Startups supporting Diversity & Inclusion in the workplace
Together with swiftscale we mapped 60+ startups and scaleups working on addressing and fostering Diversity & Inclusion (D&I) in the workplace, an important topic at the intersection of two socially related UN Sustainable Development Goals: Gender Equality (#5) and Decent Work and Economic Growth (#8).
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The demand for D&I tech has grown significantly in recent years, with its current market size estimated at $313 million, up from $100 million in 2019. This is additionally evidenced by the growth of D&I tech vendors in the landscape which have increased by 87% between 2019-2021 (RedThread Research). Similarly, the number of HRTech vendors offering features with a D&I focus have increased by 136% over the same time period.
The most recent push for societal reform and socio-economic effects of Covid-19 have played a role in accelerating this growth, as employers look to tackle systemic inequalities in the workplace and retain top talent. Late scandals at Google and Uber have created substantial internal and external backlash while in the post-pandemic world employers are noticing a record number of employees switching jobs in a mass movement dubbed the “Great Resignation”. A trend that has disproportionately affected women from underrepresented ethnic minority backgrounds more than other employees. These trends are predicted to get worse, unless employers start utilising tech innovation to make their workplace diverse and inclusive for all.
Venture capital investment into D&I companies (2017-2021 YTD)
The year 2021 has seen record growth within the D&I landscape, with €218M raised by startups so far. The vast majority of funding has been directed towards North America where D&I has experienced substantial growth (+518% YoY) while in Europe capital investments in the space nearly doubled to €15M. In that regard, the three most capitalised startups are currently all based in the United States:
🇺🇸 Syndio Solutions – a HR analytics company focussed on promoting fairness in the workplace – €74M of total funding.
🇺🇸 Canvas – a diversity recruitment platform – €71M of total funding.
🇺🇸 Cleo – a family benefit platform – €61M of total funding.
Venture capital investment into D&I companies per HQ region (2017-2021 YTD)
The D&I ecosystem is growing and the investor community is starting to understand and capitalise on the intrinsic value of fostering Diversity & Inclusion in the workplace. There are a few concrete reasons as to why this is the case:
- Companies with inclusive cultures tend to attract and retain a wider talent pool especially as more socially aware millennials become the largest generation in the workforce (Deloitte)
- Diversity in leadership fosters creativity and resilience with firms encouraging such practice generating nearly half their revenues from innovation (BCG)
- D&I is significantly correlated with financial outperformance and productivity (McKinsey, Academia)
- Client, employee and investor demand for D&I will grow in light of the wealth transfer to the millennial generation that is expected to take place over the next few decades (Bloomberg).
Investment into D&I companies is increasing across the board, but not evenly. Issues which have received a lot of attention, such as diverse recruitment and the gender pay gap, have attracted funding to reflect this attention. There is still work to be done in improving access to funding for startups working to address other challenges in workplace representation and access.
Combined venture capital investment into D&I companies per category (2017-2021 YTD)
Technology and social change continue to elevate D&I across industries in an increasingly complex and globally connected work environment. As new generations of socially conscious customers, employees and investors emerge, organisations will need to adapt and tap into disrupting technologies to drive progress and remain competitive.
What it means to be diverse and inclusive has far reaching scope, and there are several areas that we haven’t covered in the landscape that we will address in the next update:
- Startups increasing the focus on expanding areas of support for women currently overlooked by employers, such as infant loss, infertility, menopause or miscarriage.
- Startups addressing and alleviating the burden of mental health struggles for everyone in the workplace.
- Startups solving the challenges of a workforce spanning multiple generations.
- Startups championing disability inclusion, ensuring that workplaces are environments for everyone to excel in.
Please write to us if there are areas you think we have missed out or ones you feel should be included in our next update.