Mar 15, 2022

Research: female founders still raise very little capital By Last year was another record year for investments in Dutch tech companies. As much as 5.3 billion euros was invested. That said, there are still serious challenges in the Dutch startup ecosystem. One of them is raising funding for female entrepreneurs. Although diversity may be a hot topic, teams with female entrepreneurs are still strongly underrepresented in the funding statistics. Bridging the funding gap There is no shortage of good initiatives to bridge the so-called funding gap. But do they actually have the desired effect? Commissioned by MT/Sprout, startup analyst Golden Egg Check delved into the data to examine the current state of affairs regarding female founder funding. For example, how about the ambition of Fundright, the initiative in which Dutch venture capital companies strive to reduce the funding gap, that 35 percent of investors’ portfolio companies are led by women? Or the ambition that a ‘significant’ part of the startups that are invested in are set up by women? Is there at least an upward trend? In 2020, only 6 percent of growth capital went to teams consisting of at least one woman. What about in 2021? More euros for women entrepreneurs At first glance, the numbers are encouraging. Last year, women-led startups raised 431 million euros, which is almost four times more than a year earlier. In 2020, the total size of female-led startups was 92 million euros and in 2019 only 46 million euros. So there is an upward trend in absolute terms. Read also: These female founders raised millions: this is what they think of VCs with biases If we zoom in a little further, however, it turns out that 80 percent of this amount was raised by one company – Mambu – with a female co-founder, Sofia Nunes. In 2021, the fintech company, which moved to the Netherlands, raised two rounds (Series D and Series E) raising a total of 345 million euros. Less than 1 percent to female teams Companies founded exclusively by women represent 4 percent of all deals in the Netherlands in 2021. Together they account for less than 1 percent of the capital invested: almost 28 million euros. Mixed teams were involved in 9 percent of deals, or 7 percent of the value. This means that a total of 13 percent of all Dutch deals in 2021 went to companies with at least one female co-founder, and that these companies together raised 8 percent of the total invested capital. Compared to 2020 (11 percent of deals, 6 percent of value), this is minimal progress. Read also: Too few female founders? At investor Borski Fund 600 reported Well in impact and food, not in cleantech In the sectors cleantech, high tech and fintech, female entrepreneurs are (traditionally) the least represented. In these domains, men dominate when it comes to funding: more than 9 out of 10 deals are with teams composed solely of guys. In impact and food & agtech, on the other hand, most women are active. Although they are still a minority in the overall picture, they are well represented in those sectors. An example of female-led food & agtech startup that raised funding last is horticulture data platform 30MHz, co-founded by Fleur van Vliet. They raised 6.5 million euros in November from Rubio Impact Ventures and others. Of the startups (co)founded by women that raised investment last year, by far the most (19 out of 46) are active in software, followed by medtech (including e-health, biotechnology and medical devices, among others). Does the business model matter? Are there so few women entrepreneurs? Or are there too many male investors more likely to put their money into companies led by the same sex? It is difficult to pinpoint an unequivocal cause for the funding gap. What is striking is that among Dutch investors there is more enthusiasm for B2B startups than B2C startups. And female entrepreneurs are relatively often found in companies with a business-to-consumer model. In 2021, it is estimated that only 30 percent of funded startups had a B2C model, of which about a quarter were (co)founded by women. Of the larger group of B2B companies, a significantly smaller proportion had a female (co-)founder. The business model may also play a role in explaining the funding gap. Female leadership Until now, research on diversity has focused on female founders or co-founders. However, this perspective ignores companies and teams with female leadership in a broader sense. That is, not just founders, but all “CxOs”: CEO, CFO, CMO and so on. It therefore makes sense to include top management in the analysis. All in all, companies with at least one woman in top management make up almost a quarter (22 percent) of all startups that raised funding in 2021. These teams managed to raise 1.3 billion euros, equivalent to about 25 percent of total funding. Ambition Fundright not (yet) in sight That’s a big progress compared to last year, when they barely raised 300 million euros. Yet the percentage still does not come close to Fundright’s ambition. The initiative in which Dutch venture capital companies make a strong case for reducing the funding gap aims for 35 percent of investors’ portfolio companies to be led by women. Read also: Investors behind Fundright get vetted: how open are they to female entrepreneurs? What’s further an interesting observation: where in 2020 most women leaders were more internally focused COOs, in 2021 they are more likely to be CEOs. Of all companies with a woman in top management, about a third had a female CEO. These are more prominent, external roles. Other common positions include Chief Operating Officer, Chief Marketing Officer, Chief Commercial Officer and Chief Financial Officer. In short, it seems that while women are less likely to start a startup, they are more likely (at a later stage) to be involved in growing and professionalizing the company. Perhaps that is the biggest gain of the past year. In this article: