Fair HQ & Diversity VC: Transforming the VC industry

Fair HQ Team

Jul 9, 2024

Fair HQ has partnered with Diversity VC to transform the Venture Capital industry. Together, we’re setting the goalposts for where the industry should be when it comes to DEI. Here’s why we’ve partnered and what we’re going to do.

Why VCs need DEI

Venture Capital investors are the gatekeepers of success for the entire business ecosystem in the UK. Their funds plant the seeds for innovation in the economy. If the people in charge of those decisions aren’t diverse, then they’re less likely to distribute funds equitably to diverse founders and ideas.

The VC industry isn’t yet representative of society. Diversity VC’s latest Equity Record found that:

  • Women make up 30% of roles in UK VCs
  • 59% of the industry is white
  • Less than 3% of the workforce are black women

What’s more, women are twice as likely as men to be in non-investment positions (such as community or operations), meaning that they don’t get to influence who receives funding.

We can see how this lack of diversity plays out in funding decisions. According to data from PitchBook:

  • 1.5% of venture capital investment in start-ups went to women-only founding teams in 2023
  • 18% of the money invested went to teams with at least one woman founder

And in 2021, less than 0.25% of VC funding went to start-ups led by black founders.

It’s not that female founders are riskier bets. According to First Round Review’s analysis of their first 10 years of investing, companies with a female founder performed 63% better than investments in companies with all-male founding teams.

Fair HQ and Diversity VC are helping the industry become more fair and diverse. When diverse founders and investors succeed, we can solve a wider pool of problems with more creative products.

Why did Fair HQ partner with Diversity VC?

VCs fund global innovation. The problems of today can’t be solved with the same status quo thinking — we need to harness the cognitive diversity of the world’s experts. By making VC funds more representative and inclusive, we can influence which founders they back. That means a broader range of ideas and products are able to scale and change people’s lives.

Diversity VC was a natural partner for Fair HQ as they’re already established in the space. Diversity VC work with a large community of engaged VC firms, including Anthemis, Balderton, Frontline Capital and Antler. Together, with Fair HQ’s data and science-backed product, proven to improve organisations’ DEI at scale, we can transform the VC industry.

Diversity VC is excited to partner with Fair HQ, combining their expertise in behavioural science with our commitment to unlocking the economy by advancing Diversity, Equity, and Inclusion (DEI) in the venture capital industry. Together, we’re taking a data-driven approach that’s scientifically robust and deeply impactful. We’re committed to making real changes and have been thrilled to lead this transformative journey with Fair HQ. - Ladi Greenstreet, Co-CEO, Diversity VC

Setting a new standard for DEI in the VC industry

Fair HQ worked with Diversity VC to create a new standard for DEI in the VC world. We developed an original, scientific framework to assess venture capital firms on how well they embed DEI.

We look at firms’ entire operations — across their diversity, equity and inclusion, as well as specific areas relevant to their activities. These include:

  • Internal diversity — how well different demographic groups are represented throughout firms. We want to see a fair representation throughout every role function, including deal-related positions.
  • Equality — embedding fairness at a structural level. That means having processes and policies that minimise bias, provide transparency, and guarantee consistency for all employees.
  • Inclusive cultures — promoting inclusion throughout the company. We want firms to investigate inclusion gaps between employee groups and take action to close them.
  • Fair investment — making sure diversity is embedded throughout the deal-flow pipeline. Assessment criteria and decision-making processes should limit bias to give founders from minority backgrounds an equal shot.
  • Portfolio company guidance — firms support their portfolio to embed DEI internally. We want to see firms prioritising DEI in their communications and enabling their portfolio companies to track and improve DEI.

We don’t stop at assessment though. We’re creating a toolkit for firms to improve their DEI, full of impactful actions backed by behavioural science. The end goal is for DEI to be fully operationalised throughout all activities – everything from investment, marketing, communications and people ops. DEI should be an automatic consideration at every stage.

What’s next for our partnership?

The vision for the partnership is to grow our community of VCs and LPs that are actively changing how the industry operates. We want to support the community to create fairer access to capital, improve diversity in teams, and inspire portfolio companies to build fair and inclusive companies from day one.

It’s truly inspiring to work with the Diversity VC team and their community of VCs that are driving change across the industry. Together, we’re an unstoppable force.

VCs have the unique opportunity to support companies that shape our world. By fostering inclusivity within their teams, they can better tap into the full spectrum of human creativity and potential, leading to groundbreaking solutions and prosperity for all. It’s not just an industry shift; it’s a pathway to a brighter, more equitable future. - Kate Pljaskovova, Founder & CEO, Fair HQ