Meet the investor: Kevin Withane, founder of Diversity X

Kevin Withane is the founder of Diversity X, a venture capital firm in the making, community and ecosystem that supports underestimated founders. He’s also a lawyer and an investor who is actively striving to improve diversity in the investor community. 

Kevin had been working as a lawyer for over 20 years when he realised that something had to change. 

As a senior lawyer and Ethics and Compliance Executive at a FTSE250 company, he was already putting good processes and procedures in place. But he felt like there was something missing.

After a period of reflection, he realised that his passion was focused on people and getting the best out of them. He wanted to connect that to the purpose of the organisation, while driving forward ethics and sustainability. It’s a process he has personally dubbed “operationalising and good stuff”. 

We spoke to Kevin about what drives him and the good work he’s doing to bring about change.

The drive to serve start-ups

Data shows that “operationalising” works for larger organisations, because the process often helps to improve bottom-line growth. But Kevin realised that the same approach could benefit start-ups.

“I know how expensive it is to retrofit this kind of work, but if you build it in at the beginning then it’s like breathing air – you just do it. That's what start-ups need to do,” explains Kevin.

He says there are also huge benefits for start-ups in terms of improving the value of their business from an investor’s perspective. 

By operationalising at the start, founders can go to investors with a company that’s further down the line. And that means the money that’s invested can help build growth rather than be spent on putting procedures and policies in place.

“The problem is that start-ups can't afford me, and I'm not scalable either. So I began to ask, ‘how am I going to do this?’” Kevin said.

Kevin recognised that his experience and skills could be put to good use with start-ups, but there was a huge personal driver too: wanting to make the business world a fairer place for his kids.

“That's important to me. I have three mixed-race children, and my daughter is nearly 12. She could enter the workforce in six years’ time. She's got to work harder than even the two boys, because she's also female. Society makes it that way for her, and I can't have that. So I only have six years to change the world.”

Setting up a community for underestimated founders

The idea for Diversity X came as a direct response to all these problems. Setting up a community for underestimated founders was the perfect way to support start-ups and also address the inequalities in the business world.

“I use the term underestimated intentionally – not underrepresented – because there's not a lack of representation in the founders, there’s a lack of representation in the equitable allocation of capital,” he says. “That's what I'm working to change.” 

“The lack of funding going to underestimated founders isn’t the only problem, but it's a key part of it. People tend to naturally gravitate to people who look the same, feel the same and sound the same. So what if you only have straight white men, as a majority, making financial decisions?”

He gets frustrated when firms talk about diversity in their workplace or shout about a new partner. 

“That's lovely. But who's on the new investment committee? Who's the decision maker? Who gets to say, ‘yes, we're going to invest’? That still tends to be heavily skewed to the same straight white men.”

The Diversity X ecosystem

Starting in October 2021, Diversity X has already attracted 240 underestimated founders. It’s creating opportunities to access capital and Kevin is also working on launching a VC fund. 

The fund will invest in companies within the community where there are growth opportunities. The main requirement to join is that you’re an underestimated founder. 

“It's designed to be a safe space that’s all about sharing,” explains Kevin. “There are no competitors, only collaborators – you might have been doing the same thing as someone else, but you can learn from each other. It's also a place where you can vent.”

Founders join an online community first, but they are already splintering off into groups based on their geographical location or specific interests. Diversity X also hosts meetups and events, and there are plans in the pipeline for learning sessions on core areas like marketing.

Changing the investment landscape for the better

The similarities between what Diversity X and Ethical Equity are aiming to achieve are not lost on Kevin. When he first connected with Ethical Equity founder Ali Kazmi, he remembers that it was like “meeting a brother from another mother”.

“We see the world in the same way and we share the same struggles. We're both trying to help other people, but the reality is that we need to raise money to do that. And that's extremely hard because we are also underestimated founders.”

Gathering data on a wider pool of founders

So what does he think needs to happen for things to change? The first thing is gathering more data on a wider pool of startup founders, as this is what investors look at when they’re filtering out their options.

“When you look for data on a certain type of person, it isn’t there because we haven’t invested in them or given them the opportunity before. So we’re in this circular trap constantly going for the same people.”

Providing access to investors

The second important factor is creating access to investors. “Underestimated people don't always have access to investors. VCs like to have warm introductions, but if you don't have a network, you're dead in the water and we’ve got to change that.”

It’s also crucial to have a wider range of people investing smaller amounts of money. 

“Starting off with angels, we need more people of colour, more women, being able to put smaller tickets in. Two and a half grand rather than £25,000, so they can invest in the fund, but are derisking and will still get all the metrics that come out of that.”

“It's a long, long road but you've got to be intentional about building it. There are lots of groups out there like Ali and I, and we need to bring them together. The power of the collective is always more powerful than the individual.”

Find out more about the benefits of ethical investments or start your investment journey by registering as an investor here. Find out more about Diversity X and join the community here.