After working together at Goldman Sachs in London, managing partners Ali Najafbagy and Pauline Wink returned to the Netherlands and founded 4impact, which launched in 2019. The fund focuses on digital technology ventures in three investment areas: inclusion, environment, health & wellbeing. 4impact is also one of the founding members of #Fundright.
We talked with Najafbagy about how the firm ensures (e)quality in their startup assessment process and some of the challenges to improving multicultural diversity in the Dutch startup and VC world.
Why 4Impact joined #Fundright
For us at 4impact, diversity is a very natural representation of society but one that needs much more attention and action so being a part of #Fundright wasn’t even a question.
As a fund, we believe that diversity is incredibly important, not just in gender but in all segments including diversity in cultural background but also in personality traits and skill sets.
Our team members have been fortunate to have lived, studied and worked in 10 different countries, which adds perspective. And we witness the benefits of diversity and additional perspective at 4impact on a daily basis.
This is also reflected in the startup teams we look for: diversity is a powerful ingredient for success. We have always promoted diversity but #Fundright has certainly helped us approach this topic much more proactively.
It is also fair to say that #Fundright is a movement and an enabler but not a solution. We as VCs together with other organisations have to accelerate this movement towards equality. At the same time, every person is diverse in some way and if you want something, it starts with your relentless focus and pursuit.
Do you actively encourage the startups you invest in to improve their diversity?
We believe that you get diversity through quality. I wrote an article about our views on (e)quality on LinkedIn a couple of years ago. Looking at our own firm, there's no reason to believe that you can’t find that same diversity and quality in startups.
Early-stage startups rarely start with well-balanced complimentary teams. So they're automatically going to miss some personality traits and skill sets. Certainly in our field (tech), these teams may be very good at building products, the question then is: Are they solving a problem? How big is that problem? Are they also good at selling? How are their storytelling skills? Can they create a compelling customer journey? And, ultimately, how can we help complement the team in this phase with the budget and the tools we have available?
One of the companies we’ve invested in, Equalture, has developed a great tool for this and are shaping the world of unbiased hiring. Equalture provides a software solution that helps assess candidates based on their skill sets, ambitions and personality traits. Not on their age, gender, color, background or anything else. They do this with a combination of gamification, artificial intelligence, online information from sources like Linkedin and other data points.
The solution then compares the candidate outputs with those of the hiring company’s existing team and with people in similar positions at other companies. This way candidates are objectively ranked and easily compared based on scores, giving you a recruitment pipeline made up of the best candidates that possess the skills and traits you’re missing or require in your team. Equalture is active in eight countries and growing.
This is an incredibly powerful tool to help companies overcome unconscious bias in their recruitment pipeline at all levels. Just look at the recent #Kiesmij campaign from the Dutch Government.
Do you have any advice for VC firms that want to attract more diverse talent?
A lot of it comes down to the talent pool, both at VCs as well as startups. We have excellent people in The Netherlands, but to increase diversity, we need to do an even better job at attracting international talent. Our country is fabulous, well-organised, relatively affordable and a beautiful place with excellent infrastructure for people to come live and work, before, during and after coronavirus. Yet, I see little to no international people at VC firms, and that includes us too.
Luckily, there is more international talent in the Dutch startup landscape. We’re constantly engaging with mixed Dutch or all international teams and that’s diversity too. A great example is our portfolio company Envision started by two inspiring people from India. One moved to study here and the other joined from India to become co-founder of Envision. Envision is a software platform that uses artificial intelligence to help the 300 million blind and visually impaired people and the 700 million dyslexics globally to hear what we can read or see using the camera on their mobile phone or via smart glasses.
Today, c.18 months after our investment, the team is very diverse in terms of gender, cultural background, as well as working with visually impaired team members. The beauty of it is that they hired purely based on the quality of skills and the personality traits they needed. Not on diversity. For Envision, like for Equalture and for us, diversity is a result of searching and hiring for excellence.
Role models and mentors can show us different paths, but we have to choose which one to take
Diversity is a broad term and encompasses many groups of people. Gender diversity is an incredibly important category and one that can be measured well. It is very unfortunate that we are nearing 2021 and women are still not being given equal opportunities in different places including in advanced and well-to-do countries. That’s why #Fundright’s mission and vision are so very important. In addition to #Fundright, I’m excited to see strong initiatives at the government and corporate levels that are embracing gender equality.
Another very large diversity category consists of those with a different cultural (migration) background. The Dutch Central Bureau of Statistics (CBS) states that 24.5% of the Dutch population has a “migratieachtergrond” as per 1 October 2020.
Granted, it is more challenging to measure multicultural diversity. If you asked me where I’m from, I'd say I'm Dutch because I was raised here, although I wasn’t born here. According to the CBS though, I fall within the 24.5%. We need to work towards a world where this doesn’t matter. Where capabilities and character matter.
The value of strong role models cannot be underestimated here. We luckily have an increasing amount of impressive female role models paving the way for others, like my co-founder Pauline and Charlotte and Fleur from Equalture. It’s important to establish this in other areas of diversity as well.
But in the end, “diverse” people need to make their own choices, remain ambitious and reach for the stars. Just like everyone else. The equality solution will not be handed down by role models, VCs, #Fundright nor the Government.
The future of #Fundright
VC firms have to go through enormous amounts of data and meetings to assess and find those few precious startups with a mutual fit. One of the things that really helped us to e.g. find Equalture was data made available via the #Fundright Bidbook. So, in addition to the Techleap reports and online deal data platforms, these kinds of reports are incredibly helpful.
Looking at the future of #Fundright, 4impact is excited to contribute to reaching the gender goals that have been set. In addition, I look forward to contributing to more research and actions to improve other areas of diversity such as multicultural inclusion.
Many believe that improving diversity on multiple fronts is challenging. It is, but we love a good challenge don’t we? #Fundright is leading the way to mobilise and enable solutions for this challenge. I look forward to leaping forward together with you.