Under The Hood of Diversity: 2021 Creandum Diversity Index
We have said it before but it bears repeating: diverse teams drive better decision-making and build better companies, and the data shows it’s true.
Diversity is good business, and is why it’s a priority for us every day. That’s why we’re increasing the diversity of our team. It’s why we examine diversity in every investment the fund pursues. It’s why we helped launch Included.vc.
But it’s not enough. There’s still work to do. Every day. We are listening closely to how our peers are making a difference and sharing that knowledge (check out the Creandum Diversity & Inclusion Knowledge Bank for a full library.)
To everyone, we say: Keep going. Keep accelerating. Keep examining your unconscious biases. We will get there together. And as part of our work along this we want to present the Creandum Diversity Index 2021.
Methodology.
Our Creandum Diversity Index is focusing specifically on gender. The impact of gender on startups is the most researched axis of diversity, and that data remains insufficient on most others. When we started this initiative, we agreed on doubling down our efforts on this specific topic, instead of covering the entire range with less vigour.
Each year, we send a poll to the portfolio company CEOs measuring the number of women across 3 dimensions in their respective organizations:
- across the whole organization
- on the management team
- on the board
In addition to this, last year we also added a 4th data point related to compensation and the pay gap between the genders.
We use our Diversity Index to put light on the topic of gender diversity with each of the fund’s portfolio companies. By looking at an individual company’s diversity data in comparison to our broader portfolio helps facilitate the conversation and drive the initiative forward.
The reports from 2018, 2019 and 2020 can be found in the respective links. In total, for this year we surveyed 59 portfolio companies of which 52 responded.
Women across all organisations: 45% (+4%)
Across the portfolio, we can see an improvement to 44,5% women among all employees. Assuming 50% is the desirable level, we are close to this key breakthrough. Interestingly, this is the same increase as last year — which means we might just cross that boundary in 2022.
The average is brought up by a handful of cases with 65% or more women in the team. But at the same time, the number of companies with more than 50% women declined by 5% to 15%.
Although we again have many examples that have improved gender balance, these trend toward the younger companies in the portfolio. Elsewhere, it feels like just as many hired more male employees (hence the cloud of dots in the left bottom corner.)
But there are encouraging signs that the older businesses start increasing their share of women as time goes on.
We see a similar picture if we look at the relative amount of women for different types of companies by size: the larger the companies are, the closer we get to 50%
However early employees are often more important and benefit more from success. The effects of this shouldn’t be underestimated and we must work harder on getting it right in this aspect.
Women in Management: 28% (-3%).
After a great leap last year, we see women in management levels worsen in 2021. It’s hard to speculate about the causes, although many have commented on how the pandemic has affected the fate of women disproportionately to men. The effects of this may be greater as they continue to further life stages that may include more responsibilities.
Thankfully, the trend still puts us 6% ahead of 2019, so we are hopeful for progress next year. We also see that companies who have women in leadership positions are by far better at recruiting women and having a more balanced organization overall, making this number specifically important for our companies to improve.
At the same time, we now see half of the portfolio have more than 25% women in management and the proportion with less than 1% is clearly shrinking. The majority of businesses are at least heading the right direction.
As with last year, we find a relationship between women in management team and the overall share of female employees. If there are more than 50% women in management roles, there is an average of 54% female employees.
Board Members 13% (+3%).
Boards are notoriously imbalanced for gender, and are on perhaps the longest timeline for how quickly they are changing. The good news is, we have seen a leap this year of 3%, versus just half a percent in previous years.
The number of companies with more than 50% women board members is also on the up. We are almost within sight of 50% of our portfolio having at least 1 female board member, but there’s still a way to go even to reach this basic level.
The good news is, we expect improvements in this area to give greater than proportionate opportunity to women in management and other roles down the chain.
Gender Pay Gap.
Bad news to report on this front. For every dollar a man earns, a woman gets $0.76 versus $0.82 last year. We suspect this might relate to the decreasing number of women in management roles. It’s a clear indicator of what a difference this can make in real terms.
Self assessment: Creandum.
Last year we had to face the fact that our numbers were not where we wanted them to be — and the picture has stayed mostly static.
But there is hope in one key area: we have now crossed 25% of the team being women “check writers” (Principal, Partners and General Partner), responsible for leading deals and serving on boards on behalf of the fund’s investment activities. This is where the action is, and the most important area to see improvement.
We have our first female Partner, and our first female Principal. We discuss, plan and take action on how we can do more in this area all the time and we’re constantly challenging ourselves to do better. These changes will no doubt create a feedback loop that improves the area but we must keep pushing.
This can be an advantage for every team who takes it seriously. Until we can proudly point to that evidence in our own team, we will keep doubling our efforts to make a difference here. We hope you’ll do the same. ⚤🚀
Thanks to Lorenz Raml for help with this post.
