Two men, one woman

Why it pays to be a male tech entrepreneur

Image credit: Kamachi209 |

Engineering and tech start-ups might be at the cutting-edge of technology, but when it comes to raising money, the situation is far from modern if you’re female.

Just two per cent of venture capital (VC) money went to all-female founding teams in Europe in 2018, according to Atomico’s State of European Tech report, while in the UK, for every £1 of VC investment, all-female founder teams get less than 1p, a British Business Bank report has revealed. Why is the gender investment gap so bad?

“The biggest reason so few women-led companies receive investment is because they are only a small minority to begin with,” says Professor Simonetta Manfredi from the Centre for Diversity Research Policy and Practice (CDPRP) at Oxford Brookes University. “We need to see more women entrepreneurs to normalise the presence of women in these male-dominated spaces.”

Another reason may be that the majority of venture capitalists are male, with females making up just 13 per cent of VC decision-makers in the UK, and they hold unconscious biases.

Researchers at Lulea University of Technology (LTU) found financiers leading funding decisions for 125 venture applications unwittingly used different language to describe male and female entrepreneurs, revealing stereotypical views of women as having qualities undesirable in an entrepreneur, arguably echoing Facebook COO Sheryl Sandberg’s comments that: “If you’re a forthright leader, you are seen as aggressive; if you’re smiley and happy, you’re then seen as not being serious enough.”

For example, the researchers found that while financiers saw male entrepreneurs as ‘young and promising’, they perceived female founders to be ‘young and inexperienced’.

Manfredi says: “The characteristics of what makes a successful entrepreneur are traits more associated with men which may put women at a disadvantage when it comes to attracting investment.”

The LTU study also found female founders were awarded an average of 25 per cent of what they asked for, while men were given 52 per cent, and that women were more often turned down for financing than men.

The World Economic Forum (WEF) believes there should be more diversity, including women in senior roles, within VC firms. Currently just 13 per cent of senior people on UK venture capital investment teams are women and 48 per cent of investment teams have zero women, according to the British Business Bank.

“With a more balanced VC management team, much of the unconscious bias that has impacted the industry will disappear on its own,” says the WEF, which also advocates dedicated funds for women and other under-represented entrepreneurs.

Merian Ventures is one example of a US and UK VC firm that funds female-led artificial intelligence and consumer-facing technology companies. Its founder, Alexsis de Raadt St James, believes VC firms and investors have a role to play in levelling the playing field, and it’s beneficial to everyone.

“VCs have fallen into a pattern of recognition: men = success, and they keep on repeating that,” she says, explaining her firm targets the best opportunities, not simply someone who fits the mould of recent successful tech billionaires. But of course, there are other routes to raising money, too.


Mind the financial gender gap

The British Business Bank’s UK VC & Female Founders report broke down how venture capital (VC) money is distributed in the UK. It found that:

• For every £1 of VC investment in the UK, all-female founder teams get less than 1p.

• In contrast, all-male founder teams get 89p and mixed-gender teams pull in 10p

Angel investors – high net-worth individuals who back small start-ups or entrepreneurs – are one alternative to approaching VCs. It worked for Kike Oniwinde, CEO and founder of BYP Network App – a networking app for black young professionals – but she believes that challenges remain. “When it comes to securing venture capital money... You have to know the right people or build relationships over time. The [investment gap] statistics show that there need to be more networks to allow women and those from BAME backgrounds to build these relationships to ensure that they can secure this funding.”

Crowd-funding has become a fundraising phenomenon and, in theory, doesn’t rely on connections. Priya Guha, venture partner at Merian Ventures, says she has seen it used “very effectively” to get traction in a large market by publicity, while other options available to entrepreneurial students are university incubators or commercial firms with links to universities.

While many are successful, Manfredi says women represent just 11 per cent of active spin-out company founders in the UK, while on average women make up only 13 per cent of the senior executive roles in these IP-driven companies, meaning they are ‘vastly underrepresented’ in decision-making positions.

The CDPRP at Oxford Brookes is leading a project to understand the causes of under-representation of women scientists, engineers and mathematicians as founders of spin-outs. “Initial findings suggest that women founders feel there is a lack of relatable mentors, that well-connected networks are significant,” says Manfredi. The project aims to develop interventions to support women on the ‘entrepreneurial pathway’.

While the statistics show the odds are stacked against female founders, Guha says VCs and other financiers who don’t look for women-led start-ups are simply missing out.

A First Round Capital study of its own investments showed that companies with a female founder performed 63 per cent better than investments with all-male founding teams, while another by Boston Consulting Group showed that, over a five-year period, for every dollar of venture capital invested, female-led or female-cofounded start-ups generated 78 cents of revenue, while male-led start-ups only generated 31 cents. While these are small sample sizes, there is a growing recognition among VCs that diversity is good for business.

The WEF estimates it will take 217 years for the gender pay gap to close, but with growing awareness of the problem, as well as the benefits of backing female leaders, and with more routes than ever to secure investment for female founders, it’s hoped the funding gap will close considerably sooner.

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