VC firms are infamously lacking in ethnic and gender diversity — but socioeconomic background also has a huge impact on the type of people that get jobs in the industry.
According to a survey by non-profit Diversity VC, 71% of partners at UK VC firms attended a fee-paying school, dropping to 45% for all roles at VCs. Just 7% of the wider UK population is privately educated.
The organisation received responses from 305 investors and checked self-reported data against LinkedIn profiles where possible.
“VC recruitment and VC investment decisions are deeply entrenched in relationships and network access,” says David Houghton, head of research at Diversity VC. “The significant overrepresentation of VCs with private school education — where exclusive networks are often established early on — creates a self-perpetuating cycle.”
The report found that 35% of privately schooled VCs got their job through their network, compared to 25% of those who attended a state-funded school.
The lack of diversity in the socioeconomic background of VC investors has a knock-on effect on the type of founders that get funding, Houghton adds. “This dynamic leads to a disproportionate number of affluent individuals within VC firms and a bias towards funding founders from wealthier backgrounds.”
Women nearly half as likely to be partners
While it's no secret that women make up a fraction of total VCs in Europe — this is far more stark among senior roles.
17% of men respondents to the Diversity VC survey were partners, compared to just 10% of women. Men also outnumber women at the principal level.
As a result, women make fewer investment decisions. While 79% of men in UK VC are responsible for deal execution, this drops to 60% for women. The picture is similar for deal sourcing, in which 76% of men say they’re involved, compared to 59% of women.
Women VCs are up to two times more likely to invest in female founders, and this lack of representation trickles down to the startups that VCs fund. According to Atomico’s State of European Tech report, just 3% of total capital in 2023 went to all-women founding teams.
While Diversity VC did find more women than men at analyst and associate levels, it’s worth noting that survey participants were split roughly half and half between men and women — but the report’s LinkedIn analysis found that 70% of UK VCs were men. This means that the percentage of men in VC roles is likely to be higher in reality.
Ethnic diversity improving — but far from even
While the ethnic makeup of VCs in the UK has improved since 2019, non-white investors were far more likely to have got into VC by starting their own fund.
10% of white VCs found their way into the industry via that route, compared to 27% of Black investors, 23% of investors from other ethnic groups such as Uyghur and 13% of those from Middle Eastern and North African backgrounds.
As LPs draw back from investing in emerging managers due to the tech downturn, this could see founders from underrepresented backgrounds struggling to break into the industry.
So, are VC firms doing enough to promote diversity? That depends on who you ask. 75% of men respondents thought their firm was, compared to 59% of women. Among ethnic minorities, that figure drops slightly to 56%.
“Today's venture capital landscape in the UK resembles more of a 'mirror-tocracy' than a meritocracy,” says Ladi Greenstreet, co-CEO at Diversity VC. “Despite some progress, the pace of change suggests either complacency or apathy among incumbents.”
