Hiring鈥揺ven for many growth businesses鈥搃s . What exactly is the more medium-term effect that particularly early-stage companies expect the virus to have, however? And most importantly, how do these expectations differ between groups, say between American and European startups or between male- and female-led ones?

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Maren Bannon and Jennifer Neundorfer at conducted a survey to address these questions (see the overall results ), complementing other pieces of data (e.g. by a number of big EU VCs). Unlike other surveys, however, Jane, a fund focused on female founders and operating across continents, produced a much more comparative data set. They got answers from 175 U.S. companies and 75 in Europe–80 percent were led by females overall. I worked with Bannon, who kindly shared the data with me, to tease out some of the most interesting highlights.

The differences between European and American startups

What is not surprising is that in the sample, European companies had raised much less money than American companies ($500,000 versus $1.5 million) on average. Something that possibly also fueled people鈥檚 expectations: 62 percent of EU startups versus 43 percent of U.S. startups were fearful of the long-term effect of the pandemic.

At the same time, a much higher percentage of EU startups claim they have already taken measures to counteract possible effects: ranging from cutting team expenses (75 percent in EU versus 50 percent in the U.S.) to hiring freezes (42 percent versus 29 percent, respectively).

, long-time operator now turned VC partner at , confirms this slightly more optimistic outlook in the U.S.: 鈥淣ine of our portfolio companies are hiring鈥揻or early-stage founders it is a bit unique; we believe fundraising will recover more quickly for them, due to the investments being smaller and there still being capital in various funds. The most important thing for any founder is to focus on building a growing, healthy business with solid and responsible fundamental metrics.鈥�

Bannon commented, 鈥淔ounders outside of hubs like San Francisco haven鈥檛 had access to free-flowing capital, so scrappiness is built into their DNA. Taking swift decisive action right now and being realistic about challenges ahead can serve founders well. It gives me a lot of confidence in European founders.鈥�

A look at gender

But let鈥檚 drill slightly more into the gender differences when it comes to the responses to COVID-19 and the more general outlook. Interestingly, in the Jane VC survey, women in Europe felt more disadvantaged as founders because of their gender (58 percent versus 50 percent), but also more supported in their ecosystem overall (58 percent versus 45 percent). from based in Amsterdam raised a curious point in this regard; she has experienced recently that women are more likely to ask for help or–even more generally–get in touch and communicate.

鈥淲omen ask for help more easily and more often鈥揳nd earlier [鈥 And I think that is a very good thing. If you don鈥檛 talk to others, you can be so deep in the problem that you lose sight of the bigger picture,鈥� she said.

But female founders (and VCs) are more likely the ones who pick up the housework, homeschooling and care at home, as , VC at notes.

鈥淲omen will be caught up in these other things making it even harder to, for instance, fundraise,鈥� she said.

While fundraising initially slowed down for everyone, it might pick up more slowly for female founders. of echoed that fear: 鈥淲ith people returning to the logic of 鈥業 just need to invest in what I know, what I am comfortable with,鈥� there is a risk there that could bias against female founders.鈥� This could further perpetuate the inequalities built into the system (which I reported on before).

, co-founder of , a company supporting contextual content-screening that came out of in 2019, is seeing herself and others face even more far-reaching problems. On the one hand, they were lucky enough to just before COVID hit, but despite having a long runway they are proactively cutting down costs and burn rates. Revenue, like everything else, is uncertain, according to Haco.

The future

What will be the longer term effects, however?

Yvonne Bajela, principal at , a VC firm focused on underrepresented founders in London, is critical of the U.K.鈥檚 , the vehicle designed to help startups survive COVID-19.

鈥淭he LPs (such as large pension funds) have significant power and could cause a shift in driving diversity on the agenda of venture capitalists, but they are a long way off,鈥� she said.

Mirroring Check Warner鈥檚 critique of the , Bajela is fearful that it might bake inequalities into the ecosystem for the foreseeable future.

, co-founder of in Austin, Texas, who just graduated from , found a possible silver lining of COVID, however.

鈥淣ow business comes first [鈥 Numbers don鈥檛 lie, traction doesn鈥檛 lie,鈥� said Zhang. 鈥淐ompanies that can weather and grow during COVID will be undeniably compelling to investors.鈥�

While biases and pattern-matching will continue to negatively impact female founders, excellent work will still count. I would add, however: The ideal of meritocracy has not exactly made the world more equitable before, so it鈥檚 important to ensure that COVID-19 does not stifle the progress fantastic female founders and investors have fought for over the last years.

Dr. Johannes Lenhard is the centre coordinator of the for Ethics, the Economy and Social Change. With fieldwork in Silicon Valley, New York, London and Berlin, his current book project focuses on the ethics of venture capital. His recently edited volume,聽 Home: Ethnographic Encounters, was published by Bloomsbury.

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Let鈥檚 start with the numbers 鈥� at least as far as they go. According to , the situation in the U.K. is just as shattering as in the U.S.: only 13 percent of VC partners on the island are female (exactly the same share as two years ago). While the gender ratio is improving slowly for junior ranks鈥揻rom 20 percent females in 2017 to 37 percent 2019鈥搕he upper echelons, the decision-making power hasn鈥檛 shifted at all.

In fact, estimating the number for all of Europe isn鈥檛 easy; there is no singular source of information. Sifted鈥檚 recent list of can give us a sample snapshot: The top 10 firms Sifted identified including Accel, Balderton and Holtzbrinck include 12 female partners, or 15 percent, which is in line with the terrible U.K. numbers.

, director at Axel Springer Plug and Play in Berlin, told me that if she decided to turn her angel collective Auxxo into a VC fund and add four female partners, they would almost double the amount in Germany. 1

Again, similar to the U.S., the consequences of the lack of investor diversity for founders is enormous.

Atomico鈥檚 recent finds that both women-only teams and mixed teams have lost (!) shares of VC money (from 2.6 percent in 2016 to 0.4 percent in 2019 for women-only, and from 8.4 percent to 8 percent for mixed teams). Another, much less talked about consequence of the lack of (gender) diversity is also highlighted in the Atomico report: Almost 50 percent of women in European tech鈥搕his is startups and investors鈥揾ave experienced a form of discrimination in the last 12 months and more than 80 percent believe the discrimination was based on their gender.

Kathi Wilhelm, investor at Berlin-based , believes this discrimination issue to be even more poignant: 鈥淔or female founders, when you are raising money [鈥 there can still be lots of bias in the process. VCs still unconsciously value 鈥榤ale鈥� criteria鈥揾ow aggressive they are in their growth plans and so on. We have taken active measures not to let this bias get into our due diligence process.”2

What is happening right now for female investors?

Sophia Bendz and her partners at European heavyweight often try to go one step further than working against “unconscious bias” in their investment (and hiring) process. They have an angel program that is currently running in its second year and boasts more than two-thirds female investors (giving them a chance to build up a portfolio that will facilitate them joining a fund).

They also support their portfolio companies in thinking more inclusively. She explained: 鈥淲e require all of our portfolio teams to have a diversity strategy [鈥 and we challenge founding teams that are too homogeneous [鈥 there is a great we developed with Check [Warner] that we use if need be.鈥�

Check Warner in fact recently raised a diversity-focused fund in the U.K., , after starting and leading to its first successes. With Diversity.VC, Warner and her partners are trying to be empathetic to the VC industry while supporting funds in changing: 鈥淥ver the last three years, we have developed tools and programs and worked together with many funds to roll them out; with the tools we are trying to [make] VCs structurally more inclusive while helping investors to focus on what they do best.鈥�

Maren Bannon, co-founder of female-focused in Amsterdam and Boston is still slightly puzzled by how slow everything is changing: 鈥淭he European ecosystem is maturing鈥搕here are exits, there is talent, there is research, lots of engineers and many more venture firms across stages.鈥�

These are great fundamental–so what is the issue? Bannon believes one problem comes with the LPs in Europe: 鈥淟P capital in Europe is much more skewed to public finance鈥搕he EIF and the BBB are major anchor investors. [鈥 They are rather conservative in their views.鈥�3

Anya Navidski, founding partner at , a specifically female-focused fund based in London, emphasized this point even more strongly:

Traditional LPs that invest in VC funds are 3-5 years away from understanding the opportunity; they don鈥檛 understand the space. [鈥 When you are told by the BBB, the government-owned entity specifically tasked with supporting the industry, that it will take 2-4 years before you can get money from them and that they need to be the anchor investor, that naturally skews the market to people who have left big VCs or big banks. Who else can afford that?

As a result, the financial services reproduce themselves and with it their . And the data for the biggest European anchor investor indeed doesn鈥檛 look good; for instance, the list of European Investment Fund (EiF) angels reveals 91 names. Two of the people are female鈥搘hile the name Michael appears three times (four if we count Mikael). Shouldn鈥檛 the most important European anchor investor lead by example?

So, where are we?

At least in the U.K. (and in the Nordics), the issue has been identified, quantified and is continuously measured and talked about now. Diversity.VC has done a tremendous job in this respect. There are panels about it (like organized by Entrepreneurs First), and mainstream media (like the ) report on it regularly.

The crucial first female-run (and often female-focused) funds鈥揓ane VC, Ada Ventures, Voulez Capital鈥揾ave been raised. That is all very promising and will hopefully push up the number of female decision-makers across the industry at least from the next generation onwards.

But it hasn鈥檛 spread as widely as it needs to, yet.

In particular, Germany鈥搕he 鈥揳nd France are lagging behind. Obviously, there are positive signs. Berlin is moving ahead in this respect: It is again women like Bettine Schmitz and and the Evanglistas network of female angels who are leading the investors while the is focusing fully on supporting female entrepreneurship.

–the Women Entrepreneurship Roadshow鈥搕ries to span a network for female founders across all of Europe. These kinds of initiatives should also be replicated on the investor side鈥揻rom seed to growth–however, we really need somebody to make a stronger push yet, to actually put a number on the issue.

How about if the next 鈥樷�� has a section on diversity and inclusion also for the investor side of things?4 And why does Diversity.VC seemingly not have any followers on the continent?聽 Similarly, 鈥揂mbitious Ladies in Tech, founded by Blossom-Capital GP –has not yet really been copied鈥搘hy?

In short, yes, there is awareness, there are first starts, there are initiatives鈥揵ut we are still missing the networking and networked power of a European . Most importantly, we need to admit across the board that a cultural shift will be needed in order to tackle the issue of diversity in VC. Just hiring the odd female partner won鈥檛 be enough. Fortunately, there are now females, such as Marianne 脰sterlund, starting to infiltrate the industry with exactly that attitude.

I asked 脰sterlund, currently based in Stockholm as investment manager at the student-run , about the main issue she was facing when first thinking about the VC world.

Her response: 鈥淲hen I was in high school, finance was nothing I considered. It felt like such a boys-thing to be interested in [鈥 When I started looking into VC, Sophia Bendz was promoted [to partner] at Atomico鈥揳nd that was when I realized: She has done it, I can do it too.鈥�

Dr. Johannes Lenhard is the Centre Coordinator of the 聽for Ethics, the Economy and Social Change. With fieldwork in Silicon Valley, New聽York, London and Berlin, his current book project focuses on the ethics of venture capital. His聽recent edited volume came out with Bloomsbury entitled聽.听

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But what about the (often overlooked) role of聽 limited partners in the push for more diverse GP structures? As the investors behind venture and private equity funds – often foundations, family offices, pension funds and (university) endowments – one would think they carry considerable weight pushing for more diversity because it is in their economic interest to do so.

A Look At Smaller LPs

One such influencer thinks the power of LPs in driving diversity is indeed significant.

鈥淸LPs] will be the biggest driver of change [鈥 if the GP gets asked the same questions two or three times, it will escalate,鈥� said Helena Hasselmann, Managing Director of.

According to Hasselmann – at Stardust they ask GPs questions such as how do you intend to recruit more diverse GPs and what is the gender ratio of the management in your portfolio companies? They also, at times, tranche their investment based on achieving milestones, 鈥渟ome of [which] are linked to diversity goals,鈥� she said. Those can include benchmarks such as adding a woman or person of color to a fund鈥檚 advisory committee. Some GPs even struggle with this comparatively easy task, but Hasselman said progress is taking place.

Based often on a more value-oriented approach, LPs such as the have taken steps to increase pressure on VCs and other money managers, for instance by joining the diversity initiative the and by including diversity questions in fund due diligence.

Boardroom Diversity

One specific change that LPs can and have been pushing for is boardroom diversity in VC and private equity backed companies.

Charlotte Laurent-Ottomane leads a U.S.-based initiative called the. Since 2008, she has been working with big LPs such as or the to install more women in corporate boards of both public and private companies.

For her, one of the challenges in VC and private equity backed companies is the way in which board seats are filled.

鈥淒epending on the size of the investment, the deal maker(s) ends up in the negotiated board seats,鈥� she said. 鈥淎s there are not many senior female dealmakers at the moment, the portfolio company board is usually all white male.鈥�

Her proposal: 鈥淥ne way to change this is to consider outside directors if the board seats are available. Once the candidate pool is opened up, the can be applied which includes women and people of color in the candidate pool.鈥�

Some large institutional LPs, however, don鈥檛 want to be named 鈥渢he troublemakers鈥� and be kicked off an allocation.

This allocation in the top-quartile funds is the most important benchmark for many employees at these large LP entities. Research correlating diversity with higher financial performance and value creation has made very little difference, so have recent success stories: in January through June 2019, for instance, were led by women.

It seems wise then that LPs should be asking themselves if the portfolio funds they invest in are best positioned to spot the full scope of opportunities with non-diverse GP teams investing in people like themselves especially when there is a big untapped market to invest in diverse founders.

But particularly leading institutional LPs have market power; one female LP (who didn鈥檛 wish to be identified) told me: 鈥淟eading VCs will not let go of leading LPs that easily. Their brand relies in some respects on certain LPs and they present it with pride.鈥�

Hasselmann of Stardust Equity is skeptical as to why many LPs feel they can鈥檛 change things immediately, but understands the relatively slow movement in the big LPs.

鈥淚 really don鈥檛 know why they shouldn鈥檛 put pressure […] sure, in the larger institutional organizations, it is harder for them to justify not allocating to a top fund on the basis of say gender inequality […] they have first and foremost a financial responsibility. But, the definition of fiduciary responsibility is also expanding.鈥�

Slow And Steady

Women like Hasselmann and Laurent-Ottomane continue to offer solutions for longer-term change while at the same time providing best practice solutions for other LPs and the alternative asset industry as a whole.

Change is coming already from smaller, younger and more private limited partners as they press for female representation and hesitate to invest in all-white-all-male GP teams. However, it will take a little while until all the bigger, agenda setting LPs will be happy to join this debate and movement publicly.

There is much more to be done 鈥� currently only 11 percent of VC partners in the. are female and only 13 percent in the 鈥� but LPs are slowly catching on to their influence.

Article written by, the Centre Coordinator of the (Max Cam). Currently, he is working on a project about the ethics of venture capital investors in Berlin, London and San Francisco. He is also a visiting researcher at Stanford University. His writing has appeared in academic peer-reviewed journals as well as journalist outlets (, , , and ). Follow him on Twitter

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And almost every time, the partner of the fund I met for an interview was male, white, and over 40 years-old.

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I am currently conducting a year鈥檚 worth of ethnographic and interview-based research with venture capital firms for my post-doctoral project at the

This has afforded me access to VC funds worldwide. And while I initially set out to understand the investment decisions made by these funds, what I鈥檝e observed is an incredible gender divide.

As a researcher, I find myself attempting to answer the following questions: Am I the only one observing this discrepancy in the VC world (because as a white man myself I am often most easily introduced to other white men) or is it an industry wide issue? If only men are making decisions inside VC firms, why is that and what influence does this have on the companies being funded?

As in other parts of the economic world, we already know that gender disparity is commonplace. But when we look at the data regarding VC specifically, it鈥檚 quite revealing.

For example:

• Only nine out of the 100 top VC partners worldwide are women, according to the recently published.
• Women make up only 11 percent of VC deciders (investment partners) in the U.S., according to a report and Deloitte.
• In the United Kingdom, the just-published figures from mirror this picture. Diveristy.VC is a UK-based initiative that aims to increase awareness about the lack of diversity in VC and offer tools to address it.
• Its 2019 survey published in July shows only 30 percent of VCs are female in the United Kingdom (compared to 47 percent of the UK labour force overall); further, senior investment roles are occupied by only 13 percent of women and 83 percent of all UK venture firms have no women in their decision-making bodies at all.

The lack of female representation is evident among startup founders as well.

• In the U.S., Q2 2019 data from 附近上门 News shows that only 3 percent of venture money was spent on all female teams (exactly as much as in Q3 2018); 8 percent was given to mixed teams while 89 percent supported all male teams
• In the UK, just 1p in every 拢1 (or about 1 percent) invested in 2017 went to all-female founder teams according to a recent by the British Business Bank, BVCA and Diversity.VC.
• 83 percent of VC deals involved founding teams with no women.

Economically speaking, this presents a clear conundrum as women obviously spend significant amounts of money as consumers ( globally).

In fact women control. There are also large segments of the economy that cater specifically to women (and are increasingly being). For example, the women鈥檚 health industry is slated to become a. The economic incentive for VCs to be more inclusive is massive. As a result, it鈥檚 unclear why this potential isn鈥檛 reflected in the demographic of VC firms tapping into these areas through their networks.

Women VCs Respond

I was able to speak to some female VC partners about how they thought the gender bias was built into the industry.

Karen McCormick, Chief Investment Officer at Beringea in London, believes that VC is traditionally a 鈥減redominantly white male industry鈥� and the hiring often takes places from a pool of (white male) investment bankers, which she refers to as 鈥渓egacy bias.鈥�

Additionally, the small team sizes 鈥� VC firms often only have 4-6 investment partners 鈥� and the relationship-based work between partners and start ups make it difficult for anyone to leave temporarily. As McCormick put it to me, 鈥淭here is no such thing as 鈥榝illing in for maternity leave鈥� in the deal-doing partner function.鈥�

Marta Sj枚gren, an industry veteran who worked for the UK- and US-based DN Capital before becoming a partner at early-stage venture fund Northzone (the fund that) in Stockholm had to deal with the issue of maternity leave personally.

鈥淲hen I was pregnant, people in the industry told me 鈥榊ou鈥檙e going to mess it up for yourself.鈥� So, I quit after six months…There were very few examples of women walking around in London or Berlin with pregnant bellies and VC business cards.鈥�

Sj枚gren was fortunate to meet the right people in Sweden and was hired part-time with flexible working conditions. Ultimately, she had to become the role model she didn鈥檛 see making it as partner at Northzone.

The Takeaway

At this stage I have spoken to over 120 VC partners in the last 18 months 鈥� and most of them were at least aware of the gender gap problem.

But the changes that have been made so far are small. In the UK, we are seeing more junior female VCs (), but there has not been any progress at the crucial partner or GP level where investment decisions are made.

Initiatives like鈥檚 and the newsletter are encouraging but also mainly targeted at the junior ranks (and entrepreneurs). Incidentally, as Sj枚gren explained further, even some of the venture funds鈥� own investors (limited partners, often pension funds, foundations, endowments or family offices) are pushing for different investment approaches that are more inclusive.

Although there are more incentives for VCs to let women in now than before, gender equality is just one piece of a larger puzzle. Inclusivity in all dimensions 鈥� race, age, (educational) background 鈥� is becoming more of an issue in VC circles, or at least among those who observe them like myself.

It鈥檚 been suggested that inclusive VCs will fund more inclusive startups that will therefore enrich more people鈥檚 lives with their ideas (and). The benefits here seem obvious as VCs have the potential to tap into new markets (and for pension funds and the like.) One would think that a more diverse set of entrepreneurs would attract funding for innovations that allow different (and under-served) groups of consumers to benefit.

One would also hope that VCs might wake up to the cost benefit, if not the ethical benefits, of inclusivity.

And the doors might open a bit wider.

Article written by , the Centre Coordinator of the (Max Cam). Currently, he is working on a project about the ethics of venture capital investors in Berlin, London and San Francisco. He is also a visiting researcher at Stanford University. His writing has appeared in academic peer-reviewed journals as well as journalist outlets (Vestoj, Aeon, KR, and The Conversation). Follow him on Twitter

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