September 9, 2020

New diversity ‘standard’ for VC firms launches

Diversity VC is setting a new standard for diversity and inclusion in the VC industry — but will anyone take notice?

Amy Lewin

6 min read

Coming out with promises to support diversity is all the rage in 2020. And VCs hate to be behind on a trend. 

Today, non-profit organisation Diversity VC is launching a new ‘standard’ for VC firms. It’s the investment equivalent of the Fairtrade mark — a symbol for those firms which are following diversity and inclusion best practice. 

The hope is that the ‘standard’ will encourage VCs to up their game when it comes to sourcing and investing in diverse founders and employing diverse talent — but also help all the firms which go through the assessment and certification process to figure out what ‘good’ looks like. 


“It’s always been an aspiration to create something that would standardise the approach to diversity across the industry and drive meaningful action, as opposed to a one-off pledge or press release,” says Check Warner, cofounder of Diversity VC, which also publishes diversity data on the VC industry and runs a VC internship scheme. “This is tangible — you have to do what you said you would do.” 

The first 11 VC firms which have been through the assessment process include well-known European funds like Atomico, Notion, Augmentum and Anthemis, along with several Canadian funds. “The idea is that this will become an international standard,” says Warner, who says several US funds have also expressed interest in the programme.

But what will that take? 


The ‘standard’ had been in the works long before the Black Lives Matter movement catapulted the issue of diversity further into everyone’s consciousness earlier this year — but its impact is likely to be greater for it.

“Black Lives Matter led to such a sea change in people’s attitudes,” says Warner, who is also managing partner at VC firm Ada Ventures, which targets 'overlooked' founders. 

VC firms got called out on Twitter quite a lot, for not making investments in non-white or black founders in particular, and people felt exposed by that.

“Fear is quite motivating — VC firms got called out on Twitter quite a lot, for not making investments in non-white or black founders in particular, and people felt exposed by that,” says Warner. “People can find that out very quickly.” 

“People also now feel like if they haven’t made an investment into a female founder or a diverse founder, they can no longer say it’s a ‘pipeline problem’. There are now so many things out there that you can use to change your system and process, that there’s no excuse for not doing so anymore.” 

That said, just how firms can improve their pipeline isn’t super apparent to all VC investors — and that’s something Diversity VC hopes to change with its new standard. “People are curious to know what good looks like,” says Warner. “People genuinely don’t know.” 

“There’s a bit of competitiveness, which is always there in VC — we want to be the best, and we want founders to see that we’re leading the charge on this.” (As if to illustrate that point, Atomico publicly staked out its commitment to diversity and inclusion in a blog post last week.) 

Who’s not joining the party?

Diversity VC has been actively reaching out to funds to encourage them to apply. But, given that Europe’s venture scene has hundreds of players, take-up has not been huge — yet.

“Some people really don’t feel like they’re there yet,” says Warner. “They’re so far away from meeting the criteria that it doesn’t make sense to go through certification.” 


“Some of them have a ‘not invented here’ attitude — they want to do their own thing, and don’t care if it’s not consistent across the industry,” she adds. And then there are those who just didn’t apply (and perhaps, just don’t care). 

For many VC firms, it isn’t a huge indictment if they don’t get involved; plenty of firms are one- or two-man bands (and often man bands). Implementing the kind of processes — whether with regards to hiring or sourcing — that much larger firms have (and which benefit diversity and inclusion) is perhaps unrealistic, suggests Warner. 

It’s important that funds are collecting data — on inbound pitches, networks, where deal flow is coming from.

“Process is hard. It’s important that funds are collecting data — on inbound pitches, networks, where deal flow is coming from — but that’s a big extra process to put in place if you don’t already have it,” she says. 

Funds also have a different level of involvement with their portfolios, she adds. For firms which are generally quite hands off, it might be difficult to wade in and make D&I demands of startups. 

Diversity VC also won’t be naming and shaming any funds for not applying — or for failing the assessment process. 

“We agreed with funds that we won’t out you if you don’t get it,” Warner says — and for the same reason, Diversity VC won’t say which funds have achieved the standard. That’s up to them to announce. “We didn’t want it to be a tick-box exercise, so they’re not all going to get through it.” 

We didn’t want it to be a tick-box exercise, so they’re not all going to get through it.

Firms will be ‘level one’ certified if they hit certain criteria — including having a ‘chief D&I officer or champion’, policies which reduce biases in hiring processes and tracking deal flow demographics — and can then move towards achieving ‘level two’ with more in-depth assessment processes and diverse investment strategies. 

Diversity VC is working with D&I platform Diversio to assess the firms and provide them with a software platform which will give them personalised recommendations for how to improve their diversity and inclusion practices. They have drawn on existing research, from the likes of Deloitte and McKinsey, to figure out what exactly to assess — and drawn on Diversio’s experience working with LPs and private equity firms on similar measures. Funds pay a small fee to take part, while JPMorgan and OneTech are also supporting the scheme. 

Of the funds already in the process, “some are doing incredibly well on deal flow, while others are doing better on internal policy and culture,” says Warner. 

The recommendations funds receive will be wide-ranging. “For example: Do an assessment of portfolio companies to make sure the CEOs understand what good looks like in terms of D&I — or do an equity survey across your firm and the portfolio to standardise compensation packages — or make sure you’ve got flexible working policies in place,” explains Warner. 

Diversity VC will also refer VC firms to several third-party organisations to help them hit their goals, including Hustle Crew and Fearless Futures for training, and Foundervine and YSYS for building deal flow.

Making this ‘a thing’

For the standard to have real impact, it needs to pick up momentum and, like the Fairtrade mark, become something that founders and talent alike know to look for when dealing with a VC firm.

Warner hopes that will happen as “really good funds pioneer it and shout about it”. Funds which achieve the standard will be able to add a badge to their websites, and ideally founders will learn to look out for it — and only choose to work with those funds which have it.

Amy Lewin

Amy Lewin is Sifted’s editor and cohost of Startup Europe — The Sifted Podcast , and writes Up Round, a weekly newsletter on VC. Follow her on X and LinkedIn