Why diversity in venture capital matters for startups
In the first of a two-part blog series exploring venture capital and what startups need to know about seeking investors, find out why a healthy startup ecosystem requires diversity in the people investing in them. And who better to champion that message than a panel of Sydney’s top female venture capitalists.
Photo by Olivana Smith-Lathouris
As part of UTS’ Festival of Future You, UTS Startups partnered with Reinventure to bring together students, startup founders and startup industry professionals to explore the inner workings of venture capital and the importance of diversity within VC firms.
Lauren Capelin, Head of Venture Community at Reinventure, moderated a panel that included Georgie Turner, Principle at Tidal Ventures; Lucinda Hankin, Investment Associate at Grok Ventures; Hannah Yan Field, Investment Manager at Tempus Partners; and, Emily Close, Head of Venture Community and Business Development at Airtree Ventures.
Diversity means more than gender
From the obvious starting point of gender diversity within VC firms, discussion focused on why diversity is critical for the future of startups and in turn, the future of our society.
Lucinda Hankin said investors should reflect the companies they invest in.
“Women have a bigger share of the wallet in terms of consumer spending, we’re more active on social channels, it makes sense to back companies that are solving problems for women and the best people to do that are women,” said Hankin.
However for Georgie Turner, diversity doesn’t only include gender diversity.
“As VCs, we’re funding the founders that are building the products for the future and those products need to be representative of the global population as a whole and that accounts for women, people of different backgrounds of all shapes and sizes,” she said.
Hannah Yan Field agreed, adding that cognitive diversity is crucial and that the way people think, and choose to invest, is reflective of their socio-economic background, ethnicity, nationality and the way we live our lives.
“If you have everyone that looks the same, that thinks the same and come from the same backgrounds you’ll end up with investments in the same types of companies,” she said.
How diverse is VC in Australia?
Hannah Yan Field, who began her career in Boston as a violinist and then as a sales and growth manager in San Francisco, describes herself as ‘the anti-typical venture capitalist in America’.
“I’ll be frank, if I tried to get into VC in the states, I wouldn’t even be looked at because I didn’t go to an Ivy League undergrad, I didn’t go to Harvard or Stanford business school and I didn’t work at a big bank,” she said.
She decided to bring her skills to Australia where a younger VC landscape allowed her the opportunity to begin a new career path despite having never made an investment in her life.
“Something that really surprised me was being given that opportunity and having the full confidence of the team.”
“In Australia, I feel like I can be part of something collectively ambitious and I’m really proud that I can contribute my career here,” she said.
Despite Australia’s potential in the world of VC, women are still vastly underrepresented in leadership and executive positions and Emily Close of Airtree Ventures believes this is contributing to a lack of overall diversity within venture capital.
“One of the challenges has been that often you look up to people above you for roles you want to move in to. And when you’re younger you look for female role models and if you don’t have anyone working in venture, you don’t necessarily know about that,” she said.
Luncinda Hankin said that whilst hiring more females is important, there should be a greater focus on tackling the issue of diversity in higher positions.
“We can hire more women at the junior level but that’s kind of easy. We need to solve the partner-level problem because they are the decision-makers,” she said.
In part two of our Women in Venture blog series (to be published on Tuesday 27 August 2019), our panellists will offer the inside scoop on venture capital and give startup founders their golden tips and red flags when looking for potential investors.
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