The case of the 1% - Black Women in Private Equity

According to the Diversity & Inclusion Report published by the BVCA and Level 20 in March 2021, while 38% of the PE and VC workforce is female, just 12% are from ethnically and culturally diverse backgrounds, and just 1% are Black from African/Caribbean backgrounds. So not only are women under-represented in the industry, but women from different ethnicities and particularly Black women, make up an even smaller proportion. The discrepancies at a senior level are even more extreme. Only 3% of senior female professionals in PE identify as Black, Asian or other ethnic minority, and Black women specifically account for less than 1% of senior roles. This means that there is a significant lack of Black female role models in the Private Equity industry.

These findings correlate with the Good Finance Framework findings, published in June 2021 by Women in Banking and Finance. The document identified that Black women are the group within financial and professional services who fare the worst in terms of career progression.  Of the 44 women interviewed for the study, 11were Black women. It stood out that 8 out of the 11 Black women interviewed (roughly 73%) described being disregarded in meetings and puzzled over whether it was attributable to their gender or their ‘race’.

Race is a sensitive concept. It is a categorisation that is based mainly on physical attributes or traits. People are assigned to a specific race simply due to having similar appearances or skin colour (for example, Black or White). Although it's now widely accepted that race is a social construct with no scientific basis, experiences of racism do exist. Hence, the concept of racial identity or race is still important to many socially, and it is the reason why it is used in this article.

Specific to the Black women interviewed, a theme of having experienced both high and low obstacles at various stages of their careers emerged more clearly than for other women. For the most part, headwinds were experienced more intensely by Black women. Black women did not have differing perceptions of what the tailwinds were in their careers but experienced them less often. Interestingly, the study also highlighted that Black women are still facing racist micro-aggressions in the financial services sector. A micro-aggression is a subtle but offensive comment or action directed at a member of a marginalised group that is often unintentionally offensive or unconsciously reinforces a stereotype. Micro-aggressions can cause harm.  Examples of comments or actions which can be seen as micro-aggressions include:

-        ‘You're so articulate’

-        'Where are you really from?'

-        'Your name is so hard to pronounce'

-        'Is that your real hair?'

-        (Interrupting) 'Well, actually, I think…'

Additionally, the need for networking to provide better access to the highest level of gatekeepers in the financial services industry was stressed more often by Black women. Here, the word ‘gatekeepers’ is used to describe the people who hold power and willingness to open doors to opportunities. Gatekeepers get to decide who gets particular resources and opportunities, and who does not.

The Good Finance Framework also emphasised the feeling among women that there were fewer ‘mediocre’ men in roles where Profit and Loss metrics (P&L) were visible. However, men in these roles who did not perform highly were often re-shuffled into roles where performance was less visible. The Good Finance Framework noted that women appear to face different norms to men. Of the Black women who also emphasised the theme of ‘mediocre’ men (7 out of 11), three (or 27%) specifically mentioned the feeling that their performance level had to exceed both men and white women by a specific margin to get the same recognition. Two of these women suggested that the intersectionality between their race and gender caused this difference.

Data published in another study by The London School of Economics (LSE) and The Inclusion Initiative (TII), shows that Black women – regardless of whether they are from the UK or elsewhere – have the lowest probability of being top earners, with UK-born Black women being the most under-represented group in the 1% top earners. The study analyses how overall, the biggest differences between Black and White women are in banking, finance and insurance. The research reveals that Black women experience significantly poorer labour market outcomes in terms of earned income than any other racial and gender group in society. Even after accounting for a variety of factors such as occupation, childcare responsibilities, working hours and education levels, there are still significant earnings gaps for Black women. 

In addition to raising the importance of disaggregating black and minority ethnic workers as far as data will allow, the LSE study notably highlights that Black women have worse career outcomes compared to other minority ethnic workers. 

One may wonder what holds Black women back in earnings in the UK, particularly in highly skilled roles within banking, finance and insurance, where the gaps are the largest. The Private Equity industry could lead by example by working towards identifying the obstacles that Black women specifically face to accessing and progressing in the industry. The mechanisms through which those challenges can be removed need to be identified. This could have a significant impact in helping thousands of talented, overlooked Black female talents in the UK.

As a conclusion, Black women are the group that is right now most left behind, both by the Private Equity industry and wider Financial Services, and for reasons that have nothing to do with their ability.