The research combined two approaches: studying pre-existing public deal data (Market Data from PitchBook), and building a new dataset with individual VCs on founder gender in their deal pipelines – from first contact to investment
Data and Treatment
PitchBook provided the British Business Bank with data covering around 7,500 ‘UK VC Deals’ made between January 1st 2007 and April 18th 2018. In this report, ‘UK VC deals’ are defined as VC deals in UK-headquartered businesses for which PitchBook has information on the gender composition of the founding team. The businesses were split into three categories:
• All-female founded businesses: Businesses for which the founding team was all female (325 of the 7,541 VC deals);
• Mixed gender founded businesses: Businesses founded by a team with at least one woman and at least one man (904 of the 7,541 VC deals);
• All-male founded businesses: Businesses for which the founding team was all male (6,312 of the 7,541 VC deals).
This data was provided by PitchBook on April 19th 2018, and is a snapshot of the database at that time. Numbers may change over time as it is updated. Due to availability of data, periods studied varied depending on the analysis in question, and this is indicated where relevant. Data was provided covering deal stage, deal size and industry, as well as follow-on funding rounds and exit outcomes for a cohort of businesses receiving seed/series A deals between 2010 and 2012.
Where possible, the UK data was designed to allow comparison with existing PitchBook analysis of the US market. Due to the low number of deals involving businesses with all-female founders, some of the analysis undertaken is based on businesses with ‘at least one female founder’- i.e. the combination of all-female founded businesses and businesses founded by a mixed gender team. This includes the follow-on funding cohort analysis and the deal stage analysis.
Deal Stage Definitions
Angel: Rounds where there are no identified PE or VC investors involved in the business so far, or where there is a press release that specifically identifies the round as an angel round or round involving individual investors.
Seed: Rounds where the investors and / or press release(s) identify the round as seed financing, or it is for less than $500,000 and the first round reported. If angels are the only investors, then a round is only marked as seed if it is explicitly stated. For the purposes of this analysis, we have grouped angel and seed rounds together as a single deal stage.
Early-stage VC: Rounds that are identified as series A or B or, if series information is not available, classified using a combination of factors including age of the business, prior financing history, participating investors, etc.
Late-stage VC: Rounds that are series C and beyond (but don’t fall into growth capital) or, if series information is not available, classified using a combination of factors including the age of the business, prior financing history, participating investors, etc.
VC Firms Included
Participation in this research was voluntary and followed a public campaign to encourage involvement among the VC community, as well as outreach through networks. It was made clear to firms from the outset that the final report would be made publicly available but the identity of any firm or individual would not be disclosed (unless permission was granted).
To be included in the sample, the VC firm was required to have a UK office and be open to making new venture investments in 2017 and / or June-July 2018.
Data from PitchBook was used to verify that the firms included in the sample are broadly representative of the wider UK VC industry, based on Assets Under Management, Median Fund Size, Last Closed Fund Size, Last Fund Vintage, and Preferred Investment Type.
Data Provided by the VC Firms
Each firm was asked to provide anonymous data on the composition of the founding teams with whom they had contact at two stages of the investment process:
• Pitchdecks they received from potential investee businesses describing the investment proposal during a 6 week period between June 18th 2018 to July 27th 2018;
• Funding decisions (initial investment and follow-on) made by their Investment Committee (IC) during 2017.
For each team only founders were considered – i.e. excluding advisors, investors, C-level (CEO, COO, CIO etc) non-founders, etc.
A pitchdeck was defined as any document written / submitted by a founder to the VC investor which describes the investment opportunity.
IC was defined as the forum in which a funding decision was made by the VC firm based on an assessment of the founders and business (before final diligences, legal considerations etc).
The anonymous data on founding teams provided for this report covers:
• Team level gender (All-female team, All-male team, Female and Male team, Unclear, No information) based on self-reported data, names / images provided by the business (“apparent team gender”) or, for IC only, the knowledge of individuals at the VC firm;
• Source type (Warm inbound, Cold, Outbound, No information).
This data collection / generation approach was developed specifically to take account of the low levels of pre-existing founder gender data within most VCs. The alternative (i.e. building a fully verified, 100% founder-reported dataset) would likely take a number of years. Our assessment is that the benefits of more rapidly publishing new data on the inequalities discussed in this report outweighed the drawbacks of methodology.
Each firm submitted pitchdeck and IC data for each individual fund they manage. Firms categorised their funds at July 18th 2018 based on age (since fund close), size / equivalent size and investment focus (Accelerator, Seed, Series A / B, Multi-Stage, Growth / Expansion). To preserve anonymity of participants, two of the investment focus categories (Accelerator and Seed) have been combined in this report (“Accelerator or Seed”).
Individual funds could appear in the pitchdeck dataset, IC dataset or both sets. There are several reasons for this e.g. a fund was making new investments in 2017 but is no longer doing so, and so is not assessing pitchdecks (and so submits IC data but not pitchdecks); a fund was not making investments in 2017 but is now (and so submits pitchdeck data but not IC data).
Data Sourced for Complementary Analyses
PitchBook data and primary internet-based research were used to assess whether firms had a female decision-maker. The definition used by PitchBook includes roles such as Partner, Principal, VP, MD, Investment Manager / Director, CEO and CIO. Primary research used the same definition.