Diversity continues to be a big topic in 2021, as more venture firms seek to create a more inclusive workforce. While there is still a lot of work to do to be more diverse, 2021 showed that venture firms and their LPs are taking a stronger stance to promote diversity.
Here’s a countdown of our top 10 diversity stories online in 2021, based on pageviews.
Diversity in VC is not just a US-centric concern. In July, a group of female venture partners in Europe, which goes by the name European Women in VC, gave a presentation to the European Commission about the lack of women in the upper ranks at venture firms across the continent. Representatives from the group say they’re looking for equal access to capital for European female-led venture fund managers as well as female-led start-ups. Kinga Stanislawska, head of European Women in VC and managing partner and founder of Experior Venture Fund in Poland, said the group’s mission is to help women-led funds build LP relationships and grow the under-represented female VC community.
A study from UC Berkeley and Impact Venture Capital general partner Eric Ball looked into the diversity around venture capital. It found VCs prefer working with young males over females. Only 12 percent of start-ups that existed since 2000 had a female founder or had at least one woman on the founding team.
This is in spite of data showing the difference in the return on investment delivered by female and male CEOs was “negligible.”
Venture firms’ push for diversity often doesn’t happen in a vacuum. LPs seeing how diversity drives returns, along with a groundswell of social change and a generational shift in their workforce, have begun demanding their GPs make diversity a core tenant of their strategies. This has encouraged VCs to diversify their networks and invest in underrepresented founders.
But even with LP support, VCs demand more. Capital specifically set aside for investing in VCs seeking diverse investments should be a continuing effort to truly make a difference.
European investor Dawn Capital appointed Evgenia Plotnikova to general partner in September. With her promotion, Plotnikova became Dawn’s first female GP, despite the firm having other women in its five-person partner team.
Plotnikova has been with Dawn since 2018. Plotnikova, who invests in B2B companies across Europe, said she wishes the B2B space was more diverse but hopes that as firms like Dawn continue to support female GPs, the industry will see more gains in diversity.
Oliver Libby, co-founder and managing partner at H/L Ventures, writes in an op-ed that creating diverse portfolios should not rely on niche VCs alone. It is the responsibility of all VCs.
He pointed out that traditional pattern-based investing by both VCs and LPs have overlooked entrepreneurs from underrepresented backgrounds.
The husband and wife team of Kimmy and Sergio Paluch started Beta Boom, a pre-seed investor based in Utah. Beta Boom focuses on working with diverse founders in the healthtech, fintech, Saas and consumer software sectors in Salt Lake City, Chicago, New York and Los Angeles.
For Venture Capital Journal’s annual LP Perspectives Study, LPs said they felt positive over their expected alternative asset investing activity.
However, only 13 percent of the 100 institutional investors surveyed said they refused to invest in a GP because of a lack of a diversity and inclusion strategy. It seems that though diversity became a hot topic for many, it still plays a minor part in some strategies.
Diverse-owned start-ups are taking charge in the fight against climate change, but venture capital’s use of pattern-matching past successes excluded many of these companies.
These start-ups, often founded by people living in communities most at risk from damage caused by climate change, often face skeptic investors. This skepticism is attributed to pattern-matching behavior, where investors look at past successes to inform their decision-making. But climate solutions are more complex, the founders say, and this strategy leaves behind potential solutions to the climate problem.
Andrea Böhmert, co-managing partner of South African venture firm Knife Capital, closed the firm’s third fund of $50 million in 2021. The fund will make Series-B type investments in South Africa, making Knife Capital the largest local venture fund in the region.
As part of the inaugural Women of Influence list in our July/August issue, we recognized trailblazing women in venture and other alternative assets. We also took a deep dive into DE&I recruiting and the current state of gender diversity in VC. We look forward to our second annual Women of Influence special report next year.