WOMEN IN U.K. VENTURE CAPITAL 2017 A report by Diversity VC In partnership with the BVCA With data provided by Craft.co Published May 2017 WITH THANKS Diversity VC Diversity VC Craft.co Thought Leaders Founders Data Team Francesca Warner Joe Knowles Ilya Levtov Baronness Martha Lane Fox, CBE Downing Ventures Smedvig Capital Founder & CEO, Craft.co Cross-Bench Peer, House of Lords Founder and Executive Chair, Doteveryone Farooq Abbasi Olivia Neale Karthik Suresh Director, Twitter Head of Business Operations, Craft.co Mosaic Ventures Smedvig Capital Suranga Chandratillake Anna Boffetta Kirsty Macdonald Abhi Setia General Partner, Balderton Capital LSE Balderton Capital JamJar Investments Renata Quintini Travis Winstanley Yang Liu Partner, Lux Capital Catalis Group SheWorx The BVCA Calum Paterson Lillian Li Stephen Barnett Managing Partner, Scottish Equity Partners Effective Investing Tim Hames Vice Chairman, BVCA (2017-18) Reshma Sohoni Meriwether Beckwith Director General, BVCA Founding Partner, Seedcamp Oxford Capital Gurpreet Manku Kathryn Mayne Laura Zhao Assistant Director General and Managing Director, Horsley Bridge International Hannam & Partners Director of Policy, BVCA Beezer Clarkson Ben Goldsmith Noelle Buckley Managing Director, Sapphire Ventures Balderton Capital Director of Research, BVCA Gail McManus Will Parker Roe Nastasja Vojvodic Founder & Managing Director, PER London Business School Research Manager, BVCA Debbie Wosskow Michael Tefula Tom Allchorne Founder, Love Home Swap University of Oxford Director of Communications, BVCA Co-founder, Allbright Shriya Anand Wanda Goldwag UCL Advisor, Smedvig Capital Seb Butt Susanne Given UCL Non-Executive Director Hazel Mulhare Headhunter, Dore Partnership CONTENTS Foreword 4 Introduction 5 “The tech industry can be a powerful force for An overview of the venture capital industry 6 good. However there’s Our findings 10 not always equal access Discussion 18 to the opportunities Recommendations 20 it presents. I hope Methodology FAQs 24 this report is a Appendix 26 call‑to‑action for the venture capital community to ensure that it is an industry accessible to all.” Baronness Martha Lane Fox, CBE Cross-Bench Peer, House of Lords Founder and Executive Chair, Doteveryone Director, Twitter 3 FOREWORD The BVCA is delighted to support this report as we We therefore welcomed the opportunity to sponsor this view the lack of gender diversity in our industry as piece of research on the number of women working in an important business issue. This is a subject that is venture capital firms in the U.K. and their roles within treated as a strategic matter and is regularly discussed them. The results provide a valuable dataset, and at a board level within the BVCA. Our strategy is to highlight the issue representation across the industry. work with firms to increase the participation of women The pipeline, however, is promising and we will in the private equity and venture capital industry and continue to work with the industry to improve on the encourage greater representation of women in results here in future years. senior roles. The BVCA would like to thank the team at Diversity The BVCA is committed to using our position as a trade VC for their commitment, diligence and continued body and will leverage our resources to encourage enthusiasm throughout this project. discussion and debate about the challenges associated with recruiting and retaining women in the industry; Tim Hames publish research and thought leadership on the subject; Director General, BVCA and take steps to encourage an increase in the number of women in the industry. 4 Women in U.K. Venture Capital 2017 INTRODUCTION As the lead of the data team for Diversity VC, it gives me to success by venture capital, whose culture directly affects great pleasure to share our inaugural research report, +100,000 jobs and permeates through the products we all Women in U.K. Venture Capital: 2017. use on a daily basis. When Diversity VC began this study in November 2016, we Whilst we’re starting from a low base, we should were taking a voyage into the unknown. We’d just finished be optimistic about the road ahead. There is a a comprehensive desk-study,* and found that no one had greater representation of women in junior roles (at 29%) ever done a review of women in U.K. venture capital. and there is significant willingness in the industry to redress the gender balance further still. For the very first time, we are able to cast a light on the men and women working in U.K. venture This is just the start. We will continue to provide capital. With the support of the BVCA, and our data research on the industry – documenting our progress, partner Craft.co we’ve gone to great lengths to make and sharing examples of successful women and other it as extensive as possible. The study covers 160 active underrepresented groups. More significantly, we aim venture capital firms and over 1,500 employees, providing to proactively engage with firms and help facilitate their a comprehensive view of the industry today. programs of change. It’s sobering to see that women are so We hope that firms share our vision and ambition, underrepresented in our industry. Only 13% of and will join us in adopting a target of 20% women in decision makers (partners or equivalent) in U.K. venture senior, decision-making roles by 2020. capital are women, and a staggering 48% of investment teams have no women at all. I hope this report provides valuable insights and pause for thought, and I look forward to working together towards a As venture capitalists, the culture and tone we set fairer and more diverse venture capital industry. in our firms has a significant impact. It not only affects our immediate colleagues, but impacts on our Travis Winstanley * Desk study comprised a peer review of portfolio companies, and on the wider society too. 6 out Games Investment Director, Catalis Group 30 publications on diversity, full details of 10 of the world’s most valuable companies were fuelled Co‑Founder & Data Project Lead, Diversity VC available at www.diversity.vc 5 AN OVERVIEW OF THE VENTURE CAPITAL INDUSTRY Why does venture capital matter? Trailing 12-month capital invested ($B) and # of deals by quarter, Europe (2016) Venture capital is a huge industry. In 2016, some $127.4 billion was invested worldwide by venture capitalists.1 Venture capitalists put this money towards investments in early-stage businesses, helping to accelerate their growth. Unlike any other asset class, a relatively small venture investment has the capacity to create global, transformational companies. 6 of the 10 most valuable companies in the world can trace their success back to funding from venture capital.2 1 KPMG Venture Pulse (Q4 2016) 2 Based on market capitalisation, as at April 2017. 6 venture-backed firms include Apple, Microsoft, Alibaba, Facebook, Amazon and Alphabet Graph Source Atomic State of European Tech (2016) 6 Women in U.K. Venture Capital 2017 Venture in the U.K. The U.K. plays an important role on the international stage. By deal value, the U.K. is the largest market in SECTOR MAXIMUM 3 A B Europe with $4.8 billion invested in 2016 alone. FOCUS INVESTMENT SIZE At the time of writing, the U.K. has been responsible 132 35 for some 18 unicorns (companies whose value exceeds TECHNOLOGY ≤£2.5 MILLION $1 billion), including household names such as King.com, SkyScanner, Zoopla and Just Eat.4 37 £2.5 - £10 MILLION There are a number of different players in U.K. venture, 62 NON-TECH ranging from specialist seed-stage funds through to 31 160 £10 - £25 MILLION generalist growth-stage funds. ACTIVE 43 U.K. FIRMS We identified 160 active venture capital firms whose LIFE SCIENCES 10 ≥£25 MILLION characteristics are illustrated in the infographic on the right. The full list of firms and our methodology can be found at the end of this report. Note A Some firms invest across two or more sectors. It was not possible to determine 12 5 18 12 5 the sector focus of 21 firms OTHER GOVERNMENT- CORPORATE VC FIRMS 3 KPMG Venture Pulse (Q4 2016) Note B e.g. accelerators with SUPPORTED VC VC FIRMS 4 GP Bullhound: European Unicorns 2016 It was not possible to a dedicated fund, PE FIRMS determine the maximum firms with venturing Source investment for 47 firms arm Diversity VC research FIRM TYPE 7 Number of venture capital firms, by size The typical U.K. venture capital firm 90 This study identified 160 venture capital firms currently 61 active in the U.K. There were a number of firms – including London Bridge Ventures – which had as few as one employee. 9 The largest firm in our data set – Bridges Ventures – had 67 employees. SMALL MEDIUM LARGE On average, venture capital firms are relatively small, up to 5 employees 6 to 20 employees 21+ employees comprising just 9 employees, with 6 in investment roles and 3 in non-investment roles. Average team size and structure Non-investment 3 professionals 9 Investment 6 professionals Source AVERAGE AVERAGE TEAM Diversity VC research NO. EMPLOYEES STRUCTURE 8 Women in U.K. Venture Capital 2017 The purpose of this study The purpose of this study is to look at the U.K. venture capital industry from a perspective that has never been seen before. We will see for the very first time: • the number of men and women working in venture in the U.K.; • how the ratio compares to the benchmarks of other industries and geographies; • whether the size of firm or investment focus has an impact on the number and seniority of men and women; and • most importantly, we will cast light on the decision makers who are helping create the companies, jobs, cultures and products of the future.