Only 20 per cent of the UK's tech investors are women, Diversity VC's new report finds

Diversity VC was founded to promote diversity in the UK's investment industry — its most recent report makes for difficult reading 
Diversity VC founding team L-R: Travis Winstanley, Check Warner, Farooq Abassi, Anna Huyghues-Despointes, Lillian Li
Diversity VC
Amelia Heathman11 July 2019

Earlier this year, an uncomfortable statistic made the rounds: according to PitchBook data, female founders received 2.2 per cent of venture capital funding in 2018, taking in $2.88 billion out of a total of $130 billion (£103 billion).

In fact, one male-led company, the e-cigarette company Juul, took in $12.8 billion all by itself, an easy $10 billion more than all the female founders put together.

There are many reasons why women face such difficulties in the tech industry – one of which is the lack of women in the VC teams that will be investing in the new breed of companies coming up. A recent study by non-profit Diversity VC, and supported by Silicon Valley Bank, has found that women make up 20 per cent of VCs in the UK, whilst 38 per cent of firms have no women on their teams.

Speaking about the findings, Diversity VC’s co-founder and CEO Check Warner said: “This report matters, as the venture capital industry has an outsized impact on the rest of the economy. VCs invest in early-stage technology companies, which have the potential to become influential powerbrokers in the future. As venture investors enter the fray so early on, they can make a huge impact on the makeup and culture of the organisations that they fund.”

There has been some progress in the UK’s tech industry over the past two years. In 2017, only 18 per cent of VCs were women, whereas that bar has moved slightly. However, there has been no movement in senior investment roles, with women only making up 13 per cent of these positions. At nearly half of the UK’s firms, 47 per cent, there are no women in senior investment positions – as these roles have the most authority over investments by the firms this is a worrying figure to see.

It’s not like they aren’t qualified. Women in venture often have a higher level of education than men – in senior investment positions women hold an average of 1.5 degrees, compared to 1.3 for men. When it comes to junior positions, 8 per cent hold PhDs or similar, compared to one per cent of men.

The VC industry also isn’t very diverse when it comes to ethnicity. According to Diversity VC, 76 per cent of the UK VC industry is white, compared to 59 per cent of the London population as this is where the majority of funds are based.

Lillian Li, co-founder of Diversity VC, added: “This report is hugely important for the VC industry as we truly begin to address more complex dimensions of diversity and to push the industry's engagement with the topic.”

Change is happening. There is a spate of new women-led VC firms coming up including Jane VC, a new venture fund with offices in London and Cleveland with an aim to invest in women-led companies. As well, tennis star Serena Williams recently joined Whitney Wolfe Herd as an investor in the Bumble Fund which will also invest only in start-ups led by women of colour.

At the time, Williams said: “I’ve learned how impactful one woman’s voice can be when given a platform to speak and be heard. I am passionate about building on this progress and opening doors for women of all backgrounds, especially women of colour, to share their message and trust in their potential to accomplish great things.”

Tennis star Serena Williams is an investor at the Bumble Fund, focused on investing in women of colour start-ups 
REUTERS/Hannah McKay

Diversity problems in the tech industry aren’t going to be solved overnight but it's important that organisations like Diversity VC, which was established to address these problems, are on hand to measure that progress. Though some predict it may take at least 25 years to achieve gender parity in tech, statistics like this may help kick people into gear.

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