Forget rags-to-riches stories and tales of university dropouts like Mark Zuckerberg. Read the bio of the average British startup founder, and a few names keep popping up: Cambridge, Oxford and management company McKinsey. Coming from money makes it easier to make money, but a lack of financial diversity among founders could be holding back British tech. Put less carefully, are British startups too posh — and does it mean we’re missing out by reserving tech roles for the upper crust?
Some startup founders admit the benefit of their privilege — though not all. While failing to pip Boris Johnson to PM, Jeremy Hunt spoke about the trials of starting Hotcourses – the education startup he co-founded in 1996 – saying it was a “daily grind to stay alive, pay your bills,” despite his wealthy family background. Others are a bit more woke. Improbable founder Herman Narula acknowledged that early funding from family and friends totalled £1.2 million, with the team working out of the family home, a grade-two listed mansion known as Hyver Hall.
“I will be honest with you: I couldn’t have done this if it wasn’t for being able to get some money from family and relatives,” he told WIRED in 2017. Monzo’s co-founder Tom Blomfield worked for a year without any salary. “And I knew if I failed, I could just go live in my parents’ garage,” he told WIRED this year. There are founders who have come from less obvious privilege. Starling Bank’s Anne Boden is the daughter of a steelworker, but followed a longer route, starting the challenger bank after a long career in finance including a stint as COO at Allied Irish Banks.
When women, black or ethnic minorities, and people from lower socio-economic backgrounds are left out of the tech industry — and they are — the technology industry is missing out on talented people with good ideas. Finding good staff is hard, but it’s even harder when you ignore the majority of the population, and coming from wealth doesn’t mean you’re better at starting a business or have a more technical mind.
“We’re looking for whatever correlates with success — it’s not obvious to me that being part of the establishment correlates with success,” says Ed Lascelles, a partner at Albion Capital. “If anything I think the data shows otherwise.” Indeed, he argues diversity — of any sort — helps with decision making inside a business, leading to better outcomes, and and a higher return on investment for him and Albion.
Setting aside VCs chasing payouts, leaving out people with working-class backgrounds is also a problem for society. The UK’s social mobility is stalling, but tech has the potential to be more of a meritocracy than other industries — if you can code, no-one cares where you come from. “Computer science could potentially be the greatest social mobility tool of our age,” says Matt Clifford, co-founder at investment firm Entrepreneur First.
What can be done? Money is the most obvious sore point. Some investors require founders to come up with an initial cash injection from their own savings or borrowed from friends and family, as Improbable’s Narula did. But half of Britons in their 20s have no savings at all; low-income families have an average £95 in savings and investments, versus an average of £62,885 socked away by high-income families.
Clifford learned that lesson soon after co-founding Entrepreneur First, a funding system that invests in people rather than companies. EF searches out people with specific skills or talents, and then pays them to quit their jobs and spend a few months considering whether to start a company, helping them find a business-minded co-founder within the EF community. “It’s the company’s mission, and business model, to understand the barriers that might stop exceptional people from starting a company,” he says.
For its first cohort, EF didn’t didn’t have the funds to pay would-be entrepreneurs. While it didn’t charge for access to its support and network, there was no stipend on offer. “It was a pretty privileged group of people, to be honest — we didn’t select for that, but equally if you’re saying to people to come to London and see if you can build a company, you’re going to attract people who either can live in London or rely on their parents to support them,” Clifford says.
To address that, EF told its investors it needed to pay people to take part in the programme. “What we saw the minute we started doing that was that the socio-economic diversity of the people that joined us was so much wider,” Clifford says. It works: EF backed the founders behind Magic Pony, which sold to Twitter for $150 million (£115 million) in 2016, and Bloomsbury.AI, which sold to Facebook last year.
To address the posh gap, money needs to be made available at earlier stages, for those without family connections, though crowdfunding, startup ISAs and loans can help. Accelerators and other startup programmes need to pay a living wage, so people without access to the bank of mum and dad can still afford to eat and pay rent, and universities need to do more to educate a wider range of students from all backgrounds.
That’s money. Another part of the privilege equation is education. Though the world of British startups is swamped with founders who came up from private schools and Oxbridge, it’s less so than other professional industries, according to a report from The Sutton Trust called Elitist Britain, which looked at the impact of independent schools and Oxford and Cambridge.
While 71 per cent of senior judges, 57 per cent of the cabinet, and 44 per cent of newspaper columnists attended Oxbridge, only nine per cent of entrepreneurs and 12 per cent of tech firm CEOs went to either university, according to the report — that’s still higher than the less than one per cent of the population that’s Oxbridge educated, but startups do remain less dominated by those with elite educations than our government. It’s worth nothing that going to a top university doesn’t necessarily result from a privileged background; six in ten students to Oxbridge come via state schools, but that still means the seven per cent of British students who go to a private, fee-paying are disproportionately represented.
That’s just Oxbridge. A third of tech CEOs went to a Russell Group university — a self-declared group of elite educational institutions, which includes Oxford and Cambridge — while a third more were educated internationally.
Entrepreneurs and tech firm CEOs were also more likely to have attended an independent school, at 24 per cent and 26 per cent respectively, versus seven per cent of the wider population, the report showed; select for only those educated in the UK, and that figure leaps to 45 per cent for tech CEOs. In short, a disproportionate number of tech CEOs and entrepreneurs in the UK went to fee-paying schools and top universities. “It’s almost certainly the case that studying somewhere like Oxford, Camridge or Imperial will give you slightly better opportunity to go into entrepreneurship. But it’s hard to tease out from the data,” says Sam Dumitriu, research director at The Entrepreneurs Network.
Clifford says his firm did recently sign an 18-year-old with a neural imaging system, but that’s the remarkable exception to the rule. Indeed, it’s no surprise that only a handful of EF members are without a university credential as the investment firm focuses on technological breakthroughs, and that usually requires academic research. That means universities need to help ensure diversity. “One thing we have struggled with in the past… is if you look at the diversity of their classes, in particular computer science, there’s a real lack of diversity,” says Clifford.
Students from poorer students are less likely to go on to become inventors — but not for lack of ability. Research from Raj Chetty and John Van Reenen in the US showed that children who did well in maths were likely to become inventors, but only if their family was wealthy. Indeed, children with parents in the top one per cent in terms of income were ten times as likely to become inventors than those who grew up in the bottom half in terms of wealth. Those “lost Einsteins” are costing the US economy and slowing its innovation, the researchers argue.
The gap isn’t about money, but role models; poorer people simply don’t know as many entrepreneurs, inventors or startup founders, so their children aren’t aware these routes are possible. Dumitriu is partway through research in this area. “One of the things we’re finding is that people who have become entrepreneurs are more likely to say that at school level it was talked about more often, or that they know someone who is an entrepreneur,” he says. This is where mentors come in — and schools’ career advisors. Students from all backgrounds need to be told that computing science and startups are genuine options for them; Clifford says he never heard about either when a student at a state school in Bradford.
Mentors spreading that message are most effective if they represent the target audience, notes Dumitriu, suggesting there’s good reason to keep working-class success story Alan Sugar on television, as his story may be actually helpful to children from similar backgrounds. On top of knocking down hurdles to their own success, working-class founders need to promote entrepreneurship as a career option for students coming up behind them.
Even if a working-class, would-be tech founder gets a top-notch education and finds financial backing, they face another hurdle: so-called soft skills. “Careers like banking and finance have traditionally been the highest-paid graduate jobs, but there’s a real emphasis on soft skills that are often the disguised form of social preference — like how to eat dinner in a fancy restaurant or talk about the opera, or whatever,” Clifford says.
It may be a bit of a cliche, but there are two types of founders, suggests Lascelles: the technical genius with the idea, and the business friend who knows how to make it happen. If the tech founder went to Oxbridge, worked at a tech giant like Google, or at a consultancy like McKinsey, they’ll have had the opportunity to meet a business partner; if not, how do you find one? That’s the idea behind EF, says Clifford: helping the two sides of startups meet. “You don’t need to have stumbled upon the right kind of co-founder by having gone to Stanford or worked at Google together to be an entrepreneur […] We want to make entrepreneurship viable purely on the basis of talent,” he says.
The business founder’s role isn’t just going to fancy dinners and making small talk with VCs. They need to network to find funding, too. Lascelles says this used to be more difficult, but the explosion in accelerators and similar programmes has made it possible for anyone with a good idea and a business plan to get funding. “There’s so many funders, so many networks, so many people out there — if you can’t figure that out at this early stage, how are you going to be able to figure out all the hard stuff that comes later?” he says.
That said, pitching isn’t easy when it’s a room full of wealthy rich white men and you’re female, black, disabled or something else they’re not. “If you’re a working-class person pitching someone who all went to the same universities, and even the same schools, that’s going to be just as alienating an experience as if you’re a young woman pitching a group of all men,” Clifford says. “We do have to extend the critique and the critical questioning of ourselves to economic background.”
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