On International Women’s Day, Judith Hartley, CEO of British Patient Capital, argues there is a pressing need for more diversity within the UK venture capital industry.
International Women’s Day shines a light on the amazing work of women across multiple industries. However, it also serves as an important reminder that a lack of diversity remains an ongoing issue, especially within the venture capital industry.
Many women have played a remarkable role within business and finance communities in recent years. Female CEOs are becoming increasingly prevalent in traditionally male-dominated industries and gaining their seat in the boardroom.
While last year one-third of women in FTSE 100 companies were women, this year that proportion reached 40 per cent, which is a significant step-forward.
Women leading financial institutions, like Alison Rose at NatWest Group, Debbie Crosbie at TSB Bank, Catherine Lewis La Torre, the CEO of British Business Bank, and myself as CEO of British Patient Capital, are all examples of female CEOs operating at the top of the investment and finance sectors.
Despite progress and many success stories of enhancing gender diversity within financial services and the venture capital industry, currently, only 13.3 per cent of VC firms and business angel groups have women in investment decision-making roles.
This is despite growing evidence that diverse teams are more innovative and generate higher revenues. The findings of last week’s Rose Review Progress Report are encouraging but remind us that funding remains the number one barrier facing female entrepreneurs at every stage of their business journey. Total VC investment levels in female founders remain at under 5 per cent, according to British Business Bank analysis of Beauhurst data.
There is huge latent economic potential to be uncovered by increasing investment in female entrepreneurs. When first published in 2019, the Alison Rose Review of Female Entrepreneurship estimated that up to £250bn of new value could be added to the UK economy if women started and scaled new businesses at the same rate as men. Furthermore, Morgan Stanley has estimated that venture capital funds that fail to invest in women and other under-represented groups risk losing out on as much as $4.4tn.
British Patient Capital is the largest domestic investor in UK venture and venture growth capital and we want to help improve diversity within our sector. Within our own business, we work hard to ensure we have a good diversity at all levels: three out of four of our Board members are female and our wider team includes individuals from a diverse range of backgrounds.
We have also adopted the Institutional Limited Partners Association (ILPA) diversity template as part of our standard due diligence process, which enables us to assess investment opportunities on their diversity characteristics and capture data on a range of diversity-related areas, including gender and ethnicity, with a view to driving greater diversity within our investments.
Various women within the UK’s venture capital industry have been making an outstanding contribution at all levels of society. Within our portfolio of fund managers, we work with some incredible women who are in leading positions in their fields. These include Kate Bingham, Managing Partner at SV Health Investors and chair of the UK Government’s COVID-19 Vaccine Taskforce in 2020; Irina Haivas, Partner at Atomico, who led their investment in Healx, a company that uses AI to find cures for rare diseases; and Kerry Baldwin, Managing Partner of IQ Capital and BVCA Chair for 2021/22.
We engage with our fund managers, to help them improve their approach to diversity and inclusion within their own teams and also in the companies they back. As the leading investor in UK venture and venture growth, we firmly believe we have a role to play in demonstrating best practice and driving change in this area.
We welcome the extra measures proposed by the Rose Review Board to boost support for female entrepreneurs and help close the gender gap within the investment community, including the Investing in Women Code and the Women Backing Women campaign.
These initiatives are incredibly important, yet more can still be done. We all have a role to play in closing the gender and diversity gap in VC, not only because it is a social good in itself but also because it is good for business, leading to better performance and better returns.
Only collectively can we all help create an inclusive world in which women’s contributions to high-growth technology companies, and the patient capital these companies need, are fully recognised. By celebrating our successes, we provide inspiration and encouragement for others.
#BreakingTheBias to me means to continuously break down barriers for women in business, and provide a fertile ground for their ideas to flourish into the next British success story.
The views and opinions expressed are not necessarily those of AltFi.