Talent has been a priority for Allied for Startups since day one. Last month, Talent was re endorsed as a top policy priority in our 2021 Mandate. Startup visas and stock option reform are key components of our engagement on talent, especially as The Startup Nations Standard is in the pipeline!. This year it includes a twist, as there is another side to talent that we believe is equally as important; diversity.
The truth is that despite being the most progressive and innovative economic actors, lack of diversity is an ongoing challenge amongst the startup ecosystem. We believe that startups are change agents and they are in pole position to accelerate diversity and inclusion in the tech sector.
Studies have shown time after time that companies that employ gender and ethnic diverse teams have higher financial performance. This does not mean that correlation equals causation, but it does suggest that corporate commitments to diverse leadership tend to be more successful. In addition, other forms of diversity, such as language, culture, sexual orientation and age also bring competitive advantages over non-diverse teams.
Scaling-up diversity in Startups
Startups are customer-oriented businesses, their teams should reflect customer diversity in order to create better products and services which in turn will lead to a virtuous cycle of increasing returns by ensuring customer loyalty. In addition, research suggests that the more diverse a team, the more innovative they become.
For instance: Innovation: Management, Policy & Practice found that there is correlation between the number of women in a team, and the chances of a company introducing radical innovations into the market. Similarly, in a study conducted by Economic Geography, the authors concluded that increased cultural diversity is a boon to innovativeness in companies.
The effects of more diverse and inclusive teams go beyond individual company success as this creates a ripple effect in society, encouraging social mobility. The process of promoting equality of opportunity ultimately reduces inequality and advances progress up the economic ladder from one generation to the next. For societies this is an opportunity for individuals from underprivileged backgrounds to build a better future for themselves, which in turn prevents our societies from ossifying.
There is no one solution to quickly address lack of diversity but there are investments that startups can make in order to move forward. For instance: Investing in talent pipelines is key to diversity. Attracting and nurturing through mentoring and sponsorship will create and retain the next generations of global leaders. In addition, reviewing biases for hiring, evaluation and promotion policies are key to inclusion. You can’t address a problem you don’t know you have.
While we realise that diversity is on the agenda, it’s time to walk the walk and learn from positive examples and success stories! For example: our Member France Digitale hosted an event last week on Artificial Intelligence (France is AI), in which they put the spotlight on women AI entrepreneurs.Sharing best practices doesn’t just apply to startup-teams, but rather the entire ecosystem, From VC’s to mentors, to CEOs, community builders.
The more diverse the system, the better the startups and the better innovation and inclusion becomes. With diversity becoming more and more prominent we are excited to see startups at the forefront of diversity efforts!