French start-ups lack diversity because their investors do too
Establishing anything to do with employees’ ‘race’ is seen as discriminatory and is largely illegal, so improving inclusivity is not that easy to do
Paris — The start-up scene in France has the same problem that plagues the industry everywhere: too little diversity. Trouble is, in France you can’t measure it.
While observers say the venture capital and tech scene is overwhelmingly white, out of step with the make-up of the rest of the country, it’s mostly illegal to track people’s ethnicity. France has rules preventing firms from keeping tabs on the metric, which originate in part from the Nazis’ use of labels to target Jewish people and other minorities during World War 2.
As the sector expands — with venture capital funding nearly tripling last year from 2015, according to industry lobby group France Digitale — the need for a way to address what many founders see as a roadblock to success is growing.
“In France, we have a systemic issue that casts aside minorities, but no data to pin it down,” said Laura Medji, co-founder of construction equipment rental platform Tracktor, who said she’s one of the only black women out fundraising in the country. “The French culture is very different to the US one — the goal is universalism and not dividing people into categories. I have seen the US side and all that data there is not solving the problem, either.”
About 76% of venture capital investors in the US are white, according to a 2018 diversity survey from Deloitte. That compared to 80% in 2016. Black representation went from 2% to 3% in the two-year period.
Bloomberg News surveyed the 10 most-active French venture capital funds, based on the amount they invested in the first half of this year.
The survey found that initiatives in France are still mostly linked to the notion of gender. Some French venture capitalists said they also focus on socio-economic background by hiring or investing in companies run by people who grew up in poorer families or neighbourhoods, or didn’t attend the grandes écoles (top schools) system of elite higher education.
The issue of ethnic diversity doesn’t often come up in discussions with start-ups. On one hand, there’s ‘still some real awareness-raising work to be done ... On the other, it would be illegal to compile those statistics on employees’
French society emphasises individuals rather than communities and, because of that, some think it’s better to ignore racial identities.
“In France the issue is seen as class discrimination, not race discrimination,” said Kat Borlongan, director of La French Tech, the government’s body created to promote the tech scene. “There is no use of the word ‘race’, there is one human race. It’s the Republic’s ideal. But it gets tricky when that ideal fails.”
Even using the metrics they can trace, broad diversity initiatives at venture capital firms are the exception. Daphni was the only firm surveyed to say that it’s seeking an ethnically diverse workforce, though it doesn’t use metrics. Bpifrance Financement, the country’s sovereign fund, and Eurazeo subsidiary Idinvest Partners, were the only ones in the top 10 to track diversity of background for their employees.
Those two, plus telecom billionaire Xavier Niel’s Kima Ventures and Daphni also track gender. The others didn’t respond or said they don’t keep up with the data.
Aster, Partech and Sofinnova, influential venture capital firms in France outside the top 10 that were also interviewed about their practices, said they track gender, and the latter two measure background for the firms in which they invest.
Venture capital firm Daphni said that “each time we recruit, we ask ourselves the question of the ideal profile to ensure a gender balance in the team, and to be as open as possible to other cultures, notably ethnic and racial diversity.”
Aster said that the issue of ethnic diversity doesn’t often come up in discussions with start-ups. On one hand, there’s “still some real awareness-raising work to be done”, a spokesperson said. On the other, it would be illegal to compile those statistics on employees.
“It’s a paradoxical order we give to companies. On one hand, we want them to fight discrimination and tell them they should work towards inclusion,” said Marie Mercat-Bruns, affiliated professor at Sciences Po Law School in Paris. “But at the same time, they don’t have ways to measure diversity.”
Partech said that “French laws and the French concept of equality do not hinder the fight against discrimination. On the contrary, they are the foundation of it”.
Medji said she started an informal group of like-minded French entrepreneurs, including Citizen Capital investor Youssef Bellatar and Tenzing Conseil consultant Michel Chan, in January. They’ve kept in touch during the lockdown and aim to promote more ethnic, social and educational diversity in the industry, build a network of influence, and hold regular online and real-life meetings.
One challenge for venture capitalists is to find a big enough pool of entrepreneurs from different backgrounds. The issue of diversity in higher education is part of the country’s broader problem with communities integration, said Borlongan, Medji, and France Digitale CEO Nicolas Brien.
Billionaire Niel, who didn’t go to college himself, set up a free coding school in Paris in 2013 to train anyone over the age of 18 years, including those without degrees.
La French Tech’s Borlongan, who was born in the Philippines, created the Springboard programme targeting youth from underprivileged backgrounds with mentoring and funding and is launching an incubation programme for start-ups.
A homogeneous tech scene can breed a narrow perspective. It affects not just the companies that are able to get funding, but the types of businesses that are founded and the products they make. Diverse viewpoints ensure products and services that serve a diverse population.
“I shouldn’t be the rare case,” Medji said. “The absence of ethnic diversity doesn’t seem to bother investors. They themselves are very uniformly white, mostly males. They graduated from the same schools and have often the same social background — so there is a direct cause and effect: if they were more diverse within their ranks, the people at the companies in their portfolio would be more diverse, too.”
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