It’s an issue on both sides of the cheque, plaguing funds as well as founders. According to a recent BVCA survey of private equity and VC firms in the UK and Europe, 54% have all-white investment teams and the latest Women in European VC report shows that 85% of general partners are men. When it comes to raising capital, more men called John have raised investment than Black women in the UK.

But the VC world has begun to wake up to its failings. We’re seeing a rise in awareness and growth of brilliant diversity access schemes such as Future VC and Included VC. Such steps are critical and herald much-needed progress. But our work can’t stop there. Diversity isn’t solely an entry level issue - it’s a structural and hierarchical one with lack of diversity only increasing as candidates try to ascend higher. What change is made if you get people through the door but they can’t get past the lobby? It’s the top floors where world-shaping deals are inked.

In VC land - as in many industries - diversity dwindles rapidly as you near the top. The BVCA’s 2021 Diversity and Inclusion Survey found that only 17% of senior individuals in UK/ EU private equity and venture capital firms are Black, Asian or of other ethnicities. And only 3% of senior individuals are women who are Black, Asian and of other ethnicities. This shows power is still being denied to the majority. 

Real change is measured by the increase of these senior figures, not just the numbers among entry level roles. We need to break down the barriers blocking the path upwards and allow people from traditionally overlooked and understimated groups to progress to positions of decision-making authority. If not, our efforts at improving diversity are, at best, ineffective. At worst, they’re tokenistic. The VC landscape we must build is one where both funds and startups benefit from diverse senior management teams.

And there are significant benefits. Key to achieving real change is recognising that diversity isn’t something you do for brand image, or at the urging of your HR team, but for your bottom line. Including senior team members from all backgrounds allows firms access to new ideas and insights that can give them a critical edge - crucial as we head into an economic downturn. 
But mindset shift aside, what practical steps can be taken to help fix venture capital’s diversity problem? One solution is by partnering with schemes and initiatives that focus on accelerating the careers of professionals from underrepresented groups in addition to helping them get through the door.  Our Newton Fellowship Program is one such example: designed to support current venture investors, general partners, experienced entrepreneurs and industry experts, giving them access to high-level training and network opportunities that will help them climb closer to the top or even launch their own funds.

There’s internal work that needs to be done too. Firms and startups need to take a good, hard look at the culture they’ve created and honestly assess whether it’s welcoming, supportive and non-discriminatory to those from every background. Are team social events and networking opportunities accessible to all? What language or jokes will you hear when you walk the corridors? Diversity won’t be achieved without inclusion - the practice of creating a work environment and culture that enables all to thrive.

This is an area where the tech landscape, as a whole, is failing. According to Atomico’s 2021 State of European Tech report, 38% of women, 63% of non-binary respondents and 67% of genderqueer respondents reported having experienced some form of discrimination in the past 12 months. 56% of respondents from ethnic minorities reported experiencing some form of discrimination in the past 12 months. Let this go unaddressed and VC firms and startups can wave goodbye to a diverse workforce as talent is both harmed and held back.

Access schemes are an important part of diversifying venture capital. But we can’t rest on our laurels. Real, long-lasting change won’t occur if we focus all our efforts on getting people from underrepresented groups through the door and ignore the uphill battle they face once inside. A foot in the door isn't job done: we have to build a path to the top.