Companies founded by all-female teams received less than 1% of U.K. venture capital investment funds, according to a new report from the state-owned development bank.
The report, which investigated the representation of women in businesses backed by U.K. venture capital firms, found that U.K. venture capital deals with all-female founding teams made up 4% of deals in 2017 compared with 83% of deals completed with all-male teams. Deals with mixed gender founding teams made up 12% of the total.
In the U.S., the outlook is similar. In 2018, U.S. female founders raised $2.88 billion across 482 teams, a mere 2.2% of the $130 billion invested by venture capital last year, according to data reported by Fortune from PitchBook and All Raise, which advocates for women in the venture capital and the startup space.
Hu Wagner said part of the issue is the vast majority of pitches to venture capital firms are from all-male founding teams. But that is not the entirety of the problem, she said.
"There are ... mixed gendered teams, all-female teams, who come in, who do apply and it does appear to be that they don't get through at the same rate of success," Hu Wagner said.
She believes the asset class can change the way it seeks opportunities. In a bid to improve inclusion, the BBB is calling on firms to make efforts such as developing steps to increase diversity and tracking their impact.
The BBB's £2.5 billion British Patient Capital program, which makes venture and growth capital investments, is adopting the Institutional Limited Partner Association's diversity template for venture capital firms that apply for funds. The template, which has launched recently, enables venture capital firms to measure and report gender and ethnic diversity by role.
Catherine Lewis La Torre, CEO of the BPC and British Business Investments, said in a statement that there is "growing consensus that diversity is a critical success factor for high-performing teams." If U.K. venture capital investors are not promoting the need for diversity, "then we are failing in our mission to spread best practice and, importantly, missing out on better financial performance."
The BBB found there were minor signs of potential bias against all-female founder teams, which Hu Wagner believes partially comes down to unconscious bias. In 2017, 61% of investment committees didn't see any all-female teams and 24% didn't see a single female in any of their introductions, according to the BBB report. Since female representation is not common, Hu Wagner said women appear atypical when pitching as part of a founding team as opposed to their male counterparts, who are "business as usual."
In terms of diversity within U.K. venture capital firms themselves, women make up just 13% of senior people within teams, and 48% of firms have no women at all.
Hu Wagner said the nature of a venture capitalist's job is to back businesses that provide products and services appealing to a broad spectrum of people. In order to increase the number of female-founded businesses venture capitalists back, their own gender should not be a factor.
"Human beings of either gender can exercise their imagination and their empathy in order to become more approachable and to work better with people who look different from them," Hu Wagner said. "That is what we're asking individuals to do in pursuit of a better return."