• 77% of start-ups that are recruiting are actively seeking diverse candidates
• Three quarters (74%) cite a barrier to hiring diverse talent, including lack of applications and candidates
• Start-ups say diversity improves innovation (73%), recruitment (58%) and commercial performance (56%)

Nearly two thirds of start-ups (63%) say making their workforce more diverse is a strategic priority in the year ahead, according to research from Innovate UK, the UK’s innovation agency. Innovate UK found a further fifth (22%) of start-ups say they have done some work to make their workforce more diverse but could do more, and only 16% say making their workforce more diverse is not a strategic priority.

The research found that six in 10 (62%) start-ups are currently recruiting and of these 77% are actively recruiting diverse candidates. Across all start-ups, nearly three quarters (71%) have diversity targets, regardless of whether they are currently recruiting or not.

Despite the demand for diverse talent, Innovate UK found that more than half (57%) of companies say it is difficult to find and recruit diverse talent and three quarters (74%) cite a barrier that can prevent them hiring more diverse talent. The biggest barriers start-ups face are a lack of applications (not enough opportunities to interview diverse talent – 24%) followed by a lack of candidates with experience in similar roles (13%).

Start-ups believe the greatest actions that could encourage more diverse talent to enter their sector are education-linked. The top solutions – both cited by a third (34%) of start-ups – are incentives to study STEM subjects at schools and universities, and publicly funded apprenticeships, work placements and secondments.

Start-ups are extremely positive about the tangible business advantages that a diverse workforce brings. Nearly three quarters (73%) say it improves their ability to innovate, two thirds (66%) say it’s an important part of the company’s ethos, and more than half say it improves the ability to attract talented candidates (58%) and commercial performance (56%).

Surprisingly, two thirds (66%) of start-ups say a diverse workforce is not more attractive to investors, highlighting the work to be done to showcase the positive benefits of diversity in early-stage businesses to the people that help fund their growth.

Jonny Voon, Head of the Sustainable Innovation Fund at Innovate UK, says: “It’s no surprise that start-ups are choosing to prioritise diversity. Our research shows that a diverse workforce brings immense benefits to start-up life, boosting everything from workplace culture to R&D and business performance. But while start-ups are keen to expand the diversity of their workforces, it’s clear that finding the right talent remains challenging.

“Some of the key barriers centre around access to the education and work experience opportunities that help diverse candidates gain entry to key innovation sectors. There is clearly more work that can be done to expand education and career pathways, but also to demonstrate the power of diverse teams to investors so that the best businesses get the funding they deserve. This can help deliver game-changing companies led by a range of diverse talent who, through their success, can inspire the next generation.”