We need to talk about women’s role in VC

Isabel Fox is Co-Managing General Partner at Luminous Ventures, who is one of just a handful of female General Partners in the UK.

Women represent just 13% of decision makers in UK venture capital, and almost half of all firms have no women in their investment teams. It’s shocking, but not surprising.

The situation is even more distressing when you look at women of colour, and consider diversity beyond just gender. In the US, 81% of venture capital firms have no Black investors at any level, and in 2019 Mercedes Bent was the only woman who identified as African American to make Partner as a venture capital firm.

In this piece, I chat to Isabel about her experience as a woman in venture capital, how it feels to be part of a vastly underrepresented group, where the problem lies and the power you can find in sometimes being different to the norm.

How does it feel to be one of the few female venture capital General Partners in the UK?

Thankfully there are far more amazing female General Partners now than when I started in venture capital but it is still not enough.

We know that diverse teams provide 35% better performance compared to their competitors but in venture it makes such a difference to the types of businesses and diversity of founders that get backed.

A Harvard Business Review article summed up the importance – “venture capitalists are far more likely to partner with people if they share their gender or race. They’re also significantly more likely to collaborate with people if they share their educational background or a previous employer. Belonging to the same racial group increases the propensity to work together by 39.2%, and having a degree from the same school increases it by 34.4%.” It’s a vicious cycle. Those in powerful positions invest in people similar to themselves, so the powerful remain largely the same subset of society. But being aware of this is a step forward. Once you can understand something, you have more power to consciously remove these biases.

Why do you think women are underrepresented in venture capital firms?

Given that homogeneity imposes financial costs and diversity produces financial gains, venture capital is still behind where it needs to get to.

Perhaps there simply are not a large enough number of minorities pursuing these fields – although I doubt it. But if they aren’t, why not? A lack of role models and a sense of inclusion could definitely play a part, but this has a deeper rooted problem.

The core reason could be systematic and explicit biases of those in the decision making positions. Either way, the numbers speak for themselves: minority groups and women are yet to be fully integrated into the venture-backed technology world.

How did you get where you are?

I didn’t have a conventional route into venture capital. But I always knew I wanted to be a venture capitalist. I had a clear goal and didn’t let any circumstance or person stop me achieving that. I loved learning about entrepreneurship, innovation, venture and took every opportunity to develop my skills and experience possible.

Do you think being a woman can be beneficial, and is diversity important in venture capital?

Yes, absolutely. Research shows that more inclusive venture capital firms will fund more inclusive startups that will therefore reach and enrich more people’s lives. According to Extend Ventures, a large majority (68.33%) of the capital raised across seed, early and late funding stages went to all-male teams, 28.80% to mixed gender teams, and just 2.87% to all-female teams. It’s all about breaking that cycle – and it’s not just about gender either. The Extend Ventures report also notes: “A total of 10 female entrepreneurs of Black appearance received venture capital investment (0.02% of the total amount invested) across the 10-year period, with none so far receiving late-stage funding.” This article from Crunchbase sums it up perfectly.

Did Temporall’s all-female Labs team influence your desire to work with the company?

Yes. Great companies have diversity as a priority from the start, and Temporall had that.

Last year, Isabel led Temporall’s seed funding round with Luminous Ventures, and she now plays an Advisory role to the Temporall team.

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