COVID-19 has thrown the world into another economic crisis. After almost three months of lockdown, Europe seems to overcome the fever phase of the pandemic and is now preparing carefully for the recovery. Several countries are loosening the contact restrictions, reopening the borders step by step, and supporting businesses with different financial rescue packages. Companies have been starting the first activities toward a so-called “the next normal.” It is understandable that the focus of businesses right now lies on the most crucial needs to survive – such as maintaining productivity and adjusting sales targets. Parallelly, they need to adopt new ways of working, consolidate workforce capacity, as well as ensure the physical and mental health of their employees. In this turbulent time, diversity and inclusion (D&I) work may usually be neglected, as they don’t directly bring in revenue. However, lessons from previous crises show us the opposite. Paulette Gerkovich, Senior Consultant at Neuroleadership Institute, suggests companies focus on D&I if they want to thrive through a crisis. Likewise, in a recent report, “Diversity still matters, “researchers at McKinsey also argue that companies are pulling back on D&I may be placing themselves at a disadvantage due to a possible backlash of customers and talents. Thus, the role and benefits of D&I won’t change even in a crisis time, and it applies to all businesses of every size.
Yet why diversity is essential for startups in Europe?
While diversity refers to a diverse workforce with various characteristics such as gender, ethnicity, race, age, education, etc.…; inclusion describes a working culture where people can bring their whole selves to work and perceive equal opportunities to perform and develop at their best. In particular, D&I is found in many studies to contribute positively to organizational success. For instance, diversity might positively impact the decision-making quality and the opportunity for creativity by providing a greater range of perspectives. A study of Boston Consulting Group (BCG) 2018 suggests that “increasing the diversity of leadership teams leads to more and better innovation and improved financial performance.”
While globalization and free trade agreements (read the latest FTA between EU and Vietnam) bring huge benefits and opportunities for European businesses, it also corresponds to big challenges concerning increased competition in all traded goods and services. Apparently, the growth of startups is affected as well. To maintain the competitive advantages and reach the customers of tomorrow, startups need unique ideas for new products that benefit a wide range of people with different needs. Hence, gathering a team of people from different backgrounds working with suitable design thinking methods will help startups achieve this goal more quickly. For those startups with an ambition to expand their business outside of the origin country, it’s more important to involve people from the target countries on board. They will help startups understand the new markets better and come up with appropriate strategies to approach them. Another advantage that startups can benefit from diversity is that a mixed leadership team performs better than a homogenous one. According to BCG researchers, businesses founded and co-founded by women ultimately deliver higher revenue than those by men: “For every dollar of funding, these startups generated 78 cents, while male-founded startups generated less than half that — just 31 cents.” Thus, startups with mixed founders team may be considered as better financial investments for venture capital and investment firms.
Almost 67% of startups were founded by all-male teams, with just 8% of them founded by all-female teams. The remaining 25% was founded by a team, including at least one man and one woman. In the former report 2018, the male founders’ share among the startups was 82,8%. Additionally, only 12,8 % of employees of these startups come from different countries, whereas almost 90% of them wanted to internationalize their businesses. Another report of over 1200 European tech founders depicts the same picture of a male-dominated area, in which only 21% of founders who responded are women. The report indicates that 84% of all founders identified as White/Caucasian, and only 16% left self-identified as people of color.
Moreover, it is noteworthy that 92% of investment in 2019 still went to all men founding teams. The numbers of one year early were utterly shocking higher. This practically possible bias of venture capitalists, as well as a high homogeneity of startups in Europe, may prevent them from taking potential advantages of diversity & inclusion.
Thus, how to embrace D&I in your startup?
After reviewing above-mentioned reports and articles from Forbes, Atomico, EU-Startups, and HRB, here are the first three simple steps that founders, especially at the early-stage, can do right away to make things differently:
1. Start to get your leadership team right from the beginning. As previously discussed, diverse leadership plays an active role in the success of startups, forming your leadership team with a good mixture of diversity is essential. Whether one-third of the top leaders are women, people of color, or other minority groups, the key factor has different perspectives in your decision-making board.
2. Be aware of your own biases. If time and limited resources are your decisive excuse for not founding a diverse team from the start, make sure that D&I are placed into your startup’s core values chain. This will help you attract more diverse talents and gain a plus point from your future investors. However, it truly works when you can show your commitment and action toward D&I. Joining such unconscious bias training can help you reflect your own assumptions and improve your decision-making quality in terms of recruiting diverse talents for your startup.
3. Be allies to initiatives that are driving D&I in the European startup ecosystem forward. They give you opportunities to meet excellent diverse talents and learn from the best practices of other startups. You can find here a list of European diversity initiatives and organizations by region. And if you are especially interested in Vietnamese startups, join the community of Vietnamese Startups Network in Europe (VSNE). As the first community for Vietnamese entrepreneurs and startups from all around Europe, VSNE can provide you valued insights about the Vietnamese startups’ systems in Europe and a rich resource of talented Vietnamese professionals. In addition, the network can also bring you closer to the Vietnamese market through its credible partners in Vietnam.
To sum up, D&I can provide precious advantages for startups to grow sustainably. With small actions as presented above, you can open a room of opportunities, creativity, innovation, and high performance for your startup. Subsequently, you can also contribute positively to a more diverse and inclusive ecosystem of startups in Europe.