Research confirms tech founders are already well-off and well-educated before starting their companies
Category : entrepreneur
- European tech startups continue to struggle with diversity, according to a new survey from investment firm Atomico.
- The research confirms a lack of diversity across race, gender, and class at European tech startups, with the bulk of venture capital funding going to all-male founding teams.
- Just 14% of founders who don’t hold a degree manage to raise external capital, the numbers show.
- And only 5% come from low-income backgrounds.
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The European tech sector still has problems when it comes to diversity, a new report shows.
London-based investment firm Atomico has published a new study showing women, ethnic minorities and those from low-income backgrounds continue to be under-represented in European tech – with some areas getting even worse.
While venture capital firms and founders have increasingly spoken out about the need for greater diversity among tech founders and investors, class and education is a little-discussed aspect of the diversity debate.
The study, made up of interviews with 1,200 founders, found that 82% of founders had been to university, compared to 18% who hadn’t. The disparity was worse when looking at whether or not they had raised outside capital, with only 14% of founders without a degree managing to drum up investment.
And before founding their companies, 80% of respondents said they either “lived comfortably” or had some disposable income to spare. Only 5% said they previously either struggled or “didn’t have enough” to meet their basic expenses.
In other words, it helps to already be comparatively wealthy and highly educated if you’re going to take the massive, life-changing risk that is founding a startup.
Less than 1% of European founders are black
Turning to ethnicity, the survey also found 84% of Europe’s tech bosses were white, compared to less than one percent of those identifying as black, African or Caribbean.
In terms of gender, men continue to dominate the top spots, with 11 male executives for every one woman. Meanwhile, funding for all-women startup teams dropped significantly over the past 12 months, with around 90% of last year’s cash being redirected to all-male teams.
Geographically, some countries proved more diverse than others. The Czech Republic topped the list, with 20% of startups being founded by mixed-gender teams, and 8% by all-women groups. This was followed by Italy and Portugal (15% and 4%), Spain (11% and 4%) and the UK (10% and 5%).
Poland came bottom, with a whopping 94% of startups being founded by all-men teams, in contrast to the 6% started by mixed teams and none by women.
Sophia Bendz, partner at Atomico, said: “It’s obvious that capital is not being allocated in a way that reflects our society or encourages a broader set of people to become entrepreneurs.
“If investors are more representative of society’s diversity, we will reach more diverse entrepreneurs. They, in turn, can create a whole range of companies and services that we have not previously thought of.”
The survey did find some room for optimism, with 39% of startups saying they had introduced more flexible working arrangements in the past 12 months, and almost half (47%) saying they already had them in place. Another 44% either already had or had introduced specific inclusive hiring policies.
Suranga Chandratillake, general partner at Balderton Capital, said: “I think we have made huge steps in understanding and admitting the problem. Now, action will be the key.
“In the words of Alan Turing: ‘We can only see a short distance ahead, but we can see plenty there that needs to be done.'”