Women startups discriminated in fundraising

Women startups discriminated in fundraising

The lack of balance in fund raising for women led startups is stressed in a report with gender perspective on fundraising. In 2020, women-founded startups raised just 1% of investment in Central and Eastern Europe, 5% went to mixed-gender founding teams, while all-men teams raised 94%.

And 2020 was not an exception. Since 2016, all-women founding teams have received on average 2% of startup investment.
But the report says women-founded startups generate more revenue per Euro invested. Women-led businesses outperform in capital productivity by 96%, according to the report from European Women in VC, Unconventional Ventures and Experior Venture Fund says.

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EU Commissioner Mariya Gabriel writes that the numbers in Central and Eastern Europe are pointing ”to an unquestionable difficulty faced by women entrepreneurs and women fund managers in accessing finance, a problem that haunts Europe as a whole.”

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”Unfortunately, we observe underrepresentation of women in several areas of the labour market across Europe, which is particularly the case for the tech sector, digital economy, Industry 4.0 as well as energy.”

”Without equal conditions to succeed, Europe is missing out on talent as well as on better served existing and emerging markets. Analysing the funding landscape through a gender lens and implementing diversity and inclusion strategies at the level of investors and VC funds is paramount to tackling the deeply rooted inequalities and finding new solutions for women-founded companies to succeed in competitive industries.”

The report shows funders and decision makers are predominantly men. Of funds active in CEE, 85% of Venture Capital (VC) investment roles are held by men, rising to 93% at Partner level while women account for 7%.
VC funds with all-men General Partner (GP) teams have 5X the firepower to invest in companies compared to all women GPs of venture funds.

VC partners investing in the CEE region are predominantly men (93%), while women are heavily underrepresented counting for only 7%. Yet, women founded companies outperform by 96% compared to male founded companies when looking at the revenue to funding ratio.

92% of the GPs are rarely asked about their fund’s diversity and inclusion strategy when fundraising from Limited Partners (LPs). Only 2% of VC funds meet women LPs as frequently as men LPs, when fundraising.

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Francis Evans
Francis Evans
14/10/2021 09:58

This figure of 1% is exactly the same in the UK, according to the British Business Bank. The solution will need investors (Angels and VC funds) to change their approach. It can be done, look at how the number of women directors on company boards has changed in the last 10 years. It needs a determination to change from the whole of the sector. And of course LPs need to hold them to account. “92% of the GPs are rarely asked about their fund’s diversity and inclusion strategy when fundraising from Limited Partners (LPs)” is not good enough.

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