Campaign calls for greater diversity in startups getting investment
Huckletree has today launched Fairer Funding Now, its campaign calling for greater diversity among startup leaders receiving investment, after a study revealed the extent of discrimination in the funding process.
The survey of over 200 startup bosses in the UK and Ireland shows 16% faced discrimination while seeking investment – with a further 27% reporting they know a founder who faced prejudice during the process.
Of the respondents who gave details of discrimination they had faced, 86% stated sexism, echoing the lack of investment going to female-led businesses.
Just 15% of funding went to companies with a female founder in 2017 – a figure that has shown no signs of improving over the last 5 years (17% in 2016; 15% in 2015; 14% in 2014; 14% in 2013). Huckletree’s survey found that a troubling 28% of female startup leaders have experienced discrimination first-hand during the process of pitching and attending funding meetings.
Those in finance were the most likely to have experienced discrimination while raising funds, with a shocking 41% of respondents in this field saying they have experienced it. Discrimination in the technology and property sectors was also shown to be common, with 32% and 27% (respectively) of leaders stating it had happened to them.
When asked about opportunities to secure investment, there was widespread agreement that female and ethnic minority founders face challenges simply because of their gender, race or background:
- Just 9% of women believe they have equal opportunities as men to raise funding
- Only 17% of black startup leaders think equal opportunities exist regardless of background
- Dropping even further to 7% of leaders from Asian backgrounds
- And 4% of leaders who identified as mixed race
On the need to end discrimination and improve diversity in funding, Gabriela Hersham, Founder and CEO of Huckletree, commented: “The fact that so much discrimination still exists lies in complete contrast to the concept of the technology and innovation ecosystems being open to all. The sad reality is that would-be entrepreneurs who don’t fit the stereotype often face very challenging experiences, putting them off entrepreneurship altogether. As a country, we need to rectify this with urgency.”
Opinion was split when leaders were asked about solutions to discrimination and lack of diversity across industry funding. While many agreed that greater visibility of diverse founders (51%) and better knowledge sharing across startup communities (50%) were deemed to be positive solutions, the idea of imposing diversity quotas on investment and venture capital firms was more divisive, with 24% agreeing this should be considered.
However, leaders shown to face difficulty securing funding were more likely to agree quotas should be considered. While 27% of men believe quotas are a good idea, 44% of women think they should be imposed, rising to half (51%) of female leaders from ethnic minority backgrounds.
Luke Lang, co-founder of Crowdcube who is supporting the campaign, said: “As a company that set out to democratise investment, Crowdcube is proud to be supporting Huckletree’s campaign to encourage diversity among entrepreneurs receiving funding. While crowdfunding has gone some way to redress the balance, by providing entrepreneurs access to a more diverse pool of investors, the world of finance still has a long way to go to ensure all ambitious entrepreneurs can access funding to take their business to the next stage.”