Member Article

Is a more diverse senior management team the key to unlocking more funding for your business?

As the UK gears up for crunch talks with the European Union (EU) immediately following next month’s election, the issue of continued access to the brightest and best tech talent will increasingly come to the fore.

Debates over London-specific tech visas and guarantees that the continent’s best workers will still be able to make the capital their home have raged since last year’s Brexit vote, with continued access to the best software engineers, data scientists and others central to keeping the tech sector competitive.

However, one aspect that has generally escaped scrutiny is the centrality of non-UK founders and senior figures to the success of some of London’s world-leading tech businesses.

With the likes of luxury fashion retailer Farfetch, FinTech unicorn Transferwise and fashion marketplace Lyst just a few of the capital’s biggest tech success stories who are headed up by non-UK nationals.

Now research from data science hub Pivigo has gone some way to quantifying the advantages of diversity at senior management level with its analysis of Companies House and Crunchbase data.

As part of their investigation, the firm found that UK businesses with boards of three or four directors received four times more funding when they had two or more non UK nationals on their board compared to those who did not.

In total this equated to an average of £13.8m of funding for diverse boards compared to just £3.5m for boards with a UK-only senior management team.

The figures, which looked at companies founded between 2004 and 2014, also discovered that FinTech businesses were some of the most diverse, along with fashion and travel, where over two thirds of businesses have at least one non-UK director.

Kim Nilsson, Co-Founder and Chief Executive Officer of Pivigo, believes that Brexit has the potential to not just cut off the supply of talent, but also to impact on the number of entrepreneurs making London their home and a knock-on effect on investment levels too.

He said: “Brexit has the potential to impact not just access to talent, but the movement of entrepreneurial individuals that see London as a hotbed for investment, creativity and collaboration.

“As our government navigates its negotiations, we hope to see a deal that enables London to continue to be a diverse city - and businesses to build diverse teams that represent multiple nationalities, cultures and genders - not just at the senior level, but throughout the organisation too.”

Maggie Rodriguez-Piza, Chief Executive Officer of Funding London, which manages the London Co-Investment Fund alongside Capital Enterprise, said that data consistently shows that diverse companies are able to attract the best talent and deliver better returns for investors.

She commented: “Research consistently shows that companies with more diverse workforces perform better financially. At Funding London and the ‘London Co-Investment Fund’, we have found that the more diverse our companies, the more they are able to win top talent, improve their decision making, and produce better returns.”