Forward Partners publishes founder diversity numbers for first time

Rachel
Carrell (left), founder of Koru Kids, which provides childcare
after school.
Koru
Kids

• Tech startups and investment remain fairly homogeneous,
  with ethnic minority and female founders still in the
  minority.
• One problem is that no one really wants to disclose how
  lacking in diversity they are.
• One early-stage venture capital firm has studied its
  own portfolio of startups to see how many have female and
  ethnic minority founders and revealed the numbers.
• Forward Partners is beating the average, with 10
  companies out of its 52 investments having at least one female
  founder, but the investor wants to do better.

The tech startup and investment is a homogeneous
world, with the stereotype of white men at the helm still
prevailing.

According to data from The Entrepreneurs’ Network and Beauhurst
released in 2017, just 9%, or £358.4 million, of UK
investment went to startups with a female founder. The
remaining £3.6 billion went to male-founded companies. It
isn’t for want of trying either — female founders anecdotally report
that it is tougher for them to raise money.

One early-stage venture capital firm, Forward Partners,
is releasing diversity statistics for its startups for the
first time in an effort to shine a light on where it puts its
millions. Forward has invested in 52 startups since 2013, such as
peer-to-peer lender Zopa, and has $84.4 million (£74
million) in funds under management. 

Here’s how its 52 startups breakdown:

All-malefounders: 42

At least one female founder: 10 (7 have
all-female teams)

All-white founders: 36

At least one ethnic minority founder: 15 (8 are
all ethnic minority teams)

The figures still show a stark disparity between the number of
men and women being funded but it looks like Forward is doing
better than the average. There isn’t much to go on beyond
anecdotal data but,
according to Crunchbase, teams with female founders accounted
for just 9% of all global venture deals in the first quarter of
2018.

Forward Partners investor Louise Rix, who conducted the research,
also looked through six weeks’ worth of startup applications to
determine how successful different types of applicants were at
winning investment. That comprised 300 pitch decks.

She found that all-female applications made up just 7% of
pitches, but those teams did well with funding, since 14% of
Forward’s portfolio are all-female teams, or seven
companies. 

Forward Partners itself is not hugely diverse, a fact that Rix —
the only woman on the investment team — acknowledged. “What we
want to say is that we care about this, that we’ve got a lot
improvements to do, this is where we’re at, and we’re aiming to
improve,” she told Business Insider. “It would be great if other
VCs would share their data as well.”

There is a dearth of information from the European venture
capital industry about the diversity of its investors and
portfolio companies. Diversity VC, a group campaigning for more
diverse investors,
released a landmark study in 2017 showing that just 13% of
people calling the investment shots at venture capital firms are
women.

Rachel Carrell is the founder of a Forward Partners portfolio
startup, Koru Kids, which provides childcare to help working
parents after school. She raised £3.5 million ($4.6 million) in a
seed round in May from Forward and Albion Capital.

“It’s really good for society to have more diverse investments,”
she said. “When you invest in women, you do get different types
of businesses. A lot of investors, they have a collective blind
spot as a group.

“Did [being a female founder] make a difference? It’s not a
controlled experiment, so it’s hard to tell. Could I have raised
more or faster, it’s impossible to tell. But I don’t think
it’s a coincidence this is the first significant VC-backed
startup to address childcare I’m a mum of two kids.”

Rix said Forward had taken a first step in benchmarking itself,
and planned to improve from there. “We are pretty pleased
we’re beating the averages,” she said.