A number of leading venture capital and private equity investors have published substantial guidelines on Diversity and Inclusion in the investment industry.
Investors and professionals from the venture investment community have today released best practice guidelines to help increase investment in under-represented founders and drive diversity and returns across the investment sector.
The “Guidance and best practice examples for VCs, private equity and institutional investors” document was written by leading investors and professionals including Atomico, Pollen Street Capital, Ada Ventures, Adelpha, Astia, KPMG, Diversity VC and Diversio.
The guidelines are being published by the British Venture Capital Association as a resource offering practical advice and best practice suggestions for all investors, regardless of what stage or sector they invest in, with a focus on four key areas:
• Talent acquisition, retention and development.
• Internal education, culture and policy.
• Outreach, access to dealflow, and unconscious investment bias.
• Influence, external guidance and portfolio management.
Lindsey McMurray, Managing Partner at Pollen Street Capital and Council member, says: “This is a helpful document written by investors for investors. It’s designed to give practical advice and actionable suggestions for any investor looking to improve diversity, inclusion and returns. Tangible action to ensure diversity across the investment industry is important to uncover and fund innovation but also from a performance perspective. Case in point, research increasingly demonstrates that firms with more female executives outperform less gender diverse peers.”
Camilla Richards, Atomico Partner and Head of Investor Relations and a member of the Council for Investing in Female Entrepreneurs, adds: “The conversation on Diversity and Inclusion has gained momentum in recent years, however we are still yet to see that translating into real action. Progress on gender diversity in European Tech stagnated in 2020, with all male teams capturing 91 per cent of all capital raised (vs 90 per cent in 2019) and 85 per cent of all rounds. As an industry, we all need to work together to ensure we level the playing field, and support founders from underrepresented groups to succeed.”
Addie Pinkster, CEO of Adelpha and Rose Review Board member, who co-authored the guidelines, says: “We’ve targeted the guidance at Venture Capital funds and Private Equity funds but I’d encourage all investors to read it. All investors I speak to understand that diversity drives returns by providing access to unique and high-conviction investment opportunities whilst also optimising portfolio performance. On top of that, funds are increasingly under pressure from their own investors to demonstrate the existence of an active Diversity and Inclusion Policy.
“So the demand is there, but it’s not always easy to know ‘how’ to improve on diversity and inclusion. That’s where this document comes in, giving straight-forward advice on what ‘good’ looks like, how to get there and the enormous difference it can make to workplace culture, reputation and, ultimately, performance.”
Bina Mehta, a member of the Council for Investing in Female Entrepreneurs and KPMG Partner who works with scale up businesses, adds:
“Encouraging the investment community to support our under-represented entrepreneurs and business founders could provide a massive boost to the UK economy. There is a huge amount of talent to be unlocked from focussing on widening diversity across the investment community.”
Laura McGee, Founder and CEO of Diversio, the diversity data company endorsed by this report, adds: “Diversity & inclusion can give investors a massive business advantage, but it won’t happen on its own. Diversio specialises in helping investors achieve D&I in these four areas using metrics, tracking, and data-driven recommendations. Our clients are living proof that what gets measured truly does get done.”
Francesca Warner, Founding Partner of Ada Ventures, Co-Founder and CEO of Diversity VC and a member of the Council, says: “The VC Guidelines work hand-in-hand with the Diversity VC Standard (a first of a kind assessment and certification for VC funds which we launched in 2020) and we’re pleased to have been part of putting together this evidence based set of recommended actions to build inclusive systems and organisations.“
Kathryn Parsons, MBE who is Co-Founder and CEO of Decoded and a member of the Rose Review Board, adds: “We need to deeply reflect on the fact that only 1 per cent of venture capital in the UK is currently invested in female founders. If venture capital is meant to invest in the businesses of the future, they are sending a clear message that they do not believe that women have a place in that future.”
Gurpreet Manku, BVCA Deputy Director General & Director of Policy, and member of the Rose Review Board, says: “The BVCA, as the industry association for venture capital and private equity, champions diversity and inclusion across our sectors. Today’s guidance clearly sets out the steps firms can take to increase the impact of their D&I activities and we remain committed to our role in this important conversation, sharing ideas and highlighting examples of best practice.”
