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Three tips from EDI trailblazers to build a more equitable investment future

On 9th November 2022, Equality Group awarded a number of accolades to celebrate the equality, diversity and inclusion efforts of the top-performing European private equity and venture capital firms.

The Equality Celebration Awards Ceremony, hosted at Atomico’s London offices, gathered over 50 industry leaders to celebrate this achievement and also look forward to the future of equality work across the sector. 

The awards were based on data collected for our 2022 Venture Capital and Private Equity Honordex report. The index, which evaluated 282 companies, contained four ranked categories - “leaders”, ‘levellers”, “learners” and “laggards”. 

The Top Performing Private Equity Fund was awarded to Advent International, the Top Performing Venture Capital Fund went to Kinnevik and Hg Capital won the Most Improved Fund, having increased its score from 32% to 61% in just one year.

Equality Group’s Head of Academic Research Dr Keon West led the panel discussion with representatives from Advent International, Kinnevik and Atomico. Atomico were one of the top three VC funds with a score of 61% on Honordex.

The panel explored how each firm managed to attain high Honordex scores, what metrics they measure and what they plan to do over the coming years to continue their equality, diversity and inclusion work.

Here are Equality Group’s top three takeaways for VCs and PEs managing and investing in the businesses of the future:

1. Do the internal work first

Before challenging the portfolio companies you invest in, venture capital and private equity firms need to do the internal work first. This work has to be central to the organisation’s overarching business strategy and be embedded across all departments, teams and processes.

“For us, it has been important not to see this work as a separate project, with a separate project team. For us, it has been very important to inject EDI into all of our core processes” Kinnevik’s Chief People Officer Anna Stenberg said. 

This internal work will help nurture a more diverse pipeline of founders. According to Stenberg, this has allowed Kinnevik to invest in a greater variety of people and businesses.

2. Set public targets to hold yourself accountable 

Transparent targets create accountability. Accountability leads to progress. 

Camilla Richards, Partner & Head of Investor Relations at Atomico explained that the VC sets clear investment targets to hold themselves accountable. 

In 2020, the firm set itself a “sales objective to be investing in 45% underrepresented founders”, at the time the firm invested 25% in underrepresented founders. 

The VC has still not reached this target, with its most recent fund achieving a 36% investment rate into underrepresented founders. But they will continue to work towards it until the target has been reached. “We're pushing ourselves to get to that 45% target”, Richards said.

3. Empower founders through educational and community-focused programmes

Alongside funds, investors can offer their portfolio companies two other crucial resources - education and community. Offering practical learning support alongside a supportive network is an essential part of creating a diverse and sustainable portfolio. 

In collaboration with Harvard Business School, this is something that Advent International has been working on. The intensive 13-week executive education programme has been designed to develop the next generation of high-potential and diverse leaders and has so far supported 120 future leaders, across 53 of our portfolio companies.

Vice President Zinab Bercheq said the Advent Leadership Academy will “develop the next generation of high-potential and diverse leaders at our portfolio companies”.

The course “not only provides participants with practical knowledge and skills but also a broad and diverse network of peers they can leverage throughout their careers,” she added.

What’s next?

One of Equality’s Group commitments over the next year is to improve the EDI score of the VC and PE sector by 10%. We want more EDI leaders to be established and more learners to blossom.

To help reach this goal, measurement and benchmarking are key. We plan to do this through our annual Honordex report and will begin to collect data for this in the coming months. 

If you would like to be part of this ranking or would like to request a demo of the tool, please reach out to us through this form.

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