Private equity has been a predominantly male domain for many years. But, more recently, gender and cultural diversity has stopped being just a box-ticking exercise. Improved returns data is backing up diversity and inclusion strategies.
Ensuring that diversity is addressed at entry level is one step that private equity has taken, as have the advisory firms they often recruit from. But ensuring that the best talent is retained and that diversity is represented throughout an investment firm is the challenge being faced up to now.
14.1% of senior officers in UK private equity companies are female
39 private equity companies in the UK are female-led – just 6.4%
195 UK private equity-backed companies are female-led – just 2.5%
12.5% of senior officers in UK private equity-backed companies are female
Interviews
Jane Vinson
Head of portfolio for the south of England, BGF, and former member of the corporate finance faculty board
Based in the London office of the Business Growth Fund (BGF), Jane Vinson is head of portfolio for the south of England. BGF is the UK’s most prolific mid-market growth capital investor, with more than 300 portfolio companies nationwide. Vinson joined BGF in 2016, from Octopus Investments, where she had worked for 10 years and was portfolio director. Prior to that, she spent a decade with Bridgepoint Capital, working on portfolio management. Vinson is non-executive director at nine of BGF’s portfolio companies: 3sun Group, Camino, The Consulting Consortium, Furniture Village, Gymbox, Recordsure, Rethink Group, Semafone and Sophia Webster. She also brings her 25 years’ experience to bear as a member of BGF’s investment committee.
“We need to make sure we support women through their career so they can become senior investors. We have to support them through maternity and beyond, so they feel they can come back and balance work with family life, if that’s relevant to them. That’s where you often see the dropout because, historically, family life hasn’t sat easily alongside this job – there is still a lot of work to be done to ensure we can provide that support.
“I sponsor the Diversity Action Group at BGF, which links up how we address diversity issues across the business. People throughout the business are part of the action group. There is senior sponsorship of diversity, which is important so that it is not seen as just an HR issue – it needs to go through the whole culture of the business.
“In certain sectors, there are more women-led businesses and we are trying very hard to increase their backing. We are by far the largest institutional backer of female-led businesses. Last year, around £110m went into businesses that were run by women. Our minority stake approach resonates with many female founders because they are less inclined to go with someone who will have more control over the timing of an exit, for instance.
“We run events with some of our female founders, who can talk about the challenges they have faced and give advice on how to go about raising money. BGF’s Talent Network makes a conscious effort to increase the diversity in terms of chairs and non-execs in our pool that can be added to boards. The Talent Network is also attached to Level20 – a not-for-profit organisation that aims to improve gender diversity in the private equity industry.
“We also work with Diversity VC, which works with other private equity firms to improve standards across the industry. We have also committed to the government’s Investing in Women Code.
“Diversity and inclusion has moved away from simply being a tick-box exercise to something that is proven to have a positive impact on culture and business performance.”
Rebecca Sinclair
Investment manager, WestBridge
Rebecca Sinclair is an investment manager at WestBridge. She joined the mid-market investor as an executive from HSBC in 2019 and was promoted to manager in January 2021. She was with HSBC for four and a half years, having joined as an analyst on the graduate training scheme,leaving as a manager in the mid-market financial sponsors group. Her training focused on mid-market lending and investing. At Durham University, where she studied for a degree in biology, she was an executive member of the university’s Women in Business committee. She is an alternate non-executive director on the board of Channel 3 Consulting and APEM and leads the WestBridge value creation strategy.
“I joined WestBridge from the banking world, which is also a very male-dominated environment. I always think it shouldn’t be women versus men – there should just be openness to anyone, from any background. A lot of private equity houses look for a pretty standard career path – Russell Group university, audit in a Big Four firm, then into a corporate finance team, or on to an independent corporate finance boutique, and then into private equity. For me, the key thing is having diversity of experience. If you recruit the same people, there is a very good chance you will end up with the same thought processes. Is that the best way to make well-informed investment decisions?
“I could tell from the beginning of my recruitment process that WestBridge was really looking for someone with the personality and culture to fit with the firm, rather than them having a moulded set background that they wanted. Of course, you have to be able to appraise a business, pull together a financial model and have a track record in a deal environment. However, most important for WestBridge was knowing if we could work together and how well I’d fit with the team. My decision to join WestBridge was largely because of this culture and wasn’t really female-focused, although having a female founding partner was definitely a positive because it’s pretty rare.
“It really is important that we retain women in private equity because historically we haven’t and that is a waste of talent. But diversity needs to be looked at on a much wider basis – there is so much more to it than just gender. It’s equally as important to understand how we can improve diversity of backgrounds.
“The industry has been missing out on talented individuals who could be very skilled investors because they just don’t get the exposure. We need diversity of thought when analysing investments because everyone looks at an investment in a slightly different way, and that provokes challenging internal conversations.
“I go back to Durham University occasionally to help with mentoring. I would say 80% of people don’t actually know what private equity is. We need to widen the visibility of private equity and build a greater pool of people who understand the industry and who might be interested in a private equity career.”
Laura Morrill
Investment director, ECI Partners
London-based ECI Partners investment director Laura Morrill joined the firm in 2018 as a manager and was promoted to director in January 2021. Prior to ECI, she spent five years at PwC, where she joined the M&A and corporate finance team straight from university, having graduated from the University of Cambridge with a first-class degree in land economy and a master’s in management. She has been a member of ECI’s environmental, social and governance (ESG) committee since it was founded and helps drive the ESG agenda at the mid-market private equity firm and within its portfolio companies, with a particular focus on inclusion and diversity.
“The big advisory firms have a bigger pool of university graduates to choose from – the greater gender diversity you see there is a function of that – but there is still less diversity when it comes to senior roles. My experience is that retention is the main drag on achieving diversity long term. One of the reasons I joined ECI was that it felt relatively diverse versus others in the mid market.
“I am on our ESG committee and I lead our diversity and inclusion work. Last year, our board approved our first-ever strategy document for diversity and inclusion. There is buy-in at the top and action being driven bottom-up, too – that is a powerful combination. It was quite a big milestone, but now our focus is on putting it into action. This summer, we are looking at what has worked and what hasn’t so far.
“We have 50:50 gender-split candidate lists, we’ve changed the way questions are asked and a wider range of ECI employees attend the interviews to demonstrate our diversity. We have historically wanted people who can hit the ground running and have investment track records, but that has limited the pool somewhat. Now we are being more open-minded by recruiting from different industries as well as recruiting at a new entry grade, below investment manager, so we can try to capture the best people earlier in their career.
“Our policy also addresses retention. Initiatives include having sponsors within the firm, training sessions, and encouraging people to be mentors and mentees internally and externally, and we continue to sponsor organisations such as Level20 and OutInvestors.
“We know that diverse teams get better results and we’re all aligned on wanting to drive best performance. When I joined, diversity felt lower priority and more about ticking boxes. The focus is very different now – it’s important for management teams, advisers, investors and recruiting our future talent and retaining our current employees. We have to continue to drive change and improvement in this area and be able to answer questions on it in any meeting we go to.”
Joy McCormack
Director of board development, 3i
As director of board development at 3i, Joy McCormack heads up the listed private equity firm’s ‘business leaders network’. Working across all sectors and internationally, she connects executives and non-executive directors with 3i’s existing portfolio and pipeline investments. She joined 3i in 2012 and prior to that she worked at the specialist private equity executive search firm Skill Capital, placing directors in private equity portfolio companies. She previously spent five years in Goldman Sachs’ private wealth management division. She has a first-class honours degree in quantitative finance from University College Dublin.
“I’ve been at 3i for 10 years and there has always been a very open culture in many ways, including around diversity, but there hasn’t necessarily been the talent coming through the pipeline. We were very open to the diverse pool of candidates we would see. Now, it’s much more purposeful to address inclusion.
“We don’t have quotas and we will always be pragmatic about the experience required for the role. However, working with headhunters on executive search processes, we are a lot more deliberate in ensuring that we see a diverse shortlist of candidates, so that ultimately we recruit the best candidates.
“It is not being driven by the fact that we need to report on it. It is being driven very much from an evolving thought process around the importance of diversity. It will have a positive impact on returns. First, the data is there to prove that and, more importantly, there is an appreciation and understanding from experience of working in more diverse groups that it improves decision making.
“Diversity will vary a lot case by case and by sector. I think it’s all about culture and once it sits at the top of board meeting agendas, then it organically filters down into the rest of the business. That manifests itself as the executive team looks at recruitment more broadly. We’re seeing a lot more women and diversity of candidates. Potentially you make compromises because there is a little bit more strategic thought around diversity. Many benefits of such an approach to diversity will be longer term.
“When we’re seriously looking to buy a business, we spend a lot of time behind closed doors talking to management about strategy. A large part of that is the strengths and weaknesses of the board and how it is organised, so we can understand management’s ability to deliver on the strategy. Certainly one of the issues is around diversity and female representation at senior management level.”
Nicola McQuaid
Director, NorthEdge
NorthEdge director Nicola McQuaid is based in the Leeds office of the mid-market investor. She joined as investment manager from JLA Group, where she was corporate development director. As part of the Hg Capital-backed buyout management team, she led the Yorkshire-based laundry equipment firm’s acquisition drive. Prior to JLA, she spent seven years with PwC’s corporate finance team, which she joined in 2002 after graduating from the University of Leeds with a degree in modern Chinese studies. She leads the firm’s diversity, equality and inclusion (DE&I) team.
“NorthEdge had a very positive culture, but wasn’t a massively diverse workplace. When I joined, I was the one woman out of 20 investment professionals. I was at NorthEdge for just six months when our managing partner Grant Berry said: ‘We’re not where we need to be on this and I might need your help.’ It has been a big learning curve for the firm.
“You can’t have diversity without an inclusive culture. So we did a lot internally on our values, behaviours and the way that we work, engaging with people and encouraging them to speak up and have a voice. You can fix recruitment, but if you can’t retain a diverse workforce, you’ll never make sustained change: it will be short term and probably tokenistic.
“Our initial focus was internal. Then we started engaging with our portfolio and our advisory network. Who was doing what and well? Who had examples of best practice we could share? We were not judging, we just wanted to know how we could get better. There was a lot of sharing of ideas. Now our portfolio companies report DE&I stats.
“Everybody knows it’s the right thing to do morally and ethically, but when you can present data showing a correlation between more diversity and better returns, that wins over hearts and minds. We couldn’t have achieved that without everybody’s engagement.
“There are visible and invisible barriers to a woman’s progress. Despite everyone being incredibly welcoming, I was intimidated by being the only woman. It took me six months to find my voice. Some will never truly feel able to be themselves, which is a tragedy because you simply won’t get the best out of them and the benefits diversity of thinking brings.
“I’m a huge believer that this is not a women’s issue, but a business issue. Everybody may need to give support to children or to parents at some point in their lives. And there is a sense that if you step off the treadmill, it’s very hard to get back on it. But you need to make that possible so you can retain women and allow them to progress, so the business can get the best out of the talent that they have invested in and developed.”
Leigh Brody
Investment manager, AlbionVC’s UCL Technology Fund
Leigh Brody, originally from Boston in the US, is investment manager for AlbionVC’s UCL Technology Fund. Having completed a biochemistry degree at Simmons University, she worked as a research technician at the Broad Institute in Cambridge, Massachusetts. She then completed a PhD at Imperial College, London and then co-founded GlobalAcorn, a spin-out company based around the therapeutics technology she developed during her PhD. She went on to work for Desktop Genetics and Quell Therapeutics, before joining Albion in January 2021. She volunteers for various science, technology, engineering and mathematics programmes for young people.
“After a short internship at Index Ventures and spinning out my PhD project, I was really interested in the intersection of developing scientific academic ideas into commercial products. Sitting in a room with intelligent, skilled people with years of company build, I realised I needed more commercial business experience. After almost 10 years, I felt I had enough experience under my belt to get into venture capital.
“I had multiple offers on the table. However, I needed a team that would understand my profile, coming from academia and multiple start-ups and the kind of mentorship and training I needed, and would help me grow as an investor. Almost all of the UCL Technology Fund team had gone through the same transition and understood the journey I was on, which made Albion a natural fit.
“There were three female investors at Albion when I joined. I got their take on what it was like to be female in a male-dominated space. There was understanding that women are less represented and a conscious effort was made to improve gender and also other diversity internally. Like most industries, venture capital and biochemistry are generally male-dominated the more senior you go and this is a constant topic of discussion. Albion recently welcomed its first female partner, which is an exciting milestone.
“When new roles open, we have a recruitment process that includes blinding CVs, tracking diversity in the hiring funnel and setting diversity targets for recruiters. We give the job to the best person who’s the right fit and want to lose any unconscious bias.
“When we invest, we look at the female-to-male ratio of the exec team. We don’t and can’t force anything on companies, but when they have zero females around the table at board meetings, I ask: ‘How do you know that you’re getting the right voices having an input to decisions?’ It can raise a red flag. What commercial or operational decisions are they making? Are they implementing the right decision-making criteria at all levels of the company?
“People are the core of any organisation, and culture and diversity are critical conditions for future success. I am passionate about making venture capital more diverse and, where possible, aim to play a role in doing so.”