By Lucy Kenningham
Where top thinkers get a few things off their chest. Today, Nora Bavey, co-founder of Unconventional Ventures, takes the pen
Diversity reports are vital in rooting out our unconscious biases
This month, a pioneering bill in California marked a significant milestone in the venture capital industry in the US, mandating that venture capital (VC) firms must annually report the diversity of the founders they support.
This legislation represents a momentous step in the right direction, and is a development I hope to see replicated in the EU where currently, only 1.6 per cent of VC investment in the EU is allocated to female founders. For ethnically diverse founders, this figure drops to a mere 0.7 per cent.
The conversation around these stark statistics frequently points to unconscious bias as a primary factor for the lack of VC investment in diverse founders. In 2023, it is high time that we actively work to become ever more conscious about our unconscious biases.
For VC firms, achieving this requires transparency about the ways in which internal biases are manifesting in investment practices. Transparency is achieved through data and so legislation such as this, which forces VC firms to recognise which communities are under-represented within their portfolios, is a vital first step.
As an added bonus for VCs seeking to shake up their out-dated practices, increased diversity can attract limited partners who are increasingly seeking funds capable of providing diversity data and documentation.
In the larger context, broadening access to capital for a more diverse spectrum of entrepreneurs should help reduce socioeconomic disparities.
Enhanced ownership among underserved communities can lead to higher rates of employment, ultimately catalysing economic growth and stability. This legislative push in California could set a precedent for positive change in the VC industry, not only in the US but around the world.
London’s gender issue
London presents the perfect example of a city in which this kind of legislation could have a dramatic impact. Chair of the Treasury select committee Harriett Baldwin recently stated that investing in women at the same rate as men could create £250bn in new value for the UK economy.
This raises the question: why are certain communities not receiving the funding they deserve? In a large part, this is due to VC firms looking to replicate success and investing in companies which mirror the success stories of the past. Once sufficient success stories emerge from diverse founders receiving the funding they deserve, we can anticipate change.
Lack of diversity stymies innovation
Beyond creating a more equal society, it’s imperative to discuss how a lack of diversity stymies innovation, especially in the tech industry. If London hopes to cement its status as Europe’s leading tech hub, companies will need talented candidates from under-represented communities who will bring with them a diverse perspective. Effective impact tech is derived from developing unique solutions and identifying and solving a broad range of societal issues.
Creating a diverse mindset
For companies struggling to fill roles, a simple mindset switch from ‘culture fit’ to ‘culture add’ can radically alter hiring practices. Instead of looking for candidates who ‘fit’ with the team culture, individuals who potentially adopt the same outlook and characteristics as the rest of the team, seek out candidates who can ‘add’ something.
Valuing the ways in which someone’s life experiences may enable them to bring something new to the table will enable companies to take advantage of the many talented candidates seeking work that may have otherwise been overlooked.
Black tech fest a welcome celebration
Having spoken recently at London’s Black Tech Fest, I would recommend that readers attend similar events where crucial conversations are taking place that will inform the future of our industries.
Understanding and celebrating the ways in which different cultures have informed and influenced the tech industry, as well as showcasing role models from different communities, serves to inspire the next generation of tech innovators – which will, I hope, be formed of minds from every ethnicity, race, sexuality, gender, and religion.
