TOOL Spawn in Female Founders & Owners • 8 mo. ago
Top10 Hacks! Diversify Your Company, Pipeline & Portfolio
What is needed to make the ocean innovation ecosystem a leading light for diversity, equity and inclusion? As co-chair for 1000 Ocean Startups WG on diversifying the innovators´ ecosystem, I´ve gathered research and best practice which will in turn form a Bluepaper. My findings will be used for the 2024 global annual 1000OS workshop in Amsterdam, with discussions and ideation on which parts that will be recommended for coalition members onwards.
As part of TOOL´s efforts to help enable a more diverse universe of ocean & new energy innovators, I have listed 3 levels where you can fuel diversity - providing 10 Practical Hacks for each level:
I. Integrate & Reward Diversity in Your Org. & Team
II. Integrate Diversity in Your Scouting, Due-Diligence and Future Portfolio
III. Integrate & Reward Diversity in Your Existing Portfolio
Let´s dive in, and I´d love to get your comments - please share your own experiences and reflections!
I. Integrate & Reward Diversity in Your Org. & Team
More diverse investors and funds can lead to ensuring a more diverse mix of entrepreneurs being backed and scaled, consequently supporting socioeconomic change.
Define what diversity means to you. There are four basic types of diversity at work - visible and invisible - 1) Internal diversity (gender, race, physical ability, age, cultural identity, ethnicity), 2) External diversity: Education, life experiences, socioeconomic background, marital/parental status and religious beliefs, 3) Organizational diversity: (roles and perspectives within a company, such as hierarchical level, job function and specialist department), 4) Worldview diversity (beliefs and perspectives held by individuals, shaped by personal journey, philosphy, culture and religion)
Formalize an inclusion strategy! Define commitments around DEI on 3 levels - 1) Your internal organisation and partners, 2) New investments/portfolio companies and 3) Promoting DEI improvement within existing portfolio companies.
Publicly commit to a DEI Ambition Level & Defined Goals, with clear % targets on internal and external KPIs. Optimally through a collaborative partnership with fellow industry peers, alliance or coalition. Thus, benchmarks, knowledge-sharing and best practices can be developed, shared and implemented effectively, without re-inventing the wheel.
Formalize Accountability! Appoint a C-suite leader to be personally accountable for DEI targets and delivery. While the operational part of this can belong to support functions, the over-arching accountability for performance should ideally belong with top executive or a the highest representative leader for investment/commercial team, alternatively finance. It is essential that the DEI accountible represents a key revenue-generating team, to ensure that operational priorities and DEI targets are equaly prioritized.
Start from the top! Set targets for ensuring gender balance and representation from under represented groups in your own Board/Advisory Board, Management Teams, Partner Groups and Investment Committees. Ensure diversity in your investment team across all levels, and eventual board representatives appointed from your end into portfolio companies.
Design for Success! Ensure gender, ethnic and racial diversity of your key decision-making groups, across board, mgt. and investment teams. Succeeding with diversity means aiming for more than 1 "diverse" representative in any team, unless you just want to check of a box without real commitment. Set clear % targets for women & minority representation on each level.
Create a Process & Plan! Ensure to set a clear plan to establish and reach DEI targets, and conduct annual surveys tracking progress and performance. What gets measured, gets done.
Implement & Reward Progress! Make sure to actively pursue and track 1) Diversity among candidates DD´ed or reviewed for portfolio/program support, 2) The amount of capital allocated to minority-owned or -led organisations, 3) Integrate diversity KPIs into bonus and rewards program connected to this, both on team and individual schemes. Ensure that no colleagues can achieve full individual or team bonus without delivering on their internal and external DEi KPIs.
BeNice, Code of Conduct & Bias Training! Develop strict ‘fair treatment policies’ across your organization to ensure employees are treated equitably. Implement an inclusive, anti-harassment Code of Conduct and Rules of Engagement across business operations and events, based on TheFactory/Oslo´s #BeNice, the Berlin Code of Conduct, StartupLab Rules of Engagement or Founders Factory CoC. Eliminate unconscious bias and unintentional discrimination through skills & awareness building internally. This hurdle must be tackled and changed to benefit from diversity - reducing risk and increasing returns.
Recruit, Retain, Promote & Renumerate. Seeking new hires outside existing networks and establishing objective metrics for promoting promising employees. Work on inclusive language, calibration of bias - and mix of female/male interviewers. Ensure equality of opportunity, ensure a fair representation across each stage of hiring - a.o. 50% women and 30% minority candidates in first stages, and 2 or more at the final interview stage. Implement a.o. 50% female / 30% minority shortlist policy for external hires at senior levels. Ensure that your renumeration, bonus & share option programs can fuel balanced commmitment long-term, so that women team members excel rather than dropping off. Conduct equal pay analysis on total compensation, and compare with industry peers. Team up with external partners to source diverse candidates for internship & talent programs. Also make sure to provide inclusive benefits for all - such as inclusive family leave, returnship program, flexible working policies & core hours and emergency childcare.
II. Integrate Diversity in Your Scouting, Due-Diligence and Future Portfolio
Standardize. Include diversity commitment standards in the Term Sheet, which should include ensuring DEI policy within e.g. 3 months post-close, and implementation of a DEI strategy within e.g. 6 months.
Review diversity of the potential portfolio company´s board, C-suite / management teams and eventual advisory boards, and make sure the pipeline you review is balanced already from start.
Connect With Diverse/Minority Networks. Getting closer to underrepresented groups you aim to be more invested in.
Enable Effective & Integrated Data Collection not only during onboarding of new portfolio companies, and not as an extra effort, but effectively and integrated as part of the general company reporting (ideally at least annualy). Depending on regional law, seek to at least ensure data collection of gender, ethnic and racial diversity.
Pre-Seed/Seed: Make diversity part of company values, Conduct basic training to learn about unconscious bias, Recruit a diverse board/advisory board, Recruit and create a balanced team that includes underrepresented groups.
Series A: Develop and publish Diversity policy, Create compliant internal data collection process, Conduct annual D&I audit.
Series A: Ensure inclusive language and D&I statements in recruitment processes. Codify your interview process. Recruit a diverse board.
Series B+: Formalise extended Diversity Policy which include promoting DEI and avoiding discrimination. Conduct annual D&I audit.
Series B+: Ensure gender balance across board and management levels. Ensure gender and DEI representation prioritised in recruitment guidelines.
Reward team leads for securing a balanced candidate pipeline, and equal representation through the first interview/test stages for any new hire or promotion.
III. Integrate & Reward Diversity in Your Existing Portfolio
Sharing Best-Practice & Recommendations: Support your current portfolio companies with best-practice standards and frameworks on diversity commitment standards, and agree on an acceptable timeline to improve performance and report back on their current status.
Bringing Existing Portfolio Up to Standards: Aim for the same requirements set in the points reflected under the above category for due diligence and future portfolio, and help your portfolio with pragmatic actions to achieve this. Atomico´s Conscious Scaling programme and DEI Guidebook for founders are great examples.
Diverse Decision Makers: Identify if there are opportunities to change the structure of Board / Diversity Board and management teams, to create balanced representation, and set a target (e.g. 1-2 years) of achieving this, plus defining development plans enabling recruitment and retention/career development of women into upcoming senior/operational roles.
Build a Supportive Ecosystem: Enable female & minority founders through mentorship (both from women and men) and networks that can support their scaling journey - and connect all-male teams with networks and mentors that can enable better competence and support their path towards better diversity.
Incentivising Diversity: Connect company´s bonus/incentives, individual and team-based renumeration and share option programs to KPIs fueling inclusion & diversity
Diverse Ownership: Even in mixed-gender founder teams, we often see that women and minorities own smaller shares from start, have access to less follow-up capital, and more vulnerable for dilution of ownershare during growth stage. Investors can play a key role in advising and supporting share option programs and diversity balance schemes enabling underrepresented founders and team members to maintain a decent share position.
Series A: Develop and publish Diversity policy, Create compliant internal data collection process, Conduct annual D&I audit. Ensure inclusive language and D&I statements in recruitment processes. Codify your interview process. Recruit a diverse board.
Series B+: Formalise extended Diversity Policy which include promoting DEI and avoiding discrimination. Conduct annual D&I audit. Ensure gender balance across board and management levels. Ensure gender and DEI representation prioritised. Make diversity and gender balance a requirement when using external recruitment agencies, and ensure that the people doing the recruiting also come from a variety of positions, backgrounds and mindsets.
Connect Team Members with Mentoring & Sponsorship Programs: Pro-actively fuel the acceleration of underrepresented team members, by coupling them with mentors or programs that can actively support their career development.
Nurture an Inclusive Culture: Celebrate diverse holidays, host or join cultural events, and encourage team members to share their unique backgrounds and experiences.
Pioneers to follow on Standards & Reporting:
Diversity VC - The Diversity Standard: An assessment of a VC’s recruitment, culture, dealflow, and portfolio guidance policies compared to DEI best practices. Their Founders Engagement Toolkit is highly recommended, as well as their Parental Leave Guide.
Atomico - DEI Policy: Atomico’s approach to DEI and how it´s incorporated into their business operations, investment activities and portfolio.
Founders Factory: 11 ways to build diverse, equitable and inclusive startups
Diversity VC & Atomico´s DEI Guidebook for Founders
State of California Senate Bill 54: Venture Capital Companies - Reporting (Will impact any US and foreign investor or startup in the 1000 OS with business ties to California. Data reporting will be required starting 2025.)
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