By Catherine Lewis La Torre, CEO, British Patient Capital
To mark International Women’s Day two years ago, I wrote about how different approaches from employers can lead to greater diversity while reflecting on my own experience of actively developing diverse teams. Since then the British Business Bank issued its UK VC and Female Founders report and the Alison Rose Review of Female Entrepreneurship published its findings and recommendations.
The headline numbers of both reports, while making for a sobering read, will not have come as a surprise to many working in venture capital and the wider business of innovation. Yet crucially, we now have a robust data set as a baseline, and we know in business what gets measured gets managed.
Both reports act as a clarion call, and not just because a diversity of views, backgrounds and experiences is inherently fair, it’s also better for business. By way of example the UK VC & Female Founders report showed that only one percent of venture capital investment in the UK went to companies founded by women, and just ten percent to mixed gender teams. As women make up half the population there is clearly an issue.
Studies from the Boston Consulting Group, First Round Capital and Kauffman Fellows all show female founders in the US outperforming their male counterparts, generally by being far more capital efficient – when women do get funding – they demonstrate they do more with less.
Highlighting this type of data and experience, with the venture and growth capital managers in which we invest is one way in which we can bring about change.
I also believe that British Patient Capital, as the UK’s largest investor in venture and growth capital, has the responsibility to do more. After all we, and the other institutions that commit capital alongside us are writing big cheques, and while women hold just 13% of senior positions in UK venture teams, which is part of the challenge, recent data from Pitchbook shows the gender balance internationally in Limited Partners, investors in funds, is often closer to 50/50.
Morgan Stanley recently estimated that venture capital funds that fail to invest in women and other under-represented groups risk losing out on as much as $4 trillion. Increasing diversity is also good for UK plc. The Rose Review estimates that closing the gap between men and women in entrepreneurship could add an additional £250 billion in Gross Value Add to the UK economy. These are some of the reasons why we adopted the Institutional Limited Partners Association (ILPA) diversity template as part of our standard due diligence process. That was over a year ago, and while not all our fund managers may be where they need to get to, I’ve been impressed by the over-all level of engagement on diversity over the past year.
As the data shows there is much be done, and as a member of the Rose Review Council’s working group, “Achieving LP and VC support for best practices” we encourage our fund managers to sign up to the Investing in Women Code.
As responsible investors in venture and growth capital we expect commitment to diversifying our sector. It’s not just the right thing to do, it’s the smart thing to do.