Whilst the European Venture Capital market saw record-setting performance in 2021, female and ethnic minority founders continue to be vastly under-represented across the industry. According to a report by Extend Ventures, over the past decade in the UK all-female teams received only 3% of VC funding and entrepreneurs from Black, South Asian, East Asian and Middle Eastern backgrounds received in total 1.7% of VC investment. A stark comparison to the 76% of VC investment which went to all-white founding teams.
It’s no secret that the UK tech sector also has a diversity problem. Deep tech companies often struggle to build a diverse workforce, and particularly struggle to hire female technical talent. In the UK 49.8% of workers in the labour market are women but in the tech industry it’s half that according to a Tech Nation Report.
Of course, diversity goes beyond just gender diversity, it also includes age, ethnicity, disability, sexual orientation, religion, and others. A recent McKinsey report, found that diverse companies are now more likely to outperform their less diverse peers on profitability. Diverse teams bring diverse thought, essential for advancing a business forward.
Amadeus knows the benefits of having diverse teams and we’re on a mission to drive change in the European VC and deep tech ecosystems. We are proud to be led by our co-founder and CEO, Anne Glover, and our female investment professionals make up 40% of the investment teams, compared to VC more generally, where only 13% of senior decision makers are women, and half of all venture capital firms have no women at all on their investment teams.
As part of this goal, Amadeus circulated a diversity and inclusion survey to its portfolio companies in June 2021. The survey found that 64% of respondents have a Diversity & Inclusion Policy in place but 78% of C-Suite/ Executive directors were male and 72% of founders were white. Clearly, companies are aware of diversity issues, but the statistics speak for themselves – we need to do more.
The survey was a pivotal first step, but we know that in order to drive real change actionable measures need to be taken. In March 2022, Amadeus hosted an evening for the CEO and HR leaders of our UK Early-Stage deep tech companies, all of which are growing rapidly and are looking to expand their teams. The panel included Sophie Froment, Chief People Officer at ~600 person Graphcore, Peter Duff, Diversity & Inclusion Coach and former Head of D&I (EMEA) for BP and Nicola Anderson, Head of HR at Amadeus Capital Partners. Facilitating discussions with industry leaders is integral, as leadership teams are often keen but unsure on how to approach building a diverse and inclusive workforce.
We know that hiring diverse talent is hard. Diversity itself tends to promote more diversity, but what do you do when your early team isn’t diverse? Our panelists advised leadership teams to make modifications to the recruitment process to encourage diverse talent to apply. Introducing diverse recruiting committees and providing training on self-awareness can help to drive out unconscious bias when interviewing. A common mistake companies often make is having the expectation that all applicants want to work for them, when in reality, recruiting is a two-way sales process. The best candidates choose the companies, rather than the other way around. Thus, building an inclusive and welcoming environment is essential to encourage the right talent to join.
As our panelists discussed, transparency is key. If teams haven’t yet achieved the desired level of diversity, acknowledging that improvement is needed is a good step. When heading into a recruitment process, it’s easy to have a pre-determined vision of the candidate that you’re looking for. However, it is important to stay open-minded, and whilst hiring the best person for the job should always be the aim, there are adjustments that companies can make to help diversify the candidate pool and selection panel.
Diversity covers many areas which can be overwhelming, initially try to focus on just one, to encourage more female applicants for instance. Consider the connotations of words used in job adverts and try to opt for gender-neutral language, as research shows that male coded words often dissuade women from applying for roles. This causes companies to miss out on top talent—according to a 2020 McKinsey survey, 39% of respondents said they’d abandoned a potential job opportunity because they felt that the organisation wasn’t inclusive.
Adjusting roles to suit part-time hours, re-shaping the recruitment process by moving skills tests to be one of the final steps and providing example tests in advance so that candidates can see the level required, can all help to attract an otherwise eliminated segment of the market.
Recruitment agencies can be a great way to find a candidate with a very specific skill set. But it isn’t the only way, in fact, at Amadeus we’ve found that taking direct applications has allowed us to widen the casting net and increase diversity within candidate pools. Although direct applications can be time consuming for HR teams, using ATS (applicant tracker systems), can help to lighten the workload by streamlining the applicant review process, serve as a database for applicant profiles, filtering, and tracking potential candidates.
Companies need to work to retain talent by fostering an inclusive culture. It’s leadership teams that are responsible for building this culture, which becomes embedded as a firm grows, making it tough to change once a company reaches a certain size.
Panelists advised teams to think about the environment they would like to create from the very start. Consider how diversity and inclusion is presented externally on public platforms such as websites, social media and when creating digital content, as this will help build D&I messaging into the company brand.
Internally, publicising diversity statistics, speaking openly about D&I goals and facilitating education sessions across the entire workforce, will help to build employee awareness and embed D&I into company consciousness over time. Leaders who are authentic and visibly committed to diversity and inclusion, send a powerful message to employees at all levels in the company and externally.
When organising social events, think about making adjustments to accommodate for different age groups (e.g. Gen Z), cultures and religions (e.g. for employees who do not drink alcohol), this will help to ensure everyone feels included and considered.
Our panelists reminded CEOs that hiring diverse talent is challenging and to not beat themselves up if their statistics aren’t where they’d like to be at the beginning. A good way to start is to establish the industry norm and then try to beat it! And remember, the culture of the organisation is visible to your employees and often to your suppliers, customers, and community. External talent that wants to work in a company like yours, may be the key to your diverse recruitment challenge.