Spencer Crawley, co-founder and general partner; and Clara Lindh Bergendorff, an investor at firstminute capital, discuss why gender balance across the workforce often translates into business success.
Over the past few years, the tech industry has suffered from a well-publicised dearth of female engineers, founders, and investors – figures vary globally but in general just 25% of tech employees are female and only 5% in leadership positions.
The direct consequences of this are still being played out, but they include missed opportunities of innovation, negatively male-centric cultures, and restrictive groupthink. Though the underlying causes of the underrepresentation of women in tech are complex and deep-rooted – ranging from societal expectations of children, lack of role models and self-perpetuating underrepresentation in STEM education – the upshot has been loudly proclaimed for some time: more needs to be done to move towards an equitable equilibrium and promote greater female representation in tech.
In a time of increased awareness surrounding the importance of gender diversity, it’s more important than ever to celebrate the groundbreaking work of successful companies, vocal founders, and proactive VCs promoting women in tech.
Fortunately, there’s much progress to celebrate, including:
(i) US female founders have raised over $7bn this year and that about 29% of all US venture funding has gone to startups with at least one female founder – a sharp increase from the same time last year;
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(ii) the unicorn status of recent female-led and co-led startups such as Canva, Kabbage, Blippar, Stitch Fix (youngest female founder to take a company public in last year’s IPO) and many more;
(iii) the storied US venture funds, a16z and Benchmark, making Connie Chan and Katie Haun General Partners this summer;
(iv) the impactful work of the 34 senior female VCs behind AllRaise.org in promoting diversity in funders and founders, as well as the general popularity of female founder office hours taken on by more and more VCs;
(v) the spate of female-focused funds appearing in Europe, from Vaultier7 to Voulez Capital, following the US counterparts Female Founders Fund and Merian Ventures;
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(vi) initiatives like our sister company accelerateHER’s Male Champions of Change in Global Technology, where CEOs like made.com’s Philippe Chaineux, BBC’s Lord Tony Hall and Samsung’s David Euan, are stepping up to drive change in their companies and ecosystem.
At firstminute capital, our full-time investment team is split 50/50 (3 men, 3 women). Though still early days as a new fund, we are seeing the benefits of this gender diversity.
Indeed, founding teams that include a woman outperform their all-male peers by 63%, according to First Round Capital, which compared the performance data in their portfolio over ten years. We’re acutely of the imbalance at partner level – this will change over time – and are also helping our portfolio companies work towards a better gender balance (something they often come to us asking for help on).
One simple but powerful strategy that has proven effective in helping attract female tech talent has been putting procedures and policies in place that match the lifestyles of the target segment. That thinking underpins the success of startups such as Werk, who help companies embrace flexible work hours in a structured way, or juggle jobs, which connects high-quality professionals to businesses on a flexible basis, for lead and management roles.
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Such methods aren’t novel – Xansa, founded by Dame Stephanie Shirley in 1960, offered part-time employment to hundreds of female engineers with dependants. The technique proved hugely successful. Highly-skilled female coders worked on a multitude of high-profile projects such as the black box flight recorder used in Concorde, and when Xansa eventually floated it made her and 70 of her staff members millionaires. Dame Shirley is a great example of just how many incredible women have and are bossing it in tech and remain under the radar.
If the anecdotal evidence doesn’t suffice, McKinsey helpfully points out that companies in the top quartile for gender diversity are 15% more likely to have financial returns above their respective national industry medians, while those in the bottom quartile are lagging. Here in the UK, improving gender diversity with 10% have proved to correspond with a rise in EBIT by 3.5%.
The bottom line is clear: companies that proactively foster gender diversity do better. To take two examples of high growth startups taking a vocal lead, Duolingo (which has raised $108.3m) has a 50/50 gender ratio for new software engineering hires, and Weebly (acquired by Square for $365m in April) has the same gender ratio in its leadership and management.
Inclusive corporate culture attracts the best talent, and both founders and VCs, men and women, know this. It has ceased to be a passive question, and is today one that VCs ask themselves, as much as of the founders they partner with.