Death of tech startups in pandemic. Bolstering diversity – Computer Weekly Downtime Upload podcast

In this episode of the Computer Weekly Downtime Upload podcast, Caroline Donnelly, Clare McDonald and Brian McKenna discuss the collapse of UK tech startups in the wake of the pandemic, driving diversity and SAP’s “5 & 5 by 25” procurement pledge.

With a nod to Halloween, the team begin the episode with some extensive chat about this season of ghosts and ghouls – when the boundary between the living and the dead, not to mention demons, is at its most porous. The team talk horror as a genre, on film and TV. This year’s Halloween is, of course, set to be virtual, possibly foreshadowing a digital Christmas?

Crossing the boundary from Halloween to the main business of the episode, Caroline kicks matters off on a real world “quick and the dead” theme – tech startups hitting the wall because of Covid-19.

The public health pandemic has caused a record spike in collapses of UK tech startups. More than 1,000 of them have filed for administra­tion, liquidation or dissolution since the start of lockdown, according to research conducted by co-working provider Plexal and UK database for fast-growth companies, Beauhurst.

There was also a spike in startup deaths in September, notes the CW story, written by Sebastian Klovig Skelton. Also, many of those who have gone under were early-stage startups, and there are signs of growing risk aversion among investors.

Caroline goes into the story, but also speculates about its significance. Might consumer habits have changed during the pandemic to weaken the value proposition of certain startups? Will business IT buyers give less established suppliers a wide berth for fear of their prospects?

Government financial support in the UK has also benefited early-stage startups much less than more established ones is a point from the story that she draws out. Could we lose an entire generation of UK tech entrepreneurs? Or, indeed, see an exodus from self-employment to the safer haven of employment in large corporates? The team also speculate about how badly this mass demise of startups is affecting groups that are under-represented in the technology business as it is.

Clare then moves the conversation on to stories that indicate how progress can be made in terms of diversity and inclusion in the tech sector. She talks about two events she attended recently: Black Tech Fest and the Women in Business Expo.

She tells how a panel of experts at Black Tech Fest said that a push for diversity and inclusion should come with support from firms’ leadership. And she says she found both events she attended demonstrated a common theme – that companies will often say they want to engage with or hire women or people from more diverse backgrounds, but say they can’t find them. And they say that because, bluntly, they are not looking hard enough, or their cultures are not sufficiently attractive, welcoming and inclusive.

In her piece on the panel discussion the Black Tech Fest, Clare quotes Gaby Hersham, CEO and co-founder of Huckletree: “This concept that diverse talent is hard to find is not true – let’s flip that on its head.” Hersham pointed out that “diverse talent can also be ‘selective’ about the companies they want to join, ensuring that they choose an employer with an inclusive culture where they will feel welcome”.

And in her piece on the panel discussion at the 2020 virtual Women in Business Expo, Clare quotes Jane Frankland, director of Women in Cyber Academy: “Those two things [hiring and organisational culture] need to be really addressed to get the women in and enable them to succeed.”

Companies should look carefully at the language they use to recruit is one specific tip that Clare draws out in the episode. And she reiterates a point often made on the podcast – progress is slow. As she says in her piece, Women in Business Expo: If you can’t find female tech talent, you have hiring and culture issues: “Recent BCS research [found] that women account for around 17% of IT specialists in the UK, a figure which has only grown by 1% over the past five years.”

Brian then goes on to talk about one big IT company that says it is trying to make a difference to the economic wellbeing of businesses owned by women, or people from BAME communities. This is SAP, with its pledge to devote 5% of its procurement spend to social enterprises, and 5% to diverse suppliers by 2025.

SAP is calling this “5 & 5 by 25”, reports Brian. This is a board-level initiative for SAP, driven by Adaire Fox-Martin, who is also involved as a “global buy-social ambassador” with Social Enterprise UK, a network of social enterprises in the UK.

A social enterprise is a business that donates or invests its profits for social good, and the intention is for SAP to channel 5% of its addressable procurement spend to such firms. The other 5% will be routed to companies that are owned by women or by minority ethnic and black communities.

Brian talks on the podcast about his interview with Singapore-based Ben Redwine, general manager, Asia Pacific Japan, for SAP Ariba, which is a business network used to procure and sell goods and services.

Brian recounts that, among other things, Redwine said SAP’s pledge goes beyond corporate social responsibility donations in the sense that it funds the growth of companies. He also expressed the view that there is a new generation coming to command in companies and public sector organisations that wants to do social good, as well as a new generation of consumers who want to be assured that the goods they buy are not tainted by slavery in supply chains, and the like.

He gave an example in Australia, where SAP launched a diversity marketplace with IAG, an insurance company (Insurance Australia Group). They had objectives for spending with indigenous companies and spending with women-owned businesses that Ariba is now facilitating, with a diversity marketplace.

Podcast music courtesy of Joseph McDade