DVC Digest: September Reset + Building an Inclusive Pipeline
Hello DVC Community,
As summer fades and the crisp air of September rolls in, so too does a fresh wave of innovation and opportunity in venture capital, where innovation and investment collide. This month, the spotlight is not only on ambitious ideas, but also on the growing push for diversity in VC, ensuring that the next wave of disruptors reflects a broader, more inclusive future.
This month’s newsletter includes:
DVC updates: Response Submitted to the call for evidence on the UK Tax Treatment of Carried Interest
Top 3 tips for inclusive deal flow
Member Spotlight: Scottish Enterprise
Events, events, events!
What we’re reading/listening to
Read time: Approximately 7 minutes
Diversity VC membership can help your fund measure and improve its DEI efforts, while working towards an internationally recognised certification with the Diversity VC Standard.
DVC Update: UK Tax Treatment of Carried Interest
On 29 July 2024, the UK government launched a call for evidence on the tax treatment of carried interest to explore potential reforms. Carried interest, a performance-based reward for fund managers, is currently taxed at lower Capital Gains Tax (CGT) rates. The review aimed to balance fair taxation with maintaining the UK's investment competitiveness.
Diversity VC submitted a response expressing concerns about the potential impact on underrepresented groups in venture capital. Key points:
1. Impact on Diversity: Changes could disproportionately affect diverse fund managers and founders, who already face barriers
2. VC vs PE: Venture capital (VC) should not be taxed the same as private equity (PE) due to its higher risk-taking and focus on innovation
3. Recommendations: We urged the government to assess impacts on diversity and offer tax incentives to promote inclusion
Diversity VC emphasised that discouraging diverse participation in VC could harm innovation and social mobility.
If you’d like to read the full submission, please e-mail us at info@diversity.vc. The Diversity VC team will continue to provide updates as they become available.
Creating a diverse and inclusive deal flow is essential for any venture capital fund aiming to drive success through varied perspectives. Here are three key tips for building an inclusive deal flow:
Measure Diversity in Your Pipeline
Regularly track and assess the diversity in your pipeline. Establish metrics to measure gender, ethnicity, and other underrepresented groups across your deal flow. This data will help you understand where gaps exist and where targeted efforts are needed to create a more diverse pool of entrepreneurs.Collaborate with Diverse Networks
Partner with organisations, founder scouts, and networks that focus on underrepresented groups, such as women and minoritised entrepreneurs. This proactive approach increases the likelihood of discovering diverse talent and innovative ideas that may otherwise be overlooked.Ensure Fair Diligence and Feedback
Standardise your evaluation process to reduce bias and provide clear feedback to founders. Use a consistent rubric to assess opportunities and establish clear communication channels so all founders feel valued and supported during the diligence process.
By embedding DEI practices at every stage, you can significantly enhance the inclusivity and impact of your investments. For more advice, tips, and case studies on building an inclusive deal flow, download the Diversity VC Founders’ Engagement Deal Flow & Portfolio Guidance Toolkit.
Looking for more personalised strategy and to benchmark your fund’s DEI practices to your peers? Become a Diversity VC member!
In a previous newsletter, we mentioned Scottish Enterprise joining the DVC Member Community. Behind the scenes, they have been working with us at Diversity VC to advance DEI efforts in the Scottish ecosystem.
Scottish Enterprise is Scotland's national economic development agency, supporting business growth, innovation, and international trade to build a sustainable and competitive economy.
On September 4th, Scottish Enterprise and Diversity VC hosted Diversity in the Scottish Investment Ecosystem, an event bringing together investors, founders, and ecosystem builders to promote diversity, equity, and inclusion (DEI) in venture capital. The event emphasised the importance of enhancing diversity in investment decisions.
Event highlights:
Insights into the Scottish Ecosystem: Michelle Howell, the Head of Investment Management at Growth Investments, Scottish Enterprise, discussed the impact of female and minority founders on business growth
Founder Engagement Toolkit: Ladi Greenstreet introduced the Diversity VC Founders’ Engagement toolkit.
Some key data shared:
£250bn could be added to the UK economy if women scaled businesses at the same rate as men
Minority-owned businesses could increase GVA from £25bn to £100bn
Panel Discussion: Sanghamitra Karra from Morgan Stanley and Ben Leslie from Puma Private Equity addressed barriers to diversity in venture capital
Roundtable Discussions: Participants explored solutions to improve DEI within Scotland’s venture ecosystem
The event concluded with a showcase of key takeaways and a commitment from attendees to continue advancing DEI in future investment decisions. The day wrapped up with a networking reception, fostering new connections and collaborations.
👋 Say hi at one of these upcoming events:
Last chance:
Out in Tech Leadership Institute | New York | 12-14 Sept | Use Code DiversityVC for 20% off
Out in Tech are hosting their largest event ever in NYC this Sept 12 - 14! The Out in Tech Leadership Institute is a professional learning conference providing training and career management advice for mid-level employees and above. Members of the Diversity VC community can use code DiversityVC for 20% off!VentureESG FRAME Conference | London | 19 Sept | Register Your Interest Here
FRAME is the first global conference dedicated to ESG in VC to inspire more collective engagement around ESG and responsible investing. Join over 250 VCs and LPs for dynamic conversations, sector-specific breakfasts, expert speeches, panels, debates, and an ESG game.
Coming up soon:
AWS Startups & Diversity VC present Navigating Investor Due Diligence for URFs in the Age of Generative AI | San Francisco | 8 Oct | Sign Up Here
AWS Startups & Diversity VC present: Intersectional Innovation - DEI Considerations for GenAI in Media & Entertainment | Los Angeles | 16 Oct | Sign Up Here
Sifted Summit | London | 2-3 Oct | 15% off tickets w/ code DVC15
European tech has taken a beating — but startups are bouncing back. This year, Sifted Summit will explore how Europe’s leading founders, startup operators and investors are recalibrating.WVC:E Annual Summit | Paris | 7-8 Oct | Buy tickets here
The WVC:E annual summit — exclusively for women actively involved in venture capital — is back in Paris! WVC:E fosters the most open, honest and energetic discussions, workshops and roundtables with some of the best names in the industry. This year’s theme is resilience through the reset. Grab your ticket now and join 400+ female GPs, LPs, investors, angels and emerging managers. Don’t miss out!Rare Founders Demo Day | London | 14 Oct | Tickets here
SaaStock | Dublin | 4-16 Oct 2024 | Buy Tickets Here
We have few free tickets left for DVC members & their B2B SaaS portfolio. Email Abi for more information.
If you have upcoming events or would like to discuss partnerships or collaboration opportunities that would benefit the Diversity VC community in Europe, the US, or Latin America, please email abi@diversity.vc
📚 What we’re reading + listening to:
StepStone: Do no harm: how GPs and LPs can build trust through responsible AI by ensuring ethical practices, transparency, and fairness
Northzone ESG Annual Report (2023)
Balderton Sustainable Future Goals Report (2023)
What Makes an Inclusive Leader? Discover how inclusive leadership boosts team performance, fosters belonging, and drives better business outcomes through authenticity and equity
What’s behind conservative opposition to DEI? Recent research reveals that conservative opposition to DEI often masks deeper issues of anti-Black racism.
VCs Are ‘Knowledge Gatekeeping,’ And It’s Holding Back Diversity, uncover how venture capital's entrenched biases and gatekeeping practices are stifling diversity and perpetuating inequality in the industry.
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