BDC Report suggests VCs are developing a more diverse workforce but facing retention challenges

In February 2022, the Business Development Bank of Canada (BDC) developed a national diversity, equity and inclusion (DEI) reporting template for Canadian general partners. BDC Capital sent the reporting template to its 71 general partners and their 1,115 portfolio companies. At the end of 2022, 80 percent (57) of the general partners and 49 percent (544) of the portfolio companies had provided responses. The resulting DEI metrics were shared in December 2022. While the results are promising in some respects, the data demonstrates that there is still significant progress to be made on the DEI front, notably with respect to employee retention.

Among the encouraging news is the finding that women and visible minorities make up at least half of new hires at 49 percent and 45 percent of general partners, respectively. Further, in terms of career advancement, women and visible minorities account for at least half of promotions at 72 percent and 53 percent of general partners, respectively. However, the data is less encouraging when it comes to employee retention as women and visible minorities account for at least half of employee departures at 48 percent and 38 percent of general partners, respectively. Given the lack of gender and racial parity among general partners, these numbers are difficult to justify.

Alison Nankivell, Senior Vice President at BDC Capital, offered two possible explanations for the employee retention data. First, the increased level of employee departures could be a symptom of the current competition in the labour market. Second, some general partners may be having difficulties creating inclusive cultures where diverse employees can thrive. Regardless of the reasons, BDC Capital’s report serves as a reminder of the need to improve DEI metrics not only in employee retention but across all areas in the venture capital ecosystem.