About eight years ago, I visited business accelerators in Boston and New York City.
In total, about ten different spaces where entrepreneurship was thriving. As was and is the case, these co-working spaces were cool, chic and trendy places to be. Some had really fancy furniture and styling, while others opted for the minimalist approach, but with high-end touches. About 75 per cent of these spaces had a table tennis table. This was obligatory at the time. It sent out a subliminal message that you were in a hip start-up environment. As we Scots were guided through each space, our tour guide would highlight the range of businesses that were located in each office. Some would highlight the super-fast broadband or the investment that had been ploughed into some of the budding start-ups. But, throughout all my visits, one thing stood out a mile. Each accelerator, co-working space or incubator had almost a 50:50 split of male and female.
You may not find this surprising at all. But, on the week that a cross-industry UK initiative to collect data on diversity in venture capital (VC) reports its findings, the results are shocking. A staggering 75 per cent of pitches submitted to VC funds in the UK come from all-male founding teams, and the remaining pitches from all-female or mixed founding teams are significantly disadvantaged versus all-male teams competing for capital. What this in effect means is that female founders or female-led teams are not hitting the numbers when it comes to the serious side of growing and scaling a business in the UK. The outcome of all these stats is that for every £1 of venture capital investment in the UK, just 1p ends up with all-female founder teams and 10p with mixed-gender teams.
A shocking 89p goes to all-male founding teams.
It appears that the British VC industry is an “old boys’ club”. But many have known this for years. However, rather than dwell on the golf club mentality and culture that pervades venture capital, perhaps we should examine why female founders and female-led ventures are not rising to the top. Certainly, the report throws up lots of statistics that will have those in the Treasury scratching their heads and immediately forming policies to deal with it. But I just don’t accept that female founders need to be “less squeamish” about making money. Female founders are just as determined as their male counterparts.
However, there are different pressures on them. Accept it or not, we are almost but not yet at the end of the era where the male in the relationship went out to work, while the female stayed home and raised the family. And the last time I looked, we men still do not have the capacity to carry a child, give birth to it and breastfeed it. So, point number one to note is that women still carry a significant burden in bringing up children. And this clouds the minds of many male investors. Why? Because the venture capital industry is brutal and all about making money and returns for investors. This means that founders who are pitching to them need to be “all in”. The anticipation from venture capital is that those founders who want money will put everything into what they are doing for at least three to five years, putting everything else on hold. How does this fit with female founders who are planning a family or indeed have one?
This equation is then compounded even further to one side when we consider that the tech industry globally has had an image problem in regards to diversity. Many tech spaces were seen as a place for the “bros” to hang out and talk geeky physics and code. But, this is changing in the UK and it now seems that the VC industry is about to have to change to accommodate this. It is coming down the pipeline in the form of legislation or regulation. But, make no bones about it, this juggernaut will take a decade to fix. Venture capital is not going to change overnight, nor are those who run the show.
Jim Duffy, MBE, Create Special