Atomico’s yearly State of European Tech Report was released this week to coincide with Slush, and overall, it’s been a great year for European tech.
Record sums were invested in Europe’s staertup ecosystem – $23bn in 2018 up from just $5bn in 2013 –, Europe is producing $B+ companies at a level that is 15x+ higher than a decade ago and tech hubs like London, Berlin, and Paris are growing and producing new unicorns.
Yet there’s an elephant in the room.
Atomico’s report uncovered a ginormous problem many would like to avoid. The lip service being paid to diversity isn’t resulting in the numbers you expect.
To start with, all-male founding teams received 93 percent of the capital invested, and all-male funding teams were responsible for funding the vast majority of deals.
Men giving money to more men.
Perhaps worst of all, fully 46 percent of women surveyed by Atomico said that they have experienced discrimination in their job.
I’m not saying teams should be diverse for diversity’s sake. We know how equality of outcome turns out. My argument (and the scientific literature backs me up) is that diverse teams are better. Period.
A 2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean, and those in the top quartile for gender diversity were 15% more likely to have returns above the industry mean.
A 2016 study shows that people from diverse backgrounds might alter the behavior of a group’s social majority in ways that lead to improved and more accurate group thinking.
A third study published in Economic Geography, concluded that increased cultural diversity is a boon to innovativeness. For instance, of the 7,615 participating businesses, those run by culturally diverse leadership teams were more likely to develop new products than those with homogenous leadership.
So there’s that.
Men giving money to more men works. 61 unicorns is a pretty big deal. But if we want the European ecosystem to get to the next level, we need to embrace diversity because diversity creates and attracts better teams.
$957,271,421 raised last week (Source: Crunchbase )