T H E I N V E S TME N T E N V I RONME N T Pa t hways t o Equ i t y
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McKinsey’s 2020 diversity report found that the greater the repre- sentation, the higher the likelihood of outperformance. Companies with more than 30% women execu- tives were more likely to outperform companies where this percentage ranged from 10 to 30%, and in turn, these companies were more likely to outperform those with even few- er women executives or none at all. A substantial differential likelihood of outperformance (48%) separates the most from the least gender-di- verse companies. In the case of ethnic and cultural diversity, McK- insey’s business-case findings are equally compelling: in 2019, the most diverse companies outper-
formed the least diverse companies by 36 percent in profitability, slight- ly up from 33 percent in 2017 and 35 percent in 2014. 17 Over the past few years, various mentorship programs have been created to support the participation of underrepresented groups in the early-stage ecosystem. Although many of these mentorship programs are well-intentioned and helpful, the most important fact is that they are practical and drive revenue through introductions. Venture growth and access to capital is driven through network introductions and corpo- rate connectivity. Mentorship can facilitate network introductions that
lead to concrete business impact such as securing an anchor client. As we have seen, the major barrier is access to capital and this can be changed through introductions that source capital and create market traction. It has been stressed that the overar- ching theme to change is intention- ality. There is incredible untapped potential in underrepresented com- munities and entrepreneurship can generate economic opportunity and wealth creation. Business lead- ers and policy-makers must take a long-term approach when suggest- ing structural changes to drive en- trepreneurship in underrepresented
17 MicKinsey Diversity wins: How inclusion matters (2020) www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters
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