Startups are characterized as forward-thinking businesses. Think startup and most people conjure up an image of a young person taking fresh, techy approaches to businesses, going against the status quo and the classical businessman who wears a suit and carries a briefcase image. Startups and innovation inherently are about change – they are about being new, forward-thinking, fast-paced, and reflecting differences of perspective, background and experience.
On the flip side, the VC world is still seen as quite rigid. It’s still seen as a space that is closed off to diversity, that is less likely to embrace new and certainly less likely to embrace different backgrounds and perspectives. As calls to diversify the VC landscape continue to be heard, there’s no doubt that things are changing – and the outlook of both the entrepreneurial and VC landscape today has almost irreconcilably changed in the past couple of years.
Just this summer, for example, Unconventional Ventures launched a €30 million fund to invest in diverse teams (those led by founders identifying as women, POC, immigrants and/or LGTBQ+) and startup Code First Girls picked up €5.2 million to empower women with more opportunities in tech.
There are more and more female investors, more and more female-led businesses and more and more teams are clearly considering intersectionality.
One positive trend we are seeing in the VC space is the emergence of new initiatives launched between organizations and VC firms with the aim to make the VC more representative of the world we live in. One such venture is Newton Venture Program – a joint venture between London Business School and LocalGlobe VC that launched in 2020. Chatting with Executive director, Eleanor Kaye, we take a look into the outlook and hope for diversifying VC.
“I always ask myself, what can I do to improve our community’s lives? The answer is: I open doors, experiences and my network to them and feel continually gratified by the experiences they are able to have.”
Diversity in VC: What’s the view?
It’s long been said that Europe’s VC system has a diversity problem – but what does that actually mean? Rather than virtue signalling and characterizing problems, we think it’s important to have some facts and reasoning to back up big statements like this.
According to a 2021 survey by the BVCA and Level 20, only 17% of senior individuals in UK/EU private equity and venture capital firms are Black, Asian, and other minority ethnicities. Only 3% are women who are Black, Asian, and other minority ethnicities, while 54% have all-white investment teams – this certainly signals to us that there’s a problem. Further, as exposed in the 2021 State of European Tech Report, only 1.3% went to ethnic minority founding teams.
According to Eleanor, these are “chronic, entrenched, systemic issues and can be found the world over.”
Making VC more accessible
With this context in mind, Newton Venture Program is launched in 2020 with a mission “to make careers in venture capital more accessible and ensure the next generation of investors represents the world that we live in.”
Eleanor explained further, telling us how the program provides bespoke training and development programmes specifically for those people with overlooked and underestimated backgrounds – helping them break into VC. With more diversity in the VC landscape, we can logically expect more diversity to trickle into the rest of the business world. It creates a more diverse and reflective ecosystem as a whole.
So how does it work?
Eleanor shared that the initiative operates on two programmes:
VC Fundamentals: To support the entry, onboarding and development of early-career venture investors
VC Fellowship: To support current venture investors looking to advance their careers, new general partners on their first fund cycle, experienced entrepreneurs and operators, and deep subject matter experts.
What makes it different?
Newton stands out from the crowd, according to Eleanor. This is because it’s “a unique blend of faculty and practitioner teaching.” This means that fellows are exposed to quality learning and connections with the experts. The programme also offers a digital programme alongside an in-person, on-campus programme and access to a global supportive community.
“What’s interesting is how not everyone taking the Fundamentals program is necessarily looking to become a venture capitalist. Some are founders, doctors, spoken word artists, engineers, lawyers and so on who want to learn about the ecosystem and where they might fit in. Through Newton’s programmes, they gain a holistic and practical view of the wider ecosystem which can be leveraged in many different ways and across a range of different sectors.”
The journey so far
Measuring the impact of an intuitive like Newton isn’t quite as simple as just looking at how many people have taken apart and gone on to achieve cool things – at least in our opinion. Impact is a less tangible concept. We asked Eleanor to share her thoughts on the impact Newtown has so far had.
“To date, 249 people from over 48 countries have taken part in our programmes, with many more to come over the next months and years! But we passionately believe that the number of people completing one of our programmes is just the initial metric when it comes to impact. We won’t be able to see the full impact of our work for many years, as our talented alumni go forward and build their careers, re-shape VC culture, and invest in a wider, more diverse pool of startup founders. We believe there’ll be long-term and vitally important outcomes thanks to the work we’re doing.”
Making tangible change
We were curious to learn more about how Eleanor and the Newton Venture Program are helping to diversify VC in more concrete terms.
How can initiatives like Newton help diversify VC?
“We need more initiatives that make a real impact. Talking isn’t enough. Key industry players need to back, invest in, and commit to change. That’s why LocalGlobe VC partnered with London Business School to create Newton; they wanted a vehicle that would actively accelerate diversity in the ecosystem. We need to ensure that when we’re talking about diversity we’re talking about how we get people not only in the door, but also help them move up the ladder. That’s why we create initiatives that are truly inclusive. That’s the purpose Newton is here to serve.
At Newton we don’t shy away from the conversations that matter and are constantly learning, challenging ourselves to do better and to listen to those from marginalized communities.”
How does the program consider intersectionality?
“This is such an important question and a key motivator behind why we talk about building programmes for people from overlooked and underestimated backgrounds. The barriers preventing people from breaking into VC cut across so many spheres; from race and gender, through to socioeconomic status and disability. We can’t look at the issue of diversity through a blinkered lens; we must incorporate and include all groups.”
What does the future of European VC look like?
“The last few years have been a bit of a rollercoaster! We’ve seen such an explosion of innovation and investment across Europe and that’s been incredibly exciting. Recent months have also seen a massive slowdown in investment pace. I think both the current market conditions and the fact that the European tech ecosystem is only just hitting its stride is actually a massive opportunity for diversity and inclusion. Because the market is still taking shape, we can influence how that happens.
“In a downturn and as a market matures, you can either bake-in the bias and row back on commitments to change, or you can double down and create the foundations for a better future. Lots of funds are already turning commitments to diversity into action, and I predict that those who are slower to move on becoming truly inclusive will start to look like out of date outliers. We have the choice to create a genuinely representative sector over the coming years – the onus is on the VC community to meaningfully step up to the challenge.”
