With the increasing numbers of funds and initiatives to improve diversity in the tech sector, you might expect to find the Atomico State of European Tech 22 report full of heartening data. Sadly, you would be disappointed. The diversity section leads with the bad news, some data suggest that the sector is becoming less diverse, that those from diverse backgrounds face a harder battle, and that more investment has not resulted in more diversity.
But, while the report contains some depressing insights, there are glimmers of hope. Here are ten things you need to know.
1. It’s still a man’s world for founders
If you knew nothing about a founding team, it would be a good bet to assume they were all male. Data from Dealroom.co shows that in 2022 87% of all funding went to male-only teams. And this is a staggeringly consistent figure; it was 88% or 89% for the past five years.
Only 1% of funding goes to women-only teams, who have slipped back from a high — if you can call it that — of 3% in 2020.
2. When women succeed, they are doing worse than men
Interestingly, that tiny share of overall funding isn’t the only way women-only teams lose out. When it comes to the share of deals by gender the numbers have, again, remained consistent, with women-only teams getting a 6% share of deals.
Comparing with 2020 again, women are still as prolific when it comes to launching startups, but the proportion of funding they are getting is two-thirds less.
3. Mixed gender teams may be more resilient
Diversity is usually considered a strength, bringing different viewpoints and talents into a team. And that seems to be borne out by the data looking at the performance of mixed-gender teams.
Looking at the absolute amounts raised, there has, unsurprisingly, been a fall from the records set in 2021. However, this has affected single-gender teams more. Male- and female-only teams raised around 28% less in 2022 than 2021. Mixed-gender teams, however, only saw overall funding fall by 11%.
4. Even the success stories hide struggles
The fact that women and minority teams successfully raise funds shows that it is possible, but surveys across the industry shows differences between the attitudes of those founders and the white male majority.
When asked about the biggest challenges they have faced over the year, 59% of black founders and 36% of women say it was securing access to capital. But only 41% of white founders and 24% of men gave the same answer. When it comes to funding, white male privilege seems to be in play.
5. National culture also seems to play a part
Although the industry clearly has work to do, it might also reflect wider cultural attitudes, since there are significant differences in performance in individual countries.
In Ireland, for example, women-only founding teams are responsible for 10% of all deals. At the other end of the scale is the Czech Republic. There, women-only teams are only 3% of all deals, and the ratio of male-only against mixed- or women-only adjusted for population is a staggering 9.3, much higher than second-worst Belgium on 5.7.
6. Venture is also dominated by men
It’s not just founders who are mostly men. The VC landscape looks suspiciously like the founder landscape, and many suggest that this might contribute to founder imbalance, with partners tending to give money to founders that look like them.
Dealroom.co data suggest that 84% of general partner teams are entirely male. Mixed teams and women-only teams make up 15% and 1% respectively, close to the funding shares.
7. Tech might still have a problem with direct discrimination
The tech sector might usually be seen as progressive and, therefore, diversity problems might be the result of wider issues, such as culture or education. However, it appears there is still an issue with more direct discrimination.
The State of European Tech’s survey found that 40% of Black, African, and Caribbean respondents, and 37% of women, had experienced discrimination in the past year.
8. Diverse employment in the industry is improving
There is some hope, though. Among employees the picture is much more diverse, and, of course, today’s startup employees can become tomorrow’s founders.
ESG_VC, a network of more than 175 VC firms, surveyed nearly 300 venture-backed firms and found that 35% had policies in place to promote diverse recruitment. Meanwhile, although not at parity, there has been improvement in roles like product management, where 40% are women, and data science, where 31% are women.
9. Younger women teams are doing better
When the age of founders was considered, the imbalances are smaller among younger groups. Women with less than five years’ experience are represented by 8% more than women with more than women with more than fifteen years’ experience.
This might suggest that the pipeline of founders is improving, but should, of course, be considered with care. The difficulty women face in maintaining a career after childbirth is well-known and agism is, of course, a concern itself: 28% of people reporting discrimination mentioned it.
10. The longer-term trends are promising
Much of the State of European Tech 22 report looks at current or medium-term data. And while a snapshot might make depressing reading, there are lots of reason why the past few years might not be typical. Over the longer term, though, things look different.
Looking over five decades worth of unicorns, the difference between the 1980s and the 2020s is staggering. In the 1980s, only 14% of teams had at least one woman or minority founder. While only a few years into the 2020s, that figure is now 60%.
We might have a long way to go, but we should not lose sight of the progress that has already been made.
