Carl Fritjofsson


Diversity inside European VC — More work needed.

During the past 15 years Creandum have partnered with early stage technology companies and ambitious entrepreneurs, and thereby playing a small role in shaping the future. For way too long we have also known that women and minorities systematically have been excluded within our industry. This has been a much-talked-about issue for many years, and by 2018 we had hoped to see more change. But hoping is not enough.

Under the premise that you cannot improve what you don’t measure, we’re making ourselves publicly accountable by starting to measure and share numbers related to gender equality across the Creandum portfolio. We know diversity comes in many shapes and forms (e.g. 👩 👱, 👴 👵, 🕌 🕍, 🤘🏻🤘🏿), and as a starting point we chose to focus on gender. It’s a small first step and we hope by regularly measuring this we will help push the importance of the topic inside of our portfolio companies, from the board room and beyond, and over time we can see positive trends.

If you still wonder why.

There are many reasons to even out the gender distribution in the tech industry, and people have written much about it already. We could probably write a long blog series about simply that topic, but here are the 3 major reasons why Creandum care about it.

First, it makes business sense to do so. It’s not subjective liberalism. It’s facts! This 2016 working paper by the Peterson Institute for International Economics surveyed 21,980 firms from 91 countries and found a correlation between women in leadership roles firm performance. The paper concludes, “The estimated magnitudes of these correlations are not small: For profitable firms, a move from no female leaders to 30 percent representation is associated with a 15 percent increase in the net revenue margin.”

Secondly, we value diversity of thought to build the most disruptive companies. The strongest companies we see have founders that challenge each other greatly, but to do so requires founders from different perspectives and convictions. If you were to start from scratch to build an industry with high diversity of thought to solve new challenges, you wouldn’t staff it exclusively with 27-year-old white men from the same schooling.

Third, it’s simply the right thing to do! ♀︎♂︎🦄

The results.

As we know organizations are heavily influenced from the top we have chosen to measured gender diversity across 3 dimensions — whole organization, management team, and the board. 46 of our portfolio companies were surveyed, and 3 out these did not participate in the study.

Whole org: 35% women.

Across the entire portfolio organizations we have 5398 employees. Out of these 1901 are women, making it 35% across the whole organizations. This number should be 50% for us to be satisfied. And in fact averages like this also clouds the actual reality when you look deeper into the numbers.

Out of the 43 portfolio companies in this study, only three have hired an equal or more women than men, and three more that have hired 45% women and above. We’re excited for these companies breaking the mold, but only 18 of our portfolio companies have hired women as more than a third of their employees. And 29 only count women as more than 25% of their employees. The rest have overwhelmingly hired male employees as a percentage of headcount…

Distribution of Female (green) to Male (grey) employees in the 43 studied companies in the Creandum portfolio.

Management: 21% women.

Looking at all management positions in our portfolio gender diversity is worse than across the whole organization. We count 312 executive roles across the portfolio with 66 of these are held by women, making it 21%.

We see increasing this number as the most important change to aspire for. If we wish to increase the other numbers, we must start here. It’s less likely and more difficult to hire women into your organization if management decision making is made solely by men. And with less female individual contributors joining fast growing startups we have fewer experienced operators who can grow into managers.

Data proves this. In our portfolio when women make up at least a third of management positions, we see an average of 40% of total employees are women, driving the numbers in the right direction. Meanwhile we see if there’s no women on the management team, the average percentage of female employees is halved to about 20%. Women at the top hire more women.

Fortunately as board members we are often involved in building out portfolio companies’ management teams. Because of this…

…at Creandum we commit drive gender diversity agenda inside any management teams we are exposed to, today and tomorrow!

Board: 10.5% women.

Not much more needs to be said than this: We have 219 board seats across the Creandum’s portfolio. Only 23 are held by women. This is horrible.

Gender distribution (female in green) across our portfolio company board seats.

One surprising detail of the data is that we don’t see women board members playing much of a role in improving hires of women in management positions or in general employees — there seems to be too much of a distance. But as board members ourselves, we know we need more women as peers.

We also believe that some of the best board members are people who have had managerial positions in the past. Hence, the above focus to build out gender diverse management teams will help groom a next generation of board directors as well.

We’re part of the problem.

Creandum is part of the problem. I am part of the problem. We evaluate founders daily, and although we often believe there is a mutual decision by the founder to partner with us, we do play a part in deciding which founder will get the opportunity to get funding and which founder doesn’t.

We also take board positions. But we only have one woman on the investment side of our operations (go Sanna Westman). Despite our past hires, we have clearly not been developing female VC talent through the years, nor have we been hiring top-level talent as Principals or Partners. Without this, we are helping to stack board positions with men.

Hence, we have started to put in place some new processes and tactics. All of our team members have to go through an unconscious bias training. We all have biases whether we like to admit it or not, and by recognizing when the brain takes mental short cuts in its decision making we can better force ourselves to get beyond it.

Twice per year we have also started doing a diversity workshop, where we follow up on how we’re progressing on this topic, brainstorm around new ideas and tools to nurture diversity inside our own organization and our portfolio, as well as decide on explicit action items and responsibilities for the team. We are also in progress to make sure any visual Creandum collateral (such as our website) is a gender-neutral display. We also actively push for gender equality at events we participate it.

Finally when it comes to our own hiring, we ensure that women in our team take a very active role in the hiring process, and we try to widen our talent funnel by proactively reaching out of women and other under-represented groups. We believe there is no silver bullet solution here, but all of us simply have to be working harder.

Let’s point out that hiring the right people is never easy, and that the most successful companies know how to go out of the way to recruit. But if the only time we think about this issue is when we step inside the doors to a sea of men at a tech conference, we can offload the issue on others and not make any changes. We encourage the whole industry to become get more transparent about this issue so we can continue moving in the right direction.

On that topic, we are always looking for smart women in tech to join our team as well as Creandum’s portfolio companies. If interested ping me or reach out to us anytime at Onwards and upwards! 💪👊

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