Diversity in the investment teams of venture capital and private equity fund management companies has improved in recent years, but there is still much to be done. But why should diversity even be monitored in the first place?
Our recent study on the diversity of investment teams in the venture capital and private equity industry shows that the number of women in investment teams has doubled in the last four years, that most team members have a background in business or engineering, and that the age distribution in teams is fairly balanced. But what is the purpose of examining these issues?
Discussions about diversity often focus heavily on examining the gender balance between men and women. Although increasing the number of women in male-dominated industries such as the VC & PE industry is essential for numerous reasons, truly diverse teams are not created by focusing solely on gender diversity and the proportion of women when recruiting. Especially if these women are otherwise identical in the background to the men already working in the teams.
A balanced gender distribution, a wide age range, or diverse educational backgrounds in teams do not guarantee true diversity on their own.
- Jens Färm
Diversity, of course, includes several other variables besides gender alone. Some are more easily observable, while others are less visible on the surface. Examining variables such as gender, age, and educational background in a framework where they are considered as ends in themselves is rather trivial. A balanced gender distribution, a wide age range, or diverse educational backgrounds in teams do not guarantee true diversity on their own. They are mere means through by which we hope to achieve the true goal in our minds: diversity of thought.
When we make fund investments at Tesi, team evaluation plays a significant role in our investment decision. In addition to the team’s investment strategy as well as market and environmental factors, we carefully evaluate the team that manages the fund and its diversity, as well as how the team intends to develop diversity in the future. We see that diverse teams primarily think more diversely and broadly, which in turn creates a competitive advantage that is very difficult to replicate. And I can assure you that we are not the only ones who see it this way.
So let’s ensure that our teams have, and continue to recruit, above all, true diversity – that is diversity of thought. Let’s continue to pay attention to gender, age, and educational background, as well as other similar variables, but treat them as mere means on the journey toward our true end goal.
Tesi wants to raise Finland to the forefront of transformative economic growth. We develop the market, and work for the success of Finnish growth companies. We invest in venture capital and private equity funds and directly in growth companies. We provide long-running support, market insights, patient capital, and skilled ownership. tesi.fi | Twitter | LinkedIn | Newsletter