European Funds Comment: Improving Opportunities for Women in European Private Equity

6 December 2019

Diversity and inclusion are critical topics for the private equity industry. Although perhaps not yet front-and-centre of the ESG (“environmental, social and governance”) agenda that is gathering increasing momentum, many European firms are now focused on their recruitment and retention policies. For them, attracting and retaining professionals who are more diverse has become a priority, and LPs are also starting to ask questions during due diligence.

One well-known organisation leading the charge on gender diversity in private equity and venture capital is Level 20. Founded with a mission to help the industry to get to a position where at least 20% of senior roles are held by women, their report, issued in the summer, revealed that there is still a long way to go. Among GPs in the private equity industry, only 6% of senior investment professionals are women. The picture is only a little better in venture capital firms, where the corresponding number is 13% (and LPs are doing better still with 21%). In October, Coller Capital’s 2019 ESG Report painted a similarly bleak picture: women accounted for less than 20% of the senior positions at 82% of responding GP firms.

A lack of diversity at GP level may contribute to a lack of female-led investee companies. The 5th edition of the State of European Tech Report revealed that, in 2019, 92% of funding went to all-male teams, while investments in all-female teams have actually fallen. Strikingly, the report notes that female-led venture capital firms are much more likely than their male counterparts to have taken proactive steps to find companies with more diverse founders.

These structural faults have to be addressed, as Jeryl Andrew, CEO of Level 20, and George Anson, its Chair, stressed when they recently spoke to the Debevoise Women’s Review.

Jeryl told us that fundamental changes are needed to make real progress. “Financial services is not one of the most popular career choices for young women … and we need to do more work to promote private equity as an intellectually challenging, varied and financially rewarding career.” Firms should make more effort to recruit from “much broader educational backgrounds.”

There are some more positive indicators. The Level 20 report found that the percentage of women increases at mid- and junior levels, and Jeryl was “hugely encouraged by the numbers of young women entering the industry in the larger firms.” Both Jeryl and George believe the Level 20 programmes can help break down the cultural barriers. George explained that the Level 20 mentoring programme pairs women working in the industry with both female and male volunteers. “In addition to the obvious benefits for the mentees, the mentors also gain insights into some of the challenges faced by women working in the industry”. This sort of programme can catalyse the “positive and permanent change in mind-set at the senior level” which George recognises is the key to opening the door to change.

As well as joining Level 20, Jeryl – who will retire from Level 20 at the end of the year, after three years at the helm – encourages firms to adopt “affirmative recruitment strategies, with a focus on women or minorities”. The organisation also relies heavily on volunteers who support Level 20’s work and encourages men and women to get involved.

As the focus on ESG at portfolio companies intensifies – and the scope of public disclosure required in relation to diversity and gender pay gap continues to increase, both in reach and level of detail – GPs are also aware of the need to put their own houses in order. Level 20, working across Europe and with other industry associations, is making a very important contribution to their efforts.