- Koru Kids
- Tech startups and investment remain fairly homogeneous, with ethnic minority and female founders still in the minority.
- One problem is that no one really wants to disclose how lacking in diversity they are.
- One early-stage venture capital firm has studied its own portfolio of startups to see how many have female and ethnic minority founders and revealed the numbers.
- Forward Partners is beating the average, with 10 companies out of its 52 investments having at least one female founder, but the investor wants to do better.
The tech startup and investment is a homogeneous world, with the stereotype of white men at the helm still prevailing.
According to data from The Entrepreneurs’ Network and Beauhurst released in 2017, just 9%, or £358.4 million, of UK investment went to startups with a female founder. The remaining £3.6 billion went to male-founded companies. It isn’t for want of trying either – female founders anecdotally report that it is tougher for them to raise money.
One early-stage venture capital firm, Forward Partners, is releasing diversity statistics for its startups for the first time in an effort to shine a light on where it puts its millions. Forward has invested in 52 startups since 2013, such as peer-to-peer lender Zopa, and has $84.4 million (£74 million) in funds under management.
Here’s how its 52 startups breakdown:
All-male founders: 42 At least one female founder: 10 (7 have all-female teams)
All-white founders: 37 At least one ethnic minority founder: 15 (8 are all ethnic minority teams)
The figures still show a stark disparity between the number of men and women being funded but it looks like Forward is doing better than the average. There isn’t much to go on beyond anecdotal data but, according to Crunchbase, teams with female founders accounted for just 9% of all global venture deals in the first quarter of 2018.
Forward Partners investor Louise Rix, who conducted the research, also looked through six weeks’ worth of startup applications to determine how successful different types of applicants were at winning investment. That comprised 300 pitch decks.
She found that all-female applications made up just 7% of pitches, but those teams did well with funding, since 14% of Forward’s portfolio are all-female teams, or seven companies.
Forward Partners itself is not hugely diverse, a fact that Rix – the only woman on the investment team – acknowledged. “What we want to say is that we care about this, that we’ve got a lot improvements to do, this is where we’re at, and we’re aiming to improve,” she told Business Insider. “It would be great if other VCs would share their data as well.”
There is a dearth of information from the European venture capital industry about the diversity of its investors and portfolio companies. Diversity VC, a group campaigning for more diverse investors, released a landmark study in 2017 showing that just 13% of people calling the investment shots at venture capital firms are women.
Rachel Carrell is the founder of a Forward Partners portfolio startup, Koru Kids, which provides childcare to help working parents after school. She raised £3.5 million ($4.6 million) in a seed round in May from Forward and Albion Capital.
“It’s really good for society to have more diverse investments,” she said. “When you invest in women, you do get different types of businesses. A lot of investors, they have a collective blind spot as a group.
“Did [being a female founder] make a difference? It’s not a controlled experiment, so it’s hard to tell. Could I have raised more or faster, it’s impossible to tell. But I don’t think it’s a coincidence this is the first significant VC-backed startup to address childcare I’m a mum of two kids.”
Rix said Forward had taken a first step in benchmarking itself, and planned to improve from there. “We are pretty pleased we’re beating the averages,” she said.