Founders Factory Diversity, Equity & Inclusion: 2021 in review
Founders Factory Diversity, Equity & Inclusion: 2021 in review
Words Farah Kanji & Henry Lane Fox
December 15th 2021 / 10 min read
One of our key aims at Founders Factory is making the process of launching a startup more accessible. To do that, we mitigate the biggest risks for entrepreneurs from all backgrounds and give them the support they need to thrive and grow.
This time last year we first published an article outlining our diversity and inclusion work to date, our set of formalised diversity commitments, and the multiple work-streams that the Founders Factory team were engaged in to promote diversity and inclusion across the company. Since then we've invested in 36 more companies, and continue to grow our internal team of operators.
One year on, we wanted to provide an update on:
Progress on last year’s commitments
Some of our learnings along the way
An overview of new initiatives we’ve launched
One of the greatest challenges we faced this year was around our data collection methodology (moving away from assumptions-based reporting) and staying true to our diversity metrics so that we could hold ourselves accountable and truly impact change. We have been hard at work to systematise and automate our data. We’ve also expanded our diversity ‘pillars’: these once just focused on gender ethnicity, whereas they now encompass a much broader set of criteria in order to help us strive towards a truly diverse workforce.
In order to drive real change, we’ve launched new initiatives and partnerships to further our goals, including undergoing formal certification by Diversity VC to underline our commitment to driving change in the industry, and to be inspired for other areas we could support D&I across the company and our portfolio.
As in the past, our aim in sharing our journey publicly is to show how our efforts have positively impacted our team, and above all to share our learnings in the hope that those reading it find it helpful when looking to enact change in their own organisations.
Read more: 11 ways to build diverse, equitable, and inclusive startups
Diversity VC certification
At the beginning of the year, we decided to go through a formal certification process with the Diversity VC Standard, an assessment certification that benchmarks practices across the VC industry, in order to grasp our progress and to understand what we could be doing more of.
We're thrilled to say that we not only achieved our Diversity VC certification, but we scored 71% as a percentage of recommended policies, programs and best practices that VCs have in place around D&I, compared to a benchmark of 59%.
We were particularly proud of scoring 91% for internal policy & culture, versus the 66% benchmark. Credit goes to all the Founders Factory team who have been working on our D&I initiatives, especially over the last year.
Going through the process was instrumental in both reviewing our progress to date, setting new goals and implementing new work-streams.
Diversity VC made a few key recommendations for us to work on, including updating our parental leave policies and offering D&I support to our portfolio, which we have been implementing over the past months (more on this below).
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Recording hiring data
So at the beginning of the year we decided to focus our energy on automating our D&I data tracking across our operations team, all the founders we hire to build businesses in our studio, and the teams that we invest in in our accelerator.
We’ve dedicated significant time and resources to both data collection and automation. On the data collection front, we’ve moved from assumption-based tracking to self-reported tracking. We expanded the ‘pillars’ that we were tracking from just gender and ethnicity (recognised both as the biggest challenges and opportunity to affect the greatest number of people). We are now also tracking sexuality, disability, education level and parent/care-giver education level, socio-economic background, nationality, and religion.
For the first time we have a fuller picture of the makeup of our Operations team on the following criteria:
Gender
The percentage of people identifying as female has increased from 47% in Q4 last year to 53% in Q4 of this year. As well as improving representation of females by 7%, we have also expanded our options for gender identity to reflect the fact that gender is not binary. Within our diversity survey we now have options such as non-binary, trans male, trans female, and gender fluid, to ensure we are representing a broader spectrum of gender identities.
Ethnicity
Last year we recognised that our ethnic representation was not good enough so we outlined our commitments to pushing this forward. Unfortunately this hasn’t been enough to improve our representation of minority ethnic groups. Despite a 5% increase in Asian representation across the team, we have also seen a 2% increase in people who identify as white, moving from 73% in 2020 to 75% in 2021.
One action we’ve taken is to send out our new diversity dashboard on a weekly basis, increasing visibility around the diversity of our hiring pipelines to ensure we are always challenging ourselves to hire more diversely.
Nationality
We are proud to represent 12 different nationalities across our London operations team of 53, with 32% of our team being non-British nationals. Next year we are excited to get our sponsorship licence and so we expect that this number will grow as we are able to employ people from all around the world.
Disability or mental health condition
10% of our team have a disability or long-term health condition, with 6% preferring not to say. We know that the past 18 months have been particularly tough on our mental health, that’s why we have implemented quarterly mental health days. This encourages everyone at Founders Factory to make sure they are prioritising their mental wellbeing by spending the day looking after themselves. These days also encourage everyone to talk about their mental health with their co-workers. Opening up the conversation around mental health in the workplace is so important in helping us to support one other.
Sexuality
Across our team, 6% of people identify as bisexual and 2% homosexual. At Founders Factory representing the underrepresented is important to us which is why we have hosted events such as our ‘Power to LGBTQ+ Founders’ to help support LGBTQ+ Founders. If you are interested, apply here.
Education
60% of our team have a bachelor's degree or equivalent, with 32% having a masters or equivalent. Although some of our teams require formal qualifications for their professions, we want to ensure that working for Founders Factory is accessible to all. That is why we have taken the decision to remove all formal qualifications from our role requirements unless it is absolutely necessary for that job. We hope this will encourage people from all educational backgrounds to apply to work with us.
Socio-economic background
We measure childhood socio-economic status through access to free school meals. 15% of our team did have free school meals which might suggest they were from a lower socio-economic background.
We do recognise, however, that this isn’t necessarily a causal indicator of socio-economic background. This question also wasn’t applicable to 19% of our team, due to the year in which the free school meal initiative was implemented or due to not growing up in the UK, so we are looking to change our measure of childhood socio-economic status in next year's diversity survey.
Our new Diversity Dashboard
Automating the data collection and monitoring process has been a huge level up for us. We’re now able to analyse in real time the makeup of our talent and investment pipelines from the very first conversation. We can also analyse our talent and deal flow sources to understand where we are finding brilliant diverse talent, and double down on building those relationships so that we have access to brilliant talent as we open up opportunities in the future.
Our talent team will also report on this weekly so that there is awareness and engagement across the whole team. We are confident and excited that our automated dashboards will help us to drive diversity in our talent pipelines, which will play a huge part in helping us achieve the high targets we’ve set ourselves.
We are also offering more extensive unconscious bias training for interviewers to ensure that we are intentional about overcoming any internal obstacles to change.
Challenges we’re yet to overcome
We know that there is still a lot more work to do.
We have set ourselves a high bar—and one of the challenges that comes with this is maintaining and achieving this high standard. 2020 was a hugely positive year in terms of progress (for example 55% of our entrepreneurs in residence were women) but we’ve found it difficult to replicate this. Despite laying out these commitments, alongside the engagement of our team, the stats we are seeing, both in new hires to the Operations team and our entrepreneurs in residence in the venture studio, have fallen short of where we want to be. We are aware of falling short of the targets we set for ourselves around hiring more people from minoritized ethnicities (35% target vs our current 26.5% ops team hires), and Black employees and entrepreneurs in particular.
We continue to face the same obstacles when it comes to hiring from a tech talent pool that ultimately isn’t representative. We set a very high talent threshold for every position we hire for and every founder we recruit, creating enough of a challenge around hiring even before D&I comes into it. This is further fuelled by an internal challenge: despite best intentions, there’s a ‘syndrome’ of hiring managers assuming that others will be the ones to drive the change.
Part of this challenge is that hiring managers don’t have a total view of the diversity of the talent pipelines across the open roles in our team and the founders that we’re looking to invest in. Relying on action at the final stages of hiring, or in some cases retrospectively post-hire, means we’re often too late to enact change.
In recording diversity data for our Venture Studio, the main challenge we’ve faced is a low response rate from founders to our survey, meaning the data we are collecting does not have statistical significance. To rectify this, we are working closely with our team members who interact most closely with the Founders to encourage them to respond.
New Talent Initiatives
The fact we’ve struggled to hire diverse talent to the level we would like reinforces our belief that we need to make the change from the bottom up. As a result, we are investing more time and resources to source and upskill diverse talent. We wanted to call out some of our key initiatives, trying to build talent and drive investment into more diverse entrepreneurs and tech talent.
The Future Founders Lab
Run in parallel with our venture design process, this new programme will aim to build a cohort of future founders with a focus on investing in underrepresented talent, identifying key indicators of founder success that look beyond university or employer history, as well as matching business concepts to the lived experience of founders. Our ambitious targets for this will build a far more diverse talent pipeline: 50% female founders, 35% founders from minoritised backgrounds, 15% from lower socio-economic backgrounds, 5% LGBTQ+, and 5% with disabilities. Our first initiative is being run alongside our Mission Studio, in partnership with innovation agency Nesta, where we’ll be building impact-led ventures.
We’re partnering with two London-based entrepreneurs—Karl Lokko and Cyril Lutterodt—to launch Black Seed, aimed at building a community around and bringing investment to black-owned businesses. Over the next three years, this hopes to bring seed funding to a portfolio of 30 businesses, as well as office space and support.
Hispanic Star Ventures
In the US, we’ve launched a $10 million pre/seed investment program aiming to overcome the challenges that Hispanic founders face in the US. The Hispanic community makes up 17% of the US population, and 51% of projected population growth, but receives just 1% of VC funding. Over the next three years, the programme will support 30 Hispanic-owned tech startups.
Power to Underrepresented Founders events
We’re hosting events targeted at Black founders and LGBTQ+ founders providing connections to VCs and investors through 1-2-1 office hours, as well as masterclasses from the FF Operations team
This free coding course, part of the Founders Forum group, is designed to diversify the talent pool and widen access to tech jobs for underrepresented groups. Their mission is to train 100,000 diverse software engineers by 2030. You need no academic qualifications to apply, the course is entirely free provided you complete the programme, and there are maintenance grants for students from disadvantaged backgrounds. There is also an employment guarantee for all graduates at one of 01’s partner companies.
New internal practices
We’ve also taken on several other internal workstreams to enhance our approach to diversity, equity, and inclusion:
Religious holiday leave - all employees are encouraged to take leave around holidays that aren’t covered by UK bank holidays
Gender neutral family leave policy - we’ve equalised pay for the primary carer to be either parent irrespective of gender. We've also codified return to work practices
D&I materials for the portfolio - on the recommendation of Diversity VC, we have created extensive D&I resources for the use of founders in our portfolio, helping them to build diversity and inclusion into the fabric of their companies. We also ran a webinar with Hannah Keal, Co-Founder and Managing Partner of Unleashed on ‘Diversity and Inclusion in Startups’, to talk to the portfolio about how to build a diverse and inclusive company from day one
Our Women's Network continues to flourish - hosting monthly speaker sessions and meet-ups (now in person again!) on topics including ‘Turbo-charging your personal growth’ hosted by Alice Ter Haar, ‘Mental Health + Resilience’ hosted by Michelle Morgan, ‘A conversation on Leadership’ hosted by Accelerate Her, ‘Female Financial Empowerment’ hosted by Emilie Bellet of Vestpod, and ‘Crypto: why women need to know’ hosted by Sara Feenan.
What next?
The changes we’ve implemented this year are driven by the commitments that we wrote last year, which we continue to stand by and which remain the goals for us to strive towards.
I’m proud that such energy from our team has poured into these initiatives, but there is still a long way to go to where we want to be. We will keep holding ourselves to a high standard, continue to collect data to force us to reflect and act on our hiring processes, and continue to think creatively about how we can drive investment into more diverse entrepreneurs and tech talent.
We will keep everyone updated on our progress, initiatives and more in our newsletter—sign up here.
If you would like to know more and have suggestions to share with us, please email our Chief People Officer, Farah Kanji on farah@foundersfactory.co
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About Farah
Farah Kanji is the Chief People Officer at Founders Factory.
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