When You Design For Diversity, You Get Diversity: An Investor’s Perspective

Apr 14, 2021
Women of Real Ventures

Some of the women of Real Ventures

By Janet Bannister, Managing Partner at Real Ventures

The best investors invest in the best founders with the ideas that have the highest potential for success. That sounds straightforward, but the reality is not so simple. One reason that this is so difficult is because as humans, we are wired to gravitate towards people that look, sound, and act like us. But we know that diverse teams and diversity of ideas yields the best results. So how can we design our processes and systems to achieve diversity?

I am passionate about diversity and to me, diversity extends beyond achieving the gender balance. And it extends beyond having a team with a range of ethnicities, religions, ages, and sexual orientations. To me, diversity embraces all of these things but also includes introversion and extroversion; big picture thinking and detail orientation; data-driven and intuitive thinking; long term orientation and short term planning; and other types of disparate approaches. The results are clear that diverse teams are better performing teams.

At Real Ventures, we are committed to having a diverse, inclusive firm that encourages, celebrates, and harnesses our differences. When it comes to selecting founders to back, we do not have diversity targets, but we do have processes and systems to ensure we attract, welcome, and equitably evaluate all types of founders. And the interesting thing is that when you design for diversity, you get diversity.

This article highlights our work and results with respect to gender diversity, but the principles and processes apply across all types of diversity, and our work and results extend far beyond diversity of gender.

The numbers make it clear that backing women-led startups is a smart bet: private tech companies led by women have proven to be more capital-efficient, achieving 35% higher ROI, and, when venture-backed, 12% higher revenue than startups run solely by men, according to the Kauffman Foundation. And yet, only 11% of North American venture-back companies have a woman cofounder

At Real Ventures, 50% of our largest 20 investments in the past three years were made into companies with a woman founder/cofounder.

How do we achieve this? Not by setting a quota. We do it via a very deliberate process which involves:

  1. Making a concerted effort to connect with, add value to, and welcome women founders; 

  2. Building a team that is committed to diversity and lives it every day; 

  3. Designing an investment process to mitigate bias.

01. Making a Concerted Effort To Connect With, Add Value To, and Welcome Women Founders 

Women have learned that venture capital is too often hostile territory. Smart women go looking for firms that are actively interested in investing in them. 

While there are plenty of women who are trailblazers, it is often easier for people to visualize success when they have role models who look like them or to whom they can relate. If we want more women in tech, venture, and entrepreneurship, we must profile and celebrate women who are founders, leaders, and investors in these spaces, demonstrating that the startup ecosystem is a great place for successful, driven women to thrive. 

At Real, we do this in a few different ways. Firstly, we make sure that we highlight and feature the incredible women founders in our portfolio through blog posts, events, and in our messaging and the programs we run. We want all entrepreneurs to feel comfortable and excited about reaching out to us. 

Secondly, our entire team is active in the startup community, meeting early-stage founders, speaking at events, judging on panels, and connecting with founders. By supporting and working directly with programs such as Front Row Ventures’ Women Founders Project, Communitech’s Fierce Founders, DMZ’s Women Founders Fast Track and other excellent women-focused programs and organizations, we ensure that we are visible and accessible to ambitious women founders.

Katy Yam, our FounderFuel General Manager, has this to say about our approach:

“Real Ventures has always focused on fostering the Canadian startup ecosystem and, like any community, the entire system benefits when there is gender equity. The data is clear that women founders are more likely to build diverse teams. Women-led companies such as Mejuri, Willful, and Unsplash all went through Real Ventures’ FounderFuel accelerator; other Real Ventures companies including Clearbanc, Renorun, Canvass, and Plum are also led by great women founders who are achieving tremendous success, hiring more women into the tech community, and inspiring others to do the same.” 

02. Building a Team that is Committed to Diversity and Lives it Every Day

It’s not enough to say that gender equity is important to your organization. You have to live it.

As a female venture capital investment partner for the past seven years, who is now leading the firm, I am in the minority. According to two separate reports from Deloitte and Female Funders, fewer than 14% of the investment partners at North American venture capital firms are women. But when there is a woman at the investment table, almost twice as many gender-diverse teams are backed according to the Kauffman Foundation.

Unconscious bias is unconscious and more often than not leads people to unwittingly exclude others as potential collaborators, hires, or in the case of investors, portfolio founders. At Real, we are not only working to mitigate bias within our organization but are also doing whatever we can to improve representation within the startups and other organizations with which we work. 

For instance, John Stokes, a Partner at Real Ventures, recently took action when a portfolio company was looking for an independent board member. Two excellent women candidates were identified and rather than picking between them, John recognized that the best-case scenario was for him to step down so that their insights, experience, and perspectives could be added to what had previously been an all-male board. 

We’re now almost 50:50 amongst the full-time members of the investment team and are at parity across the firm. We run annual D&I training for our entire team, recognizing that we can always improve, and have completely overhauled our investment process in recognition of the unconscious ways in which women founders have historically been judged differently from men. 

3. Designing an Investment Process To Mitigate Bias

Unconscious bias also creeps into the process investors use to evaluate founders — so you have to make a plan for how to counter it. 

Research shows that significant bias can exist in the investment process, particularly at the early stage, where much of the decision process is based on judgement and pattern recognition. In fact, research shows that women founders are held to a different standard than their male counterparts, asked different questions, and scrutinized based on their personality and appearance rather than their personal track-record and company business model. 


Pattern recognition often hurts women leaders. Read about how Mary Haskett, founder of Blink Identity, twists pattern recognition to help her as a woman CEO.


To mitigate this effect, we updated our investment process to ensure that all companies are evaluated on the same criteria. Specifically: 

  1. All founders are told before they pitch what the expectations will be and the type of questions to expect. 

  2. A similar set of questions is asked of all founders.

  3. All companies are evaluated on the same scorecard, which is completed by each partner independently, and then the results are compared before the discussion begins. This criterion is specific, including facts on the team, business, and market.

  4. We evaluate teams on their completeness and complementarity, including diversity of skills, experiences and approaches.

This process enables us to have a balanced, objective discussion. We do our best to evaluate teams based on facts and specifics, not on our interpretations or stories about the founders that could be based on biases or past experiences.  

Removing bias from investing is good business. We are committed to investing in and supporting founders who will build massively impactful and successful companies. We allocate capital with the mandate to maximize returns and we know that the best way to do this is to evaluate all opportunities and founders on an equal footing. Anyone, regardless of gender, ethnicity, religion, or age has the potential to harness their passion and unique experience to build a great company. We feel passionate about our role in enabling this by supporting the very best founders.

Please feel free to contact me at janet@realventures.com.