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06

Diversity & Inclusion

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Regulation & Policy

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Resources

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06.1

State of Diversity & Inclusion

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The Ethnicity Data Gap

Since 2018, The State of European Tech report has plotted tech’s dismal track record on diversity and inclusion because we believe that European tech will only be able to reach its true potential if diversity and inclusion are at its core.

This is a complex topic; diversity is not just about gender, it is also about age, nationality, sexual orientation, socioeconomic backgrounds, neurodiversity and ethnicity. In particular, the Black Lives Matter movement this year gave cause for long-overdue reflection on the systematic exclusion of talent from Black/African/Caribbean, Asian, Hispanic/Latinx, Middle Eastern/North African, and mixed ethnic backgrounds from European tech.

We believe that data is key to progress, and a number of outstanding reports mapped Europe’s diversity deficit this year. Those include The Black Report from 10x10, Extend Ventures’ Diversity Beyond Gender Report, and Unconventional Ventures’ Nordic Start-up Funding report.

But very little data exists at a European level. Dealroom started an initiative in September to collect ethnicity data through self-identification.

So far, close to 300 people have taken part and for those who reported their ethnicity, 11% identified as Asian, 4% as Black/African/Caribbean, 4% as Mixed, 3% as Middle Eastern/North African and 2% as Hispanic/Latinx. This data will slowly allow us to build an accurate picture of the diversity of those who make up the tech industry. With enough representative data, we hope to be able to conduct research on capital flows based on both ethnicity and gender, in different territories, sub-sectors and funding stages. For this, we need help. Claim your Dealroom profile and update your details, to help build the most comprehensive living dataset on ethnicity and gender in the tech industry.

We are always looking for partners on diversity data, and welcome inbound at research@atomico.com. With data, we can help change the status quo together!

Looking at the composition of the founder respondents to the State of European Tech survey based on self-reported ethnicity, 83% of all founders identified as White/Caucasian. Only 2% of all founder respondents self-identified as Black/African/Caribbean, and none of those respondents raised external capital.

Share of founder respondents (%) who have raised external funding by self-identified ethnicity

Source:

Legend

  • All founders
  • Already raised external capital
  • Bootstrapped to date
Note:
Sample sizes across different respondent groups are lower when multiple segmentation filters have been applied, such as job function, ethnicity and gender. Please interpret the data with this in mind.
 Numbers may not add to 100 due to rounding.

As such, it should not come as a surprise that although most founders have found it harder to raise venture capital in Europe in the last 12 months, it is especially true for underrepresented founders. For reference, last year, 31% of underrepresented founders found it harder to fundraise; that number has jumped by an extra 31% this year with 62% finding it more challenging to raise venture capital on average.

In your opinion is it easier or harder to raise venture capital in Europe than it was 12 months ago?

Source:

Legend

  • Harder
  • Unchanged
  • Easier
Note:
Founders respondents only. Numbers may not add up to 100 due to rounding. Sample sizes across different respondent groups are lower when multiple segmentation filters have been applied, such as job function, ethnicity and gender.

When asked whether they think the European tech ecosystem is fair to people from all demographics, backgrounds and experiences, a large share of survey participants disagreed and voiced concerns over inequalities, proving that it is all the more urgent for us to act. While 41% of men respondents believe that equal opportunity is available to all, only 19% of women respondents share the same sentiment. Most notably, however, 77% of Black/African/Caribbean participants disagreed to this statement.

The European tech ecosystem provides equal opportunity for people of all demographics, backgrounds, and experiences

Source:

Legend

  • Agree
  • Neither
  • Disagree
Note:
All respondents. Numbers may not add up to 100 due to rounding.

The responses were broken down to examine sentiment by gender and ethnicity at the same time. 86% and 72% of women respondents who self-identified as Black/African/Caribbean and Asian, respectively, don't believe the European tech ecosystem provides equal opportunities for all. Across the board, however, respondents more or less seem to share this view, particularly women respondents.

Share of respondents who disagree with the statement: The European tech ecosystem provides equal opportunity for people of all demographics, backgrounds, and experiences

Source:

Legend

  • Women
  • Men
Note:
Sample sizes across different respondent groups are lower when multiple segmentation filters have been applied, such as job function, ethnicity and gender.

In the first ever quantitative report on diversity beyond gender in Europe, Extend Ventures is shining an even grimmer light on the lack of investments in founders from ethnicities other than White. The Black and Multi-Ethnic communities represent 14% of the UK population but all-ethnic teams received 1.58% of all venture capital funding across stages between 2009-2019.

Total capital ($B) raised across all venture capital stages by ethnicity of funding team in the UK, 2009-2019

Source:
Link to the full reportCombined Shape
Note:
Based on 3,784 entrepreneurs who started 2,002 companies and received venture capital investment between 2009 and 2019.


for every dollar invested in venture capital over the past 10 years has gone to all-ethnic teams.

Source:


0.24%
While all ethnic entrepreneurs are underfunded, Black founders, who represent 3.5% of the UK's population, are most heavily impacted with only 38 Black founders receiving venture capital funding in the last 10 years, representing just 0.24% of the total sum invested.

Source:


0.02%
Furthermore, Black women founders received even less support with only 10 receiving VC funding equating to 0.02% of the total amount invested across the 10-year period and none so far raising late-stage funding.

Source:

Ethnicity data is not (yet) available at a European-wide level but given the size of the UK venture market, it provides particularly glaring proof of the lack of ethnic diversity in European tech. The data challenge is also present across other types of diversity. Over the past few years, Dealroom has taken huge strides forward in tracking the state of play on gender diversity. The difference between men-only teams and mixed/women-only teams continues to be huge. Men-only teams captured 91% of all capital raised and 85% of all rounds in 2020.

Share of capital raised and deals (%) by founding team gender composition

Legend

  • Men
  • Mixed
  • Women
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, and grants. Please also note that the data excludes Israel.

We've made huge strides on the drive for greater gender Equity, but yet both for women, and other overlooked groups, there are still huge inclusion gaps.

It's no surprise to hear that when just 0.24% of VC funding has gone to Black entrepreneurs - as an Extend Ventures report found earlier this year - most respondents recognise the European Tech landscape can do more. We've made huge strides on the drive for greater gender Equity, but yet both for women, and other overlooked groups, there are still huge inclusion gaps. We, for example, run an equity free pre accelerator program, Rise, which gets hundreds of applications from founders from diverse backgrounds. We have support from a number of the most progressive firms out there such as Atomico, Google.org and Microsoft, but the entire ecosystem has to do more. There are still too many funds that don't have diverse investment teams, partnerships with ground roots organisations, or rely on other people to work at the very early stage. You can't build an ecosystem if you only want to get involved after Series A!"

Ashleigh Ainsley

Colorintech

Co-Founder

We asked founders to share whether they had raised any form of external capital or whether they had bootstrapped / self-financed their own company. Amongst survey respondents, 22% of all founders identified as women, although comprise of only 16% of founder respondents who have raised external capital.

Share of founder respondents (%) who have raised external funding by self-identified gender

Source:

Legend

  • All founders
  • Already raised external capital
  • Bootstrapped to date
Note:
Founders respondents only.

Last year, there was a very meaningful gap between women and men founders when it came to their ability to fundraise, and the Covid-19 pandemic threatened to increase this disparity further. But if it is true that women still experience more challenges in raising venture capital than men, the difference is less pronounced when looking at ethnicity.

Is it easier or harder to raise venture capital in Europe than it was 12 months ago?

Source:

Legend

  • Harder to raise (2019)
  • Harder to raise (2020)
  • Unchanged (2019)
  • Unchanged (2020)
  • Easier to raise (2019)
  • Easier to raise (2020)
Note:
Founders respondents only. Numbers may not add up to 100 due to rounding.

Setting a magnifying glass on early stage investing, however, shows small signs of positive change. 2020 saw a “record” number of rounds by women who have raised between $10M to $50M. For rounds below $10M, the share seems to oscillate around 6%. This is hopefully the start of a broader trend of capital flowing across more diverse sets of founders. Figures are bleak at a later stage, however; not one deal over $50M has been closed by a women-only team.

Share of deals (%) by round size and year for women founding team

Legend

  • 2019
  • 2020
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, and grants. Please also note that the data excludes Israel. 2020 is annualised based on data to September 2020.

Select VC-backed European startups with women founding teams

Anna von Stackelberg

Anna von Stackelberg

Health / Berlin

Tania Boler

Tania Boler

FemTech / London

Osnat Michaeli

Osnat Michaeli

FoodTech / Berlin

Josefin Landgard

Josefin Landgard

Health / Stockholm

Chloe Macintosh

Chloe Macintosh

Marketplace / London

Fiona Canning

Fiona Canning

Fintech / London

Anne Boden

Anne Boden

Fintech / London

Sofia Pessanha

Sofia Pessanha

Enterprise Software / Lisbon

Milda Mitkutė

Milda Mitkutė

Marketplace / Vilnius

Tugce Bulut

Tugce Bulut

Enterprise Software / London

Cristina Fonsecaa

Cristina Fonsecaa

Enterprise Software / Lisbon

Maria Piechnick

Maria Piechnick

Robotics / Dresden

The share of rounds raised by gender-diverse founding teams varies by country across Europe. Looking at the total distribution of deals raised by founding teams since 2016, it is worth noting that countries from Southern Europe such as Portugal, Italy and Spain are performing better in terms of gender diversity compared to other countries in Northern Europe, such as Denmark and the Netherlands.

Share of deals (%) by founding team gender composition and country, 2016-2020

Legend

  • Men
  • Mixed
  • Women
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, and grants. Please also note that the data excludes Israel.

As a Ghanaian-German female founder, living and raised in Germany, I think the hardest thing is access and being taken seriously. Often times if you are not already part of a network (which most 1-2 generation immigrant startup founders aren't) it is really hard to tap into that. It's very much like a sorority over here. Secondly since most VC are white, male and 40+ they often don't understand the ideas, products or opportunities within the Female BIPoC founders community as well as do not understand these markets and their growth/expansion potential at all.

Nana Addison

CURL

Founder & Director

Looking at the share of deals by founding team gender composition, the year-on-year trends across select European countries vary. Some countries such as France, Germany, and Sweden are seeing a slow but steady trend in the share of deals by all women founding teams, but his doesn't ring true for others.

Share of deals (%) by founding team gender composition and country

Legend

  • Men
  • Mixed
  • Women
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, and grants. Please also note that the data excludes Israel.

It is also interesting to explore the density of women founders on a relative basis to the general working population size of different countries. On a population-adjusted basis, Finland, Sweden and Ireland stand out.

Number of rounds per 1 million working women, 2016 to 2020

Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, and grants. Please also note that the data excludes Israel. Labour data from the Worldbank.

Beyond gender and ethnicity, 70% of those who have been discriminated against because of their socio-economic status also overwhelmingly rejected the fairness of the tech ecosystem. Separately, it's worth noting that 40% of respondents who have not experienced any form of discrimination believe that the European tech ecosystem provides equal opportunity to all.

The European tech ecosystem provides equal opportunity for people of all demographics, backgrounds, and experiences

Source:

Legend

  • Agree
  • Neither
  • Disagree
Note:
All respondents. Numbers may not add up to 100 due to rounding. Only forms of discrimination with over 50 respondents were included. Respondents were able to select up to all types of discrimination applicable to them.

If we look at the highest educational attainment of founder respondents to the survey, 84.5% of all founders reported having completed university education (bachelor's degree or higher) while 15.5% have not. Furthermore, of the founders who have raised external capital to date, 82.5% have had a university education while 17.5% have not.

Share of founder respondents (%) who have raised external funding by educational background

Source:

Legend

  • All founders
  • Already raised external capital
  • Bootstrapped to date
Note:
Share of founders who reported having already raised external capital (of any amount) versus reporting having bootstrapped their companies. Numbers may not add up to 100 due to rounding.

Share of UK venture capital invested in founding teams with at least one member from an elite educational background


42.7%
of UK capital invested at seed over the past 10 years was invested in founding teams with at least one member from an elite educational background. Education is often used as a proxy for socio-economic background. As such it is staggering to see that 42.7% of UK venture capital invested at seed stage over the past 10 years was invested in founding teams with at least one member from an elite educational background (Oxford, Cambridge, Harvard, Stanford and their respective business schools).

Source: