The announcement of AllBright Crowd, a new female-focused crowdfunding site, is just another sign that women feel that they are not getting a big enough piece of the start-up pie (and they are now willing to do something about it). The figures seem to back their suspicions up.
According to Startup DNA, a research study carried out by Wayra UK, Telefónica Open Future’s digital startup accelerator, male entrepreneurs are 86 per cent more likely to be VC funded and 59 per cent more likely to secure angel investment than women.
This in part can be explained by the fact there are fewer women working in tech startups (only nine per cent of entrepreneurs in tech are women) and fewer women in the science, tech, engineering and maths industries in general in the UK (they make up just 14.4 per cent of the STEM workforce). According to the WISE campaign (wisecampaign.org), even if its goal of getting one million more women to pursue science, technology and engineering careers is reached, the STEM workforce will still only be 30 per cent female.
However, there are some positive signs; the Wayra UK research showed that compared to the United States, those working in UK startups were five times more likely to be female. Startups are 36 per cent more likely to have female leaders than FTSE100 companies.
But how can the gap in funding be explained? The old boys’ network? A lack of role models? And how can such issues be tackled on a practical level? In a recent article in the Harvard Business Review, Sahil Raina, an Assistant Professor of Finance at Alberta School of Business, examined CrunchBase, a crowdsourced database on high-tech startups. He found out that “If you define success as an exit from venture capital financing via acquisition or an IPO, female-led startups perform much worse than male-led startups. About 17 per cent of female-led startups successfully exit VC financing whereas 27 per cent of male-led startups do.” However, that gap closes when startups are financed by VCs with female partners.
Venture capitalist firms need to recognise that “having female partners improves the chances of success for the female-led startups they finance.
Sahil Raina, Assistant Professor of Finance at Alberta School of Business
Raina concluded two things. First, something for female entrepreneurs to consider: “It’s important to know that securing financing from an all-male venture capital firm may drastically reduce their probability of a successful exit.” Second, venture capitalist firms need to recognise that “having female partners improves the chances of success for the female-led startups they finance.”
Considering that a September 2014 report from Babson College in the US found that just six per cent of global VC partners were women, there’s still a long way to go. It’s hard to say exactly when female-run startups will get through the initial rounds with as much success as men, and receive the support they need to make a profitable exit. But working towards that goal makes financial sense. Research suggests raising the level of women’s employment to the same as men’s could lift GDP by 10 per cent by 2030, so promoting gender balance could hugely benefit the UK economy.
And it seems to be a growing realisation. This spring, Indiegogo announced a “ground-breaking” campaign to support female-led crowdfunding campaigns and so “remove bias from the funding equation”. AllBright was founded by Debbie Wosskow OBE, founder of Love Home Swap, and Anna Jones, CEO of Hearst Magazines UK, to make the UK “the best place in the world to be a female founder”.
So what do female entrepreneurs think about these kind of initiatives? Club Workspace host, Raissa has been collecting the stories of business women, throughout our co-working venues. She talked to Joanna Pawluk, co-founder of IndaHash. This is a fully automated ad platform for agencies and brands to use on an everyday basis and connect with influencers across the globe.
Pawluk didn't seem particularly enthused about this special treatment: "It's not a matter of sex but your brain power. I think that it will be much more beneficial when we stop dividing business people into sexes and focus more on what they actually bring to the table." She thinks this puts women at a disdvantage. They feel they need "'support' to come to the real game, where 'professionals' sit."
She's sees male dominance in funding as part of a larger issue: "Generally speaking, men dominate in most fields, in food business, art... I think that your knowledge, intelligence, networking skills are more important factor in a success than sex."
We couldn't resist asking Joanna a few more questions:
So does being a female entrepreneur give you any edge?
"I hope that very soon we won't have to divide entrepreneurs by sex:) what I think might give ladies an edge is the ability to listen, understand and respond to clients' needs. Just to give an example we started as an Instagram focused ad tech platform and after few months we're introducing multi-platform offering for our clients."
What advice would you give to a female entrepreneur?
It's like with (kite)surfing - whenever you find a good wave just take the most from it. Most of the times it's not the highest one, not the best one, but focusing on this dream wave that might never come narrows your perception. If there's offshore in one place for sure there's onshore in another!
Who's the female entrepreneur who most inspires you?
My business partner!
Best resource for female entrepreneurs?
Especially for ladies who want to enter the world of start-ups I would suggest looking at some free courses from Stanford University available on YT. It's really true what they say there and worth preparing yourself for all challenges and difficulties that for sure you'll encounter:)
Workspace is looking for female entrepreneurs to share their stories and inspire the next generation of women in business. Get in touch with Club Workspace host, Raissa, who’s spearheading the initiative.