08 Dec 2023

The different dimensions of diversity

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The BVCA has long been an advocate for building a more diverse and inclusive private capital ecosystem, through our own research, events, committees and engagement with wider public initiatives such as the Investing in Women Code. We know that more diverse teams make better decisions and generate better returns. In addition, the industry, along with the wider financial services sector, is under increasing scrutiny to ensure that people from all backgrounds can participate and progress.

The first wave of action came with gender focused initiatives, including the Investing in Women Code and the Women in Finance Charter. The BVCA, along with Level 20, has been collecting data on diversity within private capital firms, and publishing recommendations and guidance on how to build a business culture which is inclusive towards women since 2017. Since 2021, we have expanded this to also collect ethnicity data. Our most recent study looking at General Partners can be found here.

The BVCA is continuing its work in this area this year by looking at the diversity of Limited Partner private capital investment teams in the UK. The BVCA's LP survey is open to all UK based LP’s and closes on 18 December. By participating, you contribute to a more comprehensive grasp of diversity across the entire private capital ecosystem.

However, there are many other dimensions to diversity other than gender: ethnicity, age, sexual orientation, to name a few. An important lens which is rarely discussed is that of socio-economic diversity. Anecdotally, we know that it is rare for people who grew up in lower socio-economic households to work in venture capital and private equity. Thanks to two reports published earlier this week, we now have the first data evidence of this across the venture capital ecosystem.

Diversity VC’s report, The Equity Record, found that 71% of VC professionals surveyed came from affluent upper-class backgrounds, representing an over 1000% overrepresentation compared to the wider UK population. Meanwhile, the Extend Ventures Diversity Beyond Gender report, which looked at funds raised by educational attainment of founders, revealed that founders who attended an Elite, Extended Elite, or Russell Group university raised 47% of investment by value between 2013 and 2023. Both reports also include detailed analysis of the intersectionality of socio-economic background, gender, and ethnicity.

The reports were launched with a panel discussion hosted by HSBC Innovation Banking, and collectively emphasise the need for ongoing transparency, measurement, and a commitment to fostering diversity in the venture capital landscape. It is clear that this journey toward inclusivity requires sustained momentum and a collective commitment to drive meaningful change.

The BVCA continues to promote best practice in diversity, equity and inclusion, with more resources available on our DEI webpage. The next event in our Diversity, Equity and Inclusion series will be in 2024 and will continue the conversation on this important topic with a focus on social mobility.

 

Authored by Suzi Gillespie, Head of Research and Hind Jbala, Senior Research Analyst, BVCA


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