What it is like to be ethnically diverse in venture capital

As a member of an ethnic minority group in the venture capital sector, Lillian Li (pictured) always wondered whether her background would hinder her career ambitions.

Ms Li, who was born in mainland China and came to the UK when she was a child, was turned down for a number of jobs in private equity before joining the VC world and was never quite sure if the rejections were down to not fitting the mould.

“It was never explicit whether ethnicity was going to be a handicap,” the 30 year-old says. “But I never saw it as an asset because the [industry’s] mindset has been of having a culture where people come from similar backgrounds.”

Being an immigrant and a woman of colour was not going to be a clear cultural fit, she adds, “it meant companies were taking a big bet.”

Ms Li, who now works at Eight Roads Ventures, is part of a small but increasingly more vocal diverse pool of people in an industry that has traditionally had a bias for white male executives.

In the US alone the figures show that close to 60 per cent of employees in the venture capital sector are white and male. The analysis, by Richard Kerby, a black partner at Equal Ventures, was based on the public information available on close to 200 companies.

In Europe, there is no comprehensive study of its kind but industry insiders believe the continent is even less diverse.

Still, some point to the rise of prominent leaders of ethnically diverse backgrounds, like Sonali De Rycker, a female executive of Indian origin at Accel.

There are also new initiatives designed at making venture capital firms more diverse, including Diversity VC, a London-based lobbying group, and Your Story (YSYS), a start-up community, also based in the UK, aimed at making the workplace more mixed.

Francesca Warner, co-founder of Diversity VC, says she set up the initiative partly because of the lack of industry data on diversity and how a broader workforce helps the sector.

“A diverse workforce is important on different levels,” she says. “We want the sector to represent the society that it invests into. We think that way the industry will be a better industry.

Ms Warner points out that if VCs are making decisions about which companies are going to thrive in the world, then representatives that can understand markets in a certain way are important.

Others agree. Tom Bradley, chief executive at Oxford Capital Ventures, argues that companies like his need to have a more diverse team that reflects the wider base of companies they invest in.

“If you hire narrowly, you only get a narrow view,” he says. These days, however, he worries that the decision of the UK — where a lot of venture capital firms are based — to leave the European Union may hinder the prospects of ethnic diversity in technology.

“We need to make sure that the UK remains an attractive and welcoming place for people to come and start businesses,” he says. “That’s critical to VC but also to our cultural life and what makes London and the UK an exciting place to be.”

Deborah Okenla, YSYS founder, says she is seeing change develop, albeit slowly. The black entrepreneur says that one day she looked into the room and realised “I had never seen an investor that looked like me.”

Not everyone is trying to be like Facebook founder Mark Zuckerberg, she says. “Otherwise the industry is missing out on opportunities because they are not asking the right questions [due to lack of having diverse views within workforce].”

However, some warn that the debate should not place the sole emphasis on an ethnically diverse workforce but one where the views are also disparate.

Suranga Chandratillake of Balderton Capital is of Sri Lankan origin but grew up in the UK. He says the firm is trying to invest in very small companies that would become extremely large over a short period of time.

“For them to be large they will touch an extremely large base of customers,” he adds. “The biggest issue with the lack of diversity, if everybody has the same way of looking at the world, they miss entire markets.”

But Mr Chandratillake says that ethnic diversity on its own will not cut it. “It is not about the right number of brown people and the right number of women. Are they actually more diverse in their thinking than a white guy that grew up on the wrong side of tracks?”