Despite research showing diverse teams produce better returns, very little has been done to resolve the gender diversity over the past 18 years according to FirstCapital founder Hazel Moore.

 

In March last year, McKinsey published research showing that mixed-gender boards outperform all-male boards.

 

The research found that companies in the top quartile for gender diversity are 15 per cent more likely to have financial returns above their respective national industry medians.

 

Moore told AltAssets, “I have witnessed board situations first hand where value has been destroyed as a result of a testosterone-fuelled, competitive environment, where they are trying to get one over on each other as opposed to making the best decision for a certain situation.”

 

Despite the lack of gender diversity damaging returns, the industry has done little to change the status-quo.

 

She admits that very little has changed since launching FirstCapital in 1999, as there is still a lack of diversity in the tech and entrepreneurial community, along with the lack of diversity in the venture and private equity communities.

 

“I think the awareness of the issue has massively increased and there is a lot of media attention.

 

“The fact that people are opening up and discussing it is clearly a good thing; however, the reality of the situation in my opinion is that very little has changed on the ground.”

 

In February 2015, Ellen Pao filed lawsuit against Kleiner Perkins Caufield & Byers for gender discrimination.

 

The jury eventually ruled in favor of the venture capital firm; however, Pao brought the issue of lack of diversity in the venture community, and in particular Silicon Valley, to a global audience according to Moore.

 

“With the best will in the world the people at the top genuinely do think they are taking positive steps to address the issue, not all of them, but many of them. Some don’t even recognise the issue or realise the problem.

 

“But many of the forward-thinking people do recognise there is an issue and are looking to try and do something about it. However, they are not taking bold enough steps.”

 

Unwelcoming Environment

 

In private equity Moore says there is a dialogue happening amongst the partners in some firms, as they recognise the need to increase diversity in their teams.

 

However, she doesn’t agree with the way they are going about it, which is to recruit at the junior associate level in order to build a ‘pipeline’.

 

For private equity, the approach makes some sense as industry is historically based on an ‘apprenticeship model’ where newcomers sit alongside executives to learn the trade.

 

However, Moore doesn’t think that this approach is going to deliver results fast enough.

 

“The problem with that is that the environment is so unfriendly and unwelcoming to women, the dropout rate is very high so no one gets through the pipeline. It takes too long and it’s not actually moving the needle,” according to Moore.

 

She tells the story of a women she met at a previous WPEN Summit. The women had just started in the graduate pool at one of the big brand name private equity funds.

 

“She was clearly super bright and had lots going for her, but she was really struggling. Out of a pool of 25 to 30 graduates she was the only women. So was joining a firm that had 12 partners, none of which were women.”

 

According to Moore the woman loved the job, she had lots of credentials to do it well and was just as good as everyone else at the table.

 

“However, it wasn’t a welcoming or fun environment as she was always the one on the outside and there were no senior women in the firm to relate to. Lots of people don’t want to have that fight everyday in their lives, they will go and do something else, which is a shame.”

 

Despite a high level of interest from women to get into finance and start companies, there is plenty of evidence to show that female founders find it incredibly hard to raise money.

 

“A lot of that come back to stereotypes, the idea that people fund people that look like them or look like something they have done successfully before. There aren’t many role models.” she added.

 

“Secondly, the lack of diversity and thinking around the investment committee table is an issue. There are very few female investment partners.”

 

Pitch environment is a ‘very aggressive atmospheres’ as it tends be a highly charged, testosterone filled encounters.

“I can’t make any more deductions other than that’s its unconscious basis, reinforced by this lack of role models and unfamiliarity.”

 

How can the industry change?

 

Moore’s view is that for any kind of culture change in an organisation or industry, the change has to come from the top.

 

 “If the partners in the funds are genuinely interested in changing the status quo, and introducing diversity in their thinking and in their teams, then they have to be a bit bolder in how they do that and take more of a risk,” she added.

 

“In venture funds its very normal for someone to come into a partnership as a partner despite not being in venture before. Instead they have been an entrepreneur or an executive at a larger organisation. You rarely see that in private equity, but maybe that is what the industry needs.”

 

Instead of partners relying on a pipeline which is going to take 10-plus years, they need to be more creative and make substantial change towards a more meaningful strategy according to Moore.

 

However, even if the private equity partnerships feel the best way to address the issue is to work on the pipeline, then the least they can do is re-think the recruitment process in their portfolio companies, she added.

 

“One of the things I urge private equity firms to do is make it an explicit criterion that the any recruitment shortlist has to include a certain percentage of women or have to conduct a proper search which examines the broader possibilities.

 

“My advice to any women in thee industry is to be persistent, learn the language, play the game, and beat the system.

 

“Listen to the feedback you are getting and if any of that is valuable, then take that into consideration. You have to be confident and pretty persistent, if you get a knock back, learn from it and move onto the next thing.”