PE and VC firms urged to do more to improve diversity
Latest report shows more UK PE and VC firms are being more transparent about challenges with diversity
- A bi-annual report focused on gender and ethnicity diversity within private equity and venture capital has found that notable progress has been made in increasing the proportion of women in the junior and mid-level cohort, although progress at the senior levels has been slower.
- 12% of senior investment roles in the UK are held by women, while 3% of senior investment roles are held by women from ethnically diverse backgrounds demonstrating there is more work to do.
- Across both investment and non-investment roles, women now hold 20% of senior roles in UK offices.
- Significant step up in the number of firms sharing data on gender (45%) and ethnicity (73%) demonstrating an increased commitment to transparency.
In the largest and most comprehensive study of gender and ethnicity representation in the UK private equity (PE) and venture capital (VC) sector this year’s latest British Private Equity and Venture Capital Association (BVCA) and Level 20 report found that efforts to improve diversity and inclusion are working, but progress is slow.
The study carried, out by the BVCA in collaboration with Level 20, found the percentage of women working in investment roles has increased since previous studies published in 2021 and 2018, but significant work needs to be done to attract and retain women and accelerate the representation of ethnically diverse people in private equity and venture capital.
For the first time, the study is able to report separately on individuals working in the UK as well as UK firms including their European offices.
12% of senior investment roles are held by women, 23% are at mid-level and 37% are at junior level while in total, women make up 40% of the UK private equity and venture capital workforce. This is a slight increase from 38% in the previous study published in 2021. Across both investment and non-investment roles, women now hold 20% of senior roles in UK offices.
The proportion of individuals working in PE and VC, across all roles, of Asian, Black or other ethnicities is 18%, and in investment roles is 17%. At a senior level, however, 10% of leaders are of Asian, Black or other ethnic heritage.
17% of UK investment teams are male-only, and over 80% of individuals providing data identify as white.
The BVCA is now urging PE and VC firms to accelerate progress on diversity overall with the understanding that this is only the start of the journey.
The report offers recommendations to help support firms improve their diversity and inclusion rates, including:
- Promoting inclusive policies such as parental leave for both women and men
- Leaders and managers should lead in promoting an inclusive culture within their firms through sponsorship and mentoring
- Expanding the talent pool beyond the traditional channels
- Continue to record diversity data and use the benchmarking tools supplied to monitor progress
A series of educational workshops are being scheduled by the BVCA and Level 20 to provide guidance to firms on how to improve the diversity of the sector, starting with the report launch webinar which can be found here. The BVCA’s Diversity & Inclusion events series will continue to provide a safe space to discuss these issues.
Commenting on the report, Michael Moore, Chief Executive of the BVCA said:
“Like many industries, the diversity of the private equity and venture capital sectors do not adequately reflect the diversity of background and experience of the UK population. However, we are at the start of a journey and progress has been made. I am thankful for the many firms who continue to share their diversity data in the spirit of transparency.
“We can – and must – improve. Not only is it the morally right thing to do, but it’s important for the bottom line, too. According to McKinsey, organisations with more diverse teams have 36% better financial returns. We’re urging firms to commit to do more by working with us and Level 20, and by making public commitments to improve.”
Gender
The proportion senior level roles held by women in UK firms, working specifically in investment teams, is 11% (including European offices). When UK offices alone are considered, this figure rises slightly to 12%.
At the lower level, the number of women in mid-level and junior-level investment roles across UK and European offices grew this year, by 3% (to 23%) and 4% (to 37%) respectively.
Smaller firms in the UK, predominantly in VC, have a higher proportion of women in mid and senior roles in investment teams, however they also have a higher percentage of all-male investment teams. This is due, in part, to the by the small number of employees in these firms and relatively static workforces.
As the pool of female talent at all levels grow, it’s expected that a domino effect will see more women being made partner, who will in turn act as role models, helping to grow recruitment even further.
Reflecting on the findings, Pam Jackson, Level 20 CEO (2019-April 2023) said:
"It is encouraging to see the percentage of women working in investment roles gradually increasing, albeit slowly but particularly evident at the mid and junior levels. A continuous commitment to tracking representation will maintain a focus on progress, but there remains much more work to be done."
Ethnicity
Across the PE and VC sectors, 26% of firms who reported data are made up of an exclusively white workforce.
The number of firms providing ethnicity data has grown dramatically this year, up by 73%, which shows a greater willingness to act on and improve diversity. This has meant that the BVCA is more accurately able to measure the ethnic makeup of PE and VC workforces, although our ethnicity sample is by no means the whole industry.
Through focus groups, the BVCA has found that that many firms are alive to the challenges posed by today’s report and are working hard to find ways to attract a wider range of people to the industry. This feedback is consistent with Level 20’s mission, and continued support will be made available to firms to help them improve.
Notes to Editors
Methodology:
Data on gender and ethnicity was collected via survey from BVCA members and Level 20 sponsors. We had responses from 170 firms. Additional gender data from a further 98 firms was collected from public sources. The study captures gender data on 13,520 individuals across the UK and Europe, 9,706 of whom are based in the UK.
126 firms were able to give us ethnicity data, representing 4,690 employees who self-declared their ethnicity across UK and European offices.
About the British Private Equity & Venture Capital Association
The BVCA, as the representative body for private equity and venture capital, connects institutional investors, fund managers, companies, advisers and service providers together, with our membership currently comprising more than 700 businesses from across the private capital ecosystem. This includes more than 325 PE and VC firms, 100 institutional investors and 220 professional services firms.
Private capital drives growth – providing the funding, expertise and long-term view that enables companies to innovate and flourish. Our mission is to advocate the transformative nature of the private equity and venture capital community.
An integral part of the BVCA’s mission is to promote diversity, equity and inclusion (DE&I) within the industry and support firms to build inclusive environments in which everyone can thrive. In addition to conducting research such as the report published today, the BVCA promotes diversity through internal governance, engagement with industry and government initiatives and events and networking. More can be found on our website.
About Level 20:
Level 20 is a not-for-profit organisation formed in 2015 by 12 senior private equity professionals representing GPs and LPs. It aims to work with the leaders of the European private equity industry to attract and retain more diverse talent across the industry including women, such that they will account for at least 20% of senior professionals. For more information, visit www.level20.org.
Media contacts
Karen Keany, BVCA: [email protected]
