Last week, the team at Ada Ventures released a report examining where £6.6bn of Limited Partner Capital has been invested in the UK over the last six years, between 2017-2023. The aim was to produce data on gender diversity of the leadership teams in UK VC firms.
It highlights some stark realities, showing that even with all the progress in the last six years on diversity, equity and inclusion, there’s still a very long way to go, especially in regards to where LPs have allocated their capital and the differences between job titles and management company ownership (and therefore share of the fund profits).
- The total VC workforce is 38% women. While there are more women than men at junior and non-investment levels, senior and leadership levels show a far higher percentage of male representation at over 70%. These findings support those in previous reports by Diversity VC and the British Business Bank.
- 22% of individuals with a leadership title in a VC firm are women. These leadership titles include ‘Partner’, ‘Founder’, ‘General Partner’, Managing Partner’ etc.
- Women make up only 17.7% of those with significant ownership of VC firms. Using the precedent set by Companies House, we categorise significant ownership as owning more than 25% of the management company.
- Just 7p in every pound raised goes to all-women-owned management companies; 17p in every pound goes to mixed-ownership management companies; and the remainder (76p) goes to all-men-owned management companies.
- All-men-owned management companies raised 8x more funds between 2017-2023 compared to all-women-owned.
- All-men-owned management companies raised c.10.3x more capital than all-women-owned management companies and c.4.5x more than mixed-ownership management companies.
- Ownership diversity has consequences for the gender balance within the VC firm. Mixed and all-women-owned funds both have around 35% female representation at leadership level. All-men-owned funds have 19% female representation at leadership level.
- We still know little about what proportion of LP capital goes towards funds with diverse teams, how LPs classify diversity in teams and whether LPs include diversity, equity and inclusion (DE&I) in their investment decisions.
This report highlights the often hidden world of LP investing and calls for more accountability and visibility on where LP capital-particularly public money is going. Public commitments to investing in diverse-led funds and transparent practices are more standard in the US than in the UK or Europe, but there is similarly limited transparency on where the capital is actually being invested. “Diversity washing” appears to be happening. Women have leadership titles (founding partner, managing partner and partner) without the same levels of ownership as their male counterparts (27% of men with leadership titles have significant ownership, vs just 17.7% of women).
It is critical that we dive into these issues now, while the UK and Europe are still in the early stages of the growth of the venture capital ecosystem. More money flowing into the industry (particularly pension fund capital) might exacerbate the situation.