The figures are unequivocal: In 2020, female founders received only 1% of VC funding in Central and Eastern Europe. In contrast, across Europe, 90.8% of capital went to all-male teams. A similar discrepancy can be seen when looking at the origin of the founders: Successful start-ups are disproportionately often led by people who come from “advantaged backgrounds”.
A new study from Great Britain now takes a closer look at precisely these correlations. Founder network Cornerstone Partners, in collaboration with consultancy Engage Inclusivity and NPO Diversity VC, surveyed 1,186 UK companies that were “pre-VC” in 2019 (i.e. had yet to raise VC funds but were “VC eligible”) and 696 companies that announced VC investments in 2019.
The study found that 75% of founders come from advantaged socio-economic backgrounds, e.g. with parents in senior positions. Hardly any of these founders come from families living on welfare. This also has an impact on the educational background. 93% of the VC-funded founders have attended university. 21% even have a doctorate. By comparison, 42% of the UK population have completed tertiary education, i.e. a university degree.
The study also examined the impact of ethnicity. Only 1% of pre-VC and 3% of VC-funded founders surveyed in the UK identify as black. 10% of pre-VC founders identify as Asian, compared to 7% of VC-funded founders.
The full study and specific recommendations for action from the study authors can be found here.
The study presented here was commissioned in May 2020 by Cornerstone Partners, an angel investment network focused on investing in companies led by black and diverse founding teams. Cornerstone, a consortium of individuals of African and Caribbean descent, was inspired to undertake the survey by experiences of companies that showed great potential for success but struggled to attract venture capital.