Following the recent news showing that for every £1 of venture capital (VC) investment in the UK, female-led start-ups receive less than 1p. Contributor Juliet Eccleston, Founder – AnyGood?
Investors to step out of their comfort zone and reap the benefits of increased investment in women. The report, published by The UK VC & Female Founders for the Treasury, found that, by comparison, all-male founder teams are given 89p and mixed-gender teams collect the remaining 10p. Furthermore, only one in 10 decision makers were woman, and two-thirds of VC firms have no female partners at all.
This is despite a large body of work showing that increasing female presence at senior levels boosts profitability. A report published by Credit Suisse stated that companies where women made up at least 15 percent of senior management were 50 percent more profitable than those where fewer than 10 percent of senior managers were female.
While subconsciously we all know gender inequality is a huge issue, these figures are simply staggering. The bottom line is, ignoring women is costing venture capitalists money. There is a huge amount of evidence to suggest this, with McKinsey research showing that companies in the top quartile for gender diversity at executive level were 22 percent more likely to outperform their national industry average.
In fact, recent research in the USA has shown that male-only businesses may actually be a worse investment than mixed teams. For every dollar of funding, start-ups with women on the board generate 78 cents, while those founded only by men generate 31 cents. People tend to invest in what they are familiar with, and the lack of female representation across VC boards is clearly playing a part in this imbalance.
I’m not attempting to pit the sexes against each other here, but rather show that equality and diversity actually drive productivity and profit. While such gender disparity is shocking, this is not just a social justice issue, but also business imperative. By stepping out of their comfort zone, investors will see real benefits.’
Of course, this isn’t a simple issue to rectify and cannot solely be addressed from the top down. Only by overhauling the way we hire, and coming to terms with the ingrained bias within hiring processes, will we be able to build the truly diverse teams that will go on to make the funding decisions of the future.