The D&I case for investment
1 min read
A substantial contribution to the overall lack of diversity in tech is the lack of funding that goes to underrepresented founders.
A recent report by Extend Ventures found that from 2009 to 2019, Black founders – in particular Black female founders – experienced severe venture capital underfunding in the UK, securing just 0.02% of the amount invested in 2,002 companies. The same report found that just over 42% of venture capital at seed stage went to a founding team with at least one member from an elite educational background.
Specific initiatives have been set up to try and counteract this. Launched in 2019, Ada Ventures is a UK-based VC aiming to invest in diverse founders, while Impact X, originally founded in the US, has also been set up in the UK. Impact X supports underrepresented founders making social change through impact investing.
Playfair Capital have also set up Female Founder Office hours to give women founders the opportunity to meet investors from the UK’s leading VCs.
Research has also shown the lack of diversity within VC itself. For example, less than 10% of decision-makers at VC firms in the US are women.
Boosting minority participation in angel investing has long been desired within tech startup circles, but progress has been slow.
In the US there has been a push for professional networks to form in US cities to identify and recruit angel investors who are female or of colour to fund tech entrepreneurs. Black Angels Miami and Commune Angels are two examples of venture capitalists working to increase diversity in the tech industry in US cities.
Closer to home a number of initiatives have been set up to increase representation within VC. Diversity VC provides research and resources to promote diversity within the ecosystem, and Angel Academe and the Female Founders Fund focus on funding for female entrepreneurs in the UK. Ada Ventures, mentioned above, have also launched Ada’s Angels, to empower members of their community with capital to make early-stage investments.