This post was written by our Co-Founder JuIiet Eccleston
As readers of my blog will know, I try to be as vocal as I can about diversity, especially in the workplace. Fortunately, there has recently been much progress with regards to female representation across many industries. However, news this week about a report highlighting the shocking underinvestment in female start-ups has reinforced my feelings that there are still many barriers to be overcome. As I’ve written about before, change will only come about with concerted efforts all the way from the ground up.
Shocking underinvestment in female start-ups
The report, created by the UK VC & Female Founders for The Treasury found that for every £1 of venture capital (VC) investment in the UK, all-female founder teams received less than 1p. By comparison, all-male founder teams were given 89p and mixed-gender teams collected the remaining 10p. In addition to this, only one in 10 decision makers were women, and two-thirds of VC firms had no female partners at all. This underinvestment in female start-ups comes despite an overwhelming body of evidence showing that increasing the presence of women at a senior level boosts profitability. A recent report published by Credit Suisse stated that companies where women made up at least 15% of senior management were 50% more profitable than those where fewer than 10% of senior managers were female.
While subconsciously we all know gender inequality is a huge issue, these figures are simply staggering. What’s even more puzzling about them is that, by ignoring women, venture capitalists are actually losing money. In fact, recent research in the USA has shown that male-only businesses may be a worse investment than mixed teams. For every dollar of funding, start-ups with women on the board generated 78 cents, while those founded by men generated 31 cents. Unfortunately, as is the case with hiring, people tend to invest in what they are familiar with, and this is evident in the underinvestment in female start-ups.
Overhauling how we hire
This isn’t an attempt to pit the sexes against each other here, but rather, show that equality and diversity actually drive productivity and profit. The fact of the matter is that it is business imperative for investors to step out of their comfort zone and invest in women. However, this is not a simple issue to address and cannot just be solved from the top down. Only by really overhauling the way we hire, and coming to terms with the ingrained bias within hiring processes, will we be able to build the truly diverse teams that will go on to make the funding decisions of the future. If a lack of diversity is prevalent across all levels of a company, how can talent be pipelined to the top?
An ideal hiring system
An ideal hiring system, therefore, is one which levels the playing field out so that everyone can be judged solely on their suitability for a job. That’s what we’re aiming to create at AnyGood? Our model takes advantage of the power of personal networks and peer-to-peer recommendations and uses them to help people find a job. We believe that this model will remove unconscious bias from hiring, and, in the end, solve problems such as the complete underinvestment in female start-ups. Just as companies like Airbnb rely on recommendations and hold individuals accountable for their reputations, so does AnyGood? and our diverse set of members are rated by clients on the quality of these recommendations. Therefore, offering good candidates earns trust. From this trust, more diverse workforces can be built, giving underrepresented groups a fairer chance of a bias-free hiring process. On top of this, we pay finders fees to anyone referring an individual who is successfully hired, with members receiving a £1,500 share of the fee, and enjoying an additional 10% profit share in AnyGood? based on their activity and value to the platform. Therefore, instead of having thousands of LinkedIn contacts, or a phone full of valuable connections just lying dormant, with AnyGood? you can help them out by recommending them for select roles while benefitting financially.
The desire is there
While there is still much to be done before workforces are fully free of discrimination and bias, and this week’s news clearly illustrates that, the desire for change is there. At AnyGood? we’ll be doing as much as we can to facilitate this change.
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