Venture capitalists fund the entrepreneurs of today to make a different tomorrow. But when we begin to investigate who represents the typical face of VC, the ease of painting a picture of who this is can be somewhat unnerving.
The VC ecosystem is becoming aware that diversity at the decision-maker level is a must, and this is at the core of beliefs we champion at the Oxford Venture Capital Network.
Together with Oxford Women in Business, we recently hosted a panel discussion on the ‘Changing Face of VC’ at Trinity College, Oxford. Our speakers, Alexia Arts, Eric Collins and Akriti Dokania, shared their background stories of how they entered the VC world and highlighted not only the gravity of the diversity issue, but gave some insight into the strategies being applied now to address it.
Diversity - what can we say about it in the VC ecosystem today?
Alexia, currently the investment manager at MMC ventures, gave us a first-hand example that women are underrepresented in VC; she was the first female on her team, which invests in early stage technology businesses.
According to a data project conducted by Diversity VC in 2017, women made up 13% of the senior decision makers at UK VC firms and 66% of firms had no women on their investment team. And the bad statistics for the number of women in VC is mirrored in the number of female founders/teams that are backed by VC.
So, addressing diversity is not just internal to the investment firms, but the investment portfolios themselves are facing deserved scrutiny. Firms are beginning to track the diversity of their portfolio, as Akriti, an investor at Octopus Ventures, revealed. In fact, Octopus Ventures initiated this metric just 3 years ago. But it is a positive and conscious start towards changing statistics that Eric, CEO and General Partner at Impact X, quoted: “less than 4% of VC goes to women and less than 1% goes to people of colour”.
How did our speakers find their careers in VC? What is their advice for those interested in this industry?
There are not a huge number of opportunities that exist out there for VC. This is the stark truth that Eric emphasized. “Many of us stay forever in one organization,” he added. So there really must be something that makes you stand out when looking for a position. Eric started out on the other side, as a founder and serial entrepreneur. He believes that after his five successful exits, he gained a reputation as someone with a keen eye for identifying ideas with potential and teams with talent. This facilitated his transition to VC as an operating executive. But he urged, “Consider multiple paths.”
Akriti believes there was some luck involved in the start of her journey into VC, as a founder approached her. For others, VC firm founders do not always come knocking on the door because, as Akriti acknowledged, “People sometimes don’t have the network.”
And the VC network notoriously exists in a bubble.
Alexia, who started her career via a graduate scheme at Santander and later secured a position as an analyst at Santander InnoVentures, underlined the network-based modus operandi of the VC industry. Newsletters and Whatsapp groups often circulate new jobs, which is a shortcoming because the potential outside of the “massive bubble” is difficult to tap in this way.
But dipping one foot into the network is only one step. All speakers emphasised the importance of differentiating yourself. According to Akriti, you must have a thesis about your interests in the VC industry. You must have a story that you believe in.
Returning to the topic of the panel discussion, Alexia also unhesitatingly added that in the changing tide of today’s VC ecosystem, it is a good time for underrepresented people to apply for junior level positions at VC firms. Akriti added, “ Being diverse is a strength.”
How can we create a more diverse VC ecosystem? How is the future looking?
Impact X was founded particularly to invest in underrepresented entrepreneurs across Europe. “We invest where there is underinvestment,” Eric explained. Now, there are four funds in the UK interested in underrepresented founders and teams. But Impact X does not view these new funds as competitors. “We are acting as a prototype,” he added.
With new firms popping up with diversity at their forefront, older VC firms are also beginning to re-think their strategies to increase diverse representation.
CEOs are learning about unconscious bias and sharing it with their teams, as exemplified at Octopus Ventures. They are also asking founders if they think about the impact of diversity in their teams. Even the wording in job descriptions is being checked so that is does not come across as off-putting or biased against certain genders or ethnicities. Akriti also highlighted a new initiative of accepting blind CVs for the 1st and 2nd stage interviews.
The conversation about diversity is certainly making an impact, and as more underrepresented people begin entering at the junior level, we should expect to see them at principal and partner positions in several years. There will be a lag before the efforts of today are represented at the decision-making level. But when we do get there, more senior position role models, mentors and advocates can continue to inspire those that would otherwise not see themselves as the face of VC.
There was also an overarching sense of hope and belief from the panel that the next generation, the millennials, can be trusted to continue asking critical questions of the industry. Our speakers agreed that one actionable step forward is for the student population to question where university/college endowments are being invested. As Limited Partners that invest in VC funds, these organisations must recognise their responsibility in pushing for a more diverse VC ecosystem.