Funding a diverse future
Alexandra Gheorghe, FinTech Platform Manager at Barclays and Editor in Chief of the Rise FinTech Insights report
Venture Capital is funding the future, from the founders and startups that it funds to the customers and communities that are using their innovative new products. The latest Rise FinTech Insights report considers the subject of diversity in FinTech, and features an interview with SoftBank Investment Advisors, about giving diverse founders a “seat at the table” as well as insights from Anthemis VC, FinTech startups and industry partners.
Diversity of thought
Diversity of thought is the idea that “companies that bring together people who think differently from one another can create conversations that stimulate new ideas and drive efficiency.” In the investment world, investment decisions arise from differentiated perspective around market dynamics or a particular company. And the results are quantifiable. By giving diverse founders a seat at the table, companies enjoy better overall financial performance. HBR reported that EBIT margins for companies with diverse management teams were nearly 10% higher than for companies with below-average management diversity. So how do investors, corporates and individuals support diverse founders?
Promoting diversity across investment teams
Supporting diverse founders begins within, by promoting diversity across investment teams and creating a corporate culture that enables all employees to grow. Even before an employee is onboarded, diverse recruiting practices and interview panels enable a pipeline of individuals from a range of cultural, ethnic, and socio-economic backgrounds. Equally, applicants at those interviews want to see interviewers and future colleagues that they can relate to. That’s true for any hiring team, including investment teams.
In my interview with her, Hayley Chan, Director at SoftBank Investment Advisors, highlighted that “SoftBank has established a Diversity & Inclusion Committee with senior leaders that regular basis to discuss topics such as our work environment, flexible work arrangements and benefits to support our employees such as maternity and paternity leave, as well as elder care. We also started several affinity network groups that bring together groups of employees to celebrate and embrace our differences, leading to a more inclusive workplace.”
The need for employee benefits and community groups has been amplified over the past year. In the report, Elizabeth Davis, Investment Associate at Anthemis noted that “one of the areas in which women have been disproportionately impacted during this pandemic has been child care and mothers were 47% more likely than fathers to have either lost their job permanently or quit, and 14% more likely to have been furloughed.” This discrepancy can be addressed by creating equitable benefits packages for employees and enabling affinity groups to address community challenges through actionable corporate policy changes.
Investors should not only ask for these support systems to exist in their own firms, but also in the companies in which they invest. Diversity VC, a non-profit partnership promoting diversity in Venture Capital, has put together a list of questions for venture funds during the due diligence process so startups can better understand their approach to diversity and inclusion. The list includes questions around diversity and inclusion policies and unconscious bias training that seeks to create a standard for tracking diversity metrics across the investment space.
Inclusive founder networks
Hiring diverse teams will take time. In the meantime, all investors need to begin diversifying their founder networks and serving as better allies. One way to enable this is by focusing on creating communities where diverse founders can have access to resources, capital and networking opportunities.
SoftBank has brought together women leaders from their portfolio companies through Connect and Lead, providing an opportunity for them to network and explore business collaborations. Additionally, SoftBank Group recently announced the Opportunity Fund, a new $100 million venture fund for outstanding Black, Latinx and Native American founders.
Programmes leading the way
Rise, created by Barclays, is deeply committed to empowering the next generation of FinTech leaders has a proud history of supporting diversity through our programmes. We have a strong support network for female founders, through our Female Tech Collective, a founder-to-founder network led by females to support females, and featuring mentoring and dedicated programmes and events.
Our Female Innovators Lab, from Barclays and Anthemis, is a New York City-based studio dedicated to cultivating entrepreneurial talent in women from all sides of the financial services ecosystem. The Lab’s mission is to identify female founders at the idea stage of their journey and match them with the resources and mentorship required to develop a company and bring it to its first round of fundraising.
Barclays and Techstars have recently launched Female Founders First, a one-off programme for 30 high-growth female founders from around the globe. The selected participants will receive mentorship and a curriculum of workshops and roundtables as well as perks, access to a great network and brand strengthening initiatives.
Another new diversity initiative is the Barclays Black Founder Accelerator, specifically designed to champion diversity in innovation and entrepreneurship. In partnership with Foundervine, the programme offers up to 25 Black-founder led pre-seed businesses the opportunity to participate in a 12-week immersive accelerator programme and help them to grow and scale.