How gender-diverse VCs drive performance and social change

How gender-diverse VCs drive performance and social change

One of our commitments at LEAP is to help close the gender gap in tech. So we were keen to catch up with #LEAP23 keynote speaker Kinga Stanislawska (Co-Founder and Managing General Partner at Experior VC) to learn about her perspective as a woman with decision-making power in the world of tech investments. Along with her role at Experior VC, Stanislawska is also an Investment Committee Member at Europe’s biggest deep-tech fund, EIC FundEuropean Women in VC community.

We asked what it means to her to empower and mentor other women in the VC space, and she said:

“The issue does not lie in our personal beliefs, since although distribution of capital should be equal due to moral reasons, we cannot simply omit half of the population. It truly has a business sense.”

Let’s talk a little more about that. 

Smaller gender gap = better company performance

“Research shows that gender equality has a strong link to a company’s financial performance,” Stanislawska noted – pointing to a 2020 study by McKinsey which found companies with more women in executive roles are 25% more likely to be profitable. 

“Although this research deals with profit at business level,” Stanislawska said, “the same situation occurs in the space of investment. In the U.S. 70% of funds with mixed gender teams score in top quartiles. In the European Women in VC 2021 report on Diversity in CEE region, we presented that women startup teams perform 96% better on dollar invested.”

So pushing for more gender diversity in a company’s team isn’t just about paying lip-service to a diversity agenda – it absolutely makes sense from a business perspective: “diverse teams are just a better bet.” 

And it’s better for society

Studies show that women investors are up to 3X more likely to fund female founders. Stanislawska said it comes down to “the propensity toward homophily – the tendency for like to attract like and for similarity to breed connection. We tend to invest in people like us.”  

This is really important, because as Stanislawska pointed out, “we can spot a direct correlation between women-led business and the growth of society-friendly solutions.” 

Indeed, a recent survey by the European Investment Bank found that firms led by women rate higher on ESG scores and do better at upskilling their employees by investing in training. More diversity among investors leads to more diversity among successful startups; and in turn, that leads to better environmental, social, and governance outcomes. 

Working for change

With all the research to show that gender diversity is a good thing for all kinds of reasons, it’s disappointing that we still have such a long way to go:

“While the venture world and European startup scene may have witnessed an epic year in 2021, female entrepreneurship got lost along the way. In 2021, 89% of all funding went to male-led startups, 9.3% to mixed teams, and just 1.8% to female-led startups. 

“At the same time female General Partners still raise micro or small funds (funds sub €50m), which are not sufficient to make the systemic market change, have flexibility to deliver follow-on capital to portfolio, thereby allowing for better returns and wealth creation, and fight the diversity gap on the venture capital market. Small fund sizes make it hard to raise more capital from diversified investor pools or demonstrate track record. And in VC, size matters. 

“There’s a lack of diversity-focused investment strategies at the Limited Partners level. It is at the very top of the funnel that real influence can occur, at the top of where the money flows from. The reason for that is evidently male dominance at the Limited Partner level. Most of the interactions with LPs are with men; only 20% of the interactions are with women. Out of this 20%, slightly more than half of the women have actual decision-making power (53%). 

On the 17th of November 2021 over a 100 participants from the ecosystem discussed the issues and solutions addressed in the White Paper petition handed over by a Group of Female General Partners from EU27. The asks were for inter alia to widen the top of the funnel, through establishing a new European Fund of Funds of €3 billion AUM to anchor female-led/Co-led VCs and growth funds and to address the gender equality issue in the European VC market from the level of Limited Partners right through female-led VCs to female founded businesses.” 

Don’t be afraid of disagreements; surround yourself with people who challenge you

We asked Stanislawska how her firm approaches finding and selecting startups. She said:

“We are simply open for projects despite gender, race, origin or any diversity you may speak about. We [people] tend to be biased in all of our decisions; to avoid that you should not approach pipeline selection with a team that speaks like you, looks like you, or thinks like you. 

“As an investor or a part of an investment team you should surround yourself with people who disagree with you, challenge you; and bring different values, experiences and backgrounds into the decision making. 

“Sitting at a decision-making table with people like you is truly comfortable. But will not lead you to innovation, future, or returns. Why? Because you will look for investment proposals that are equally comfortable for your decision-making process as surrounding yourself with people who tend to nod their heads every time. 

“We cannot revert the wheel by surrounding ourselves with people like us. Break the wheel, leave your comfort zone, network – and always approach the pipeline with people who are a challenge, not comfort. Then you can be sure you used the market opportunity and selected well.” 

Thanks to Kinga Stanislawska at Experior VC. Join us at #LEAP23 to learn more. 

 

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