Gender-diverse teams are 48 per cent more likely to outperform their non-diverse counterparts in profitability, potentially impacting the growth success of UK start-ups, according to a recent report by UK executive search firm, Druthers Search.
The research emphasised that equity, diversity, and inclusion (EDI) at the top level must be improved for commercial success. It was shown that, despite EDI in senior leadership teams being a key factor in start-up success, only 2 of the 44 unicorn businesses in the UK had 50 per cent or more female representation on their board, and over 85 per cent of these teams are made up of White individuals.
According to the report, forming teams before appointing an EDI or people specialist to direct culture and decision-making frequently leads to poor EDI.
Four out of five unicorns with a combined valuation of over £8 billion include EDI positions, demonstrating the importance of these roles.
According to the survey, businesses with a gender pay gap of more than 20 per cent experience a 64 per cent higher attrition rate, which hinders growth and drives up costs—employee replacement costs can reach £30,000 annually.
Investing in under-represented founders is becoming increasingly valuable for venture capitalists with diverse leadership teams driving investment opportunities and innovation. But despite research showing diverse teams are more likely to produce innovative solutions, equity, diversity, and inclusion (EDI) have recently lost some of their emphasis among leaders.
Multiverse VP of people and talent Paige Rinke says: “The reality is, companies are not going to survive in the future if they don’t have diversity, not only will it colour their reputation – they simply won’t perform to their full potential. It’s not actually a choice.”
Passion Capital partner Will Orde says: “At the point when we’re making an investment decision, we’re looking at two things from an EDI point of view. The first is, who are the founders that we’re backing? We want to invest in a diverse set of founders because you get good outcomes from diverse founders. The second is the founder’s cultural attitude and thinking about building their team going forward.”
co-founder & director Kiri O’Brien says: “Investing in EDI isn’t just ethical—it’s essential. Let’s address the elephant in the room: in recent years, EDI has slipped down priority lists, budgets have been slashed, and the backlash has been palpable.
“But our deep dive into the successes (and failures) of UK Unicorns reveals a compelling truth. This new data shows that companies prioritising equality, diversity, and inclusion from the outset are not only leading in innovation but also reaping billion-pound rewards.
“The message is clear: while financial success is achievable without focusing on EDI, investing in building an equitable, diverse, and inclusive culture as early as possible is transformative, leading to greater success and better positioning for sustained growth and innovation.”
Octopus Ventures partner Edward Keelan says: “Although businesses can grow and succeed without a diverse leadership team, the data and studies can not be ignored. Figures show that EDI needs to come from the top down to inspire staff, reduce attrition, and prove their values and commitment to creating a rounded business.
“EDI efforts should start from the leadership team. There’s no point in having someone responsible for EDI if the leadership doesn’t talk about it and take it seriously. And don’t be afraid to talk to your staff about diversity and listen carefully to those from diverse backgrounds – not just about not what you could do for them, but also how they feel and the causes of that.”