds (20%) with finance and banking accounting for 18% and 12%, respectively. Interestingly, just 4% of UK VCs have worked in a technology role.
Ethnicity proved harder to quantify for Diversity VC, with just 223 of the 2,114 VCs surveyed answering this question. Of those 223, 76% identified as white, but that figure might not be representative of how homogenous the industry remains at large.
Warner admitted that the sensitivity of this research led to a smaller sample size when it comes to ethnicity data, with some self-selection bias coming into play as the funds with the best ethnic diversity are more likely to submit to this data collection. That being said, "we do now have some numbers where we didn't before and have a benchmark to measure against and see how that changes over time," she said.
Diversity VC will continue its recent work with the Future VC apprenticeship scheme, which looks to get more diverse people placements at European funds, and will replicate this research in a year or so, with a focus on other areas of diversity - such as LGBTQ+ and socioeconomic mobility - which it wasn't able to fully investigate for this report.