The issue of women startup founders not receiving equitable venture funding is a shortfall of the West: It’s here, everywhere in the U.S., and over there, all throughout Europe.
It’s hard to say that some of these metrics represent investors simply pulling back when data shows the bias has historical precedence. Even in 2008, all-women U.S. founding teams raised 1.2% of all venture capital, according to PitchBook data. In 2012, they raised 1.8%, then 1.7% in 2016. If anything, 2021 was the anomaly, which saw 2.3% of venture dollars allocated to all-female U.S. teams. Today, that number is tracking at 1.9% so far, which is nearly on par with what, typically, always has been.
In Europe, the story is quite similar, although 2020 was the standout year that saw women raise 2.4% of all venture capital on the continent. Last year paints a more realistic picture: All-women teams raised only 1.1% of all venture funds in Europe, a number on par with what they raised in 2017, 2018 and 2019, which saw these teams pick up 1.5%, 1.8% and 1.5% of all venture capital, respectively, as previously reported by TechCrunch. The inequality gap is failing to move in a meaningful direction.
It’s no coincidence that our societies, with frameworks and ideological mores handcrafted with sexism and misogynoir, have made little progress toward equitable change. There are two concurrent narratives here: In one, the data reflects how investors, the men in charge, truly feel about economic gender equality. At the same time, the numbers are a byproduct of our Western society; one that is still beholden to excluding and devaluing women; one that relishes their treatment as second-class citizens, rendering their dreams irrelevant.
“Women have had to navigate the tempestuous waters of gender bias for generations,” Deena Shakir, a partner at Lux Capital who is based in the Bay Area, told TechCrunch. “These biases risk holding back a generation of breakthrough entrepreneurs who have the potential to transform science and our economy.”
“European society is contradictory,” Ruth Foxe Blader, a France-based partner at the Anthemis Group and co-founder of the European Women in Venture Summit, told TechCrunch. “On one hand, there is far greater support for working families, but it is socially more traditional and sexist.”
A new report from Unconventional Ventures breaks down how uniform the bias is throughout Europe. Last year, all-women teams raised 0.5% of all venture capital in France and Sweden, while 0.7% was allocated to such groups in Norway, followed by 1.1% to all-women teams in the Nordic countries, and 1.7% to those teams in Denmark. No money was allocated to all-women teams in Iceland, although groups in Germany, Finland and the U.K. were able to raise 1.3%, 2.5% and 3%, respectively.
Good luck breaking this down by race.
“I can’t say what it’s like in Germany for Black founders because that data is missing,” Rukayyat Modupe Kolawole, a fintech founder, told TechCrunch. Tracking race is illegal in France and Germany, but she said there is a whisper network among Black founders to share their experiences and how to navigate the scene. A few investors once told her they felt uncomfortable investing in her company because her team consists of all Black people.
“I found [that] quite discriminatory,” she continued. “But at least, to me, they were honest.”
As a result, she and other Black founders from the country often head to the U.S. or U.K. for funding, where Black women have never received more than 1% of venture funds. This is the ingrained misogynoir in our overall society, moving from hushed tones to existing openly and explicitly, showcased in consistent data. And that’s no shortfall; that’s intentional.
Tobi Ajala, the U.K.-based founder of TechTee, said she had to look toward the U.S. and Canada to find funding for her company. She said that the U.S. is able to uplift individuals from underrepresented backgrounds more so based on merit, unlike the systems in the U.K., which are primarily still structured around class.
“What the U.K. tends to show me is that regardless of how good we are, how valuable we are, our shouts aren’t as loud enough as the infrastructure of the U.K.,” Ajala told TechCrunch. Between 2009 and 2019, only 10 Black women raised venture capital in the U.K. “So we crossed the pond.”
On both continents, women are able to pick up significantly more money when they have at least one male co-founder, signifying that investors see the male presence as something that doubles or even triples the value of a woman. For example, last year, all-women teams in the U.S. raised $7.7 billion. The data point for U.S. mixed-gender teams was $49.1 billion, according to PitchBook. In the U.K. last year, the 3% of venture capital that all-women teams raised turned to 11.1% when a man was involved. In France, that 0.5% turns to 12.9%.
Romain Lavault, a general partner at the Paris-based venture capital firm Partech, said everyone in France knows the gender issue within venture. He said many funds in the country signed the SISTA charter, a promise to fill at least 30% of all partner positions with women, hire teams that are 50% women and stock 25% of the fund’s portfolio with companies at least co-founded by a woman by the year 2025, followed by 30% in 2030 and 50% in 2050.
“The most prominent firms in France have signed the SISTA agreement, which maps out the necessary steps to bring gender balance in the startup ecosystem,” he told TechCrunch. He also pointed out a pipeline problem in the low percentage of women accepted into engineering programs, an issue that also exists in the U.S., where only one in five STEM degrees are earned by women. Currently, Partech has 22 women on the team page of its website out of the 61 listed in total — meaning 36% of its team consists of women.
“The gender imbalance in VC is a reality. It’s rooted in the imbalance in the tech and entrepreneurial communities from which most VCs are coming,” he continued. “It’s a structural change that is needed, and even though it will take a generational shift, it needs to start today.”
“Gender disparity in venture capital is not only widespread, it is interconnected,” Blader said. “A paucity of diverse investors reproduces a dearth of diverse founders. It’s ridiculous. This system only changes through concerted, systemic efforts to stop minimizing the contributions of women and people of color to society and technology.”
Pippa Lamb, a partner at Sweet Capital based in London, added to Blader’s sentiments, saying that the inequality in the startup and venture ecosystem is a microcosm of a wider problem. “Too often, cultural or unconscious biases have seeped into hiring structures and company cultures,” she told TechCrunch. “Company rhetoric can only go so far. Enforcing practical steps that drive measurable outcomes is essential.”
Geri Kirilova, a managing partner at the New York-based Laconia Capital Group, echoed that.
“As long as the process for fund manager selection, hiring and startup investing relies on affinity, opacity and inconsistency, the funding gap won’t change,” she told TechCrunch. “We have to be honest about how things are currently being done in order to be able to fix them.”
In some ways, the equivalent of a European country breakdown is seeing what women raise in individual states here in the U.S. Earlier this year, Crunchbase looked at how much funding was allocated to companies with at least one women co-founder these past three years and found Utah, Wisconsin and Illinois respectively invested 2.5%, 4% and 5% of their venture funds into such companies.
Meanwhile, Massachusetts, Colorado and New Jersey allocated 10.5%, 13% and 22%, respectively. Furthermore, PitchBook recently found that the Bay Area remained the top place for all-female teams to raise capital, followed by New York, Los Angeles and Philadelphia.
That the solution is so simple — cutting more checks to women — highlights the discriminatory ideological strongholds that our society continues to impose on us. These men in charge, these tastemakers and gatekeepers have managed to block change globally. That’s the impressive breadth and strength of the patriarchy. Alas, it won’t last.
“Things are changing positively,” Shakir said. “It may not be linear and it may not be the pace it should be, but I’m optimistic that our daughters will be entering their careers in a very different world than we did, just as we benefited from the progress of our mothers’ generation before us.”
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