Tackling The Gender Gap in VC Fintech Funding

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The fight for female empowerment and equality has raged for centuries. Its battlefields include the household, politics, sports, education and the workplace. While significant ground has been gained – most notably in the last few decades – the quest for gender parity continues on all fronts. 

While many women continue chipping away at corporate glass ceilings, others are taking the plunge and launching their own businesses. This is hardly a new phenomenon. In fact, women have been breaking barriers in the entrepreneurial space since as early as the 1700s

Recent years have witnessed a surge in small businesses in general. In 2020, SMEs represented 99.9% of the private business sector in the UK. A 2020 report from Ueni surveyed 22,257 small businesses in the UK. Approximately 7205 of these were launched by female entrepreneurs.

This puts the number of UK businesses currently owned by women at 32.37%. This is a huge shift from four years ago (when only 17% of founders were female). While this represents a significant advance in female SME representation, the gender gap remains wide open when it comes to VC funding. 

This is especially true of the Fintech (Finance and Technology) sector. In 2019, there were 369 female founded/co-founded companies in Fintech.

Female-founded fintechs accounted for just 17% of the UK’s total fintech venture capital (VC) investments over 2020. Again, these numbers show a marked improvement from 2019, where VC investments in female-founded Fintechs sat at 11%.

These findings demonstrate a slow but steady rise in venture capital funding for women owners in Fintech. Progress is being made.

An increase in women VC investors in recent years has boosted funding for female founders. However, the gap is still too wide. And with the economic uncertainty brought on by the global pandemic, it isn’t closing fast enough.  

At Addition, we’re passionate about empowering small businesses with financial insights normally reserved for larger corporations. Equal opportunity, visibility and support are our core motivators.

As per the 2021 International Women’s Day theme, we’ve reached out to leaders in the female Fintech space to ask how we can #ChoosetoChallenge the disparity in VC funding for this sector – and empower women Fintech founders to succeed

“Find the thing you’re really good at, know that you’re enough – and then go for it!”

Seema Khinda Johnson, Co-Founder and COO of Nuggets

What are some of the obstacles to women achieving VC fundraising success in fintech?

In the US, only 2.2% of venture capital has gone to female-founded startups. And yet, female founders build companies with serious value, as the facts below show: 

  • Female-run startups generate 78c in revenue for every dollar of investment raised — as opposed to male-run startups which generate 31c.
  • Women-led teams deliver a 35% higher return on investment than all-male teams.
  • Companies with female founders perform 63% better than those with all-male founders.

Have you got a personal example to share? What action can be taken to help women in fintech access a greater portion of investments?

Accenture’s FinTech Innovation Lab London is a good example of how we got Nuggets, our decentralized, self-sovereign ID and payments platform, to join a cohort of 20 fintechs into its accelerator programme that provides unparalleled access to senior executives and investors from over 40 of the top UK financial institutions, such as NatWest, Lloyds, HSBC, JP Morgan and many others.

London’s FinTech Accelerator Lab, aims to help fintechs build connections with relevant decision-makers, and investors to catapult visibility of their technology among the people who matter. 

Their interest in us was due to their growing customer protection and privacy concerns, coupled with the deteriorating digital payments security and rising fraud. The addition of Nuggets to the accelerator programme demonstrates that self-sovereign digital identity technology is an innovative solution that can be used to address some of the societal, financial and sustainability challenges in the year ahead, an overarching theme of the year’s programme.

It was great timing for Nuggets as we started to scale the business. Being accepted into the programme was a tremendous opportunity that enabled us to showcase our technology to every bank and financial institution that are looking for a fast, safe path to innovation, especially when it comes to privacy.

How can we #ChoosetoChallenge this massive divide?

Remember — this is incredibly hard work. It’s not for everyone. I remember someone telling me, “If you want to work the longest hours and be the lowest-paid — be a founder!” But if you’re the right sort of character, there’s nothing quite like it. Don’t try to be something you’re not. You’re enough as you are.

Lastly, I’d say to all the women out there – make yourselves visible! Speak at events, meet people. Build supportive, inspiring networks, find mentors and sponsors. Find the thing you’re really good at, know that you’re enough – and then go for it!

“Build a product or service that has a real market need and that solves a real problem.”

Elena Sinelnikova, CEO at Metis, CEO of CryptoChicks

What are some of the obstacles to women achieving VC fundraising success in fintech?

I have seen statistics that women-founded fintechs have raised a meagre 1% of total fintech investment in the last 10 years. My recent experience of our Metis team raising 1M in a seed round shows this stat is irrelevant. Along with my co-founders I was involved in all investors meetings and I was the one pitching to the investors, telling them our story, asking questions. We considerably exceeded our fundraising goal, so this was a whooping success and my being a woman didn’t hold us back one bit.

Have you got a personal example to share?

We have just raised  $1 million from fourteen private equity and angel investors for our Metis startup, which is building a platform for decentralized organizations. Another example is the fundraising I was doing for my CryptoChicks organization, which aims to educate women and youth in Blockchain and AI technologies. I and my co-founders started this initiative from a very small meetup group, but had an ambitious goal of creating a big worldwide blockchain hackathon event for women.

Raising money for this non-profit organization was more challenging experience. But with a lot of work and with a bit of innovation and out-of-the-box thinking we succeeded in that goal too and managed to raise enough funds not only for one event, but for our operational costs for a few years.

What action can be taken to help women in fintech access a greater portion of investments?

My take on it is to build a product or service that has a real market need and that solves a real problem. Also to get great mentors and advisors to join you in building this dream of yours. In my case people that were my advisors, mentors and co-founders were the key part to the fundraising success. I am very grateful to them for their dedication, help and support, regardless of their gender.

How can we #ChoosetoChallenge this massive divide?

There is no one to challenge other than ourselves. In my experience working at CryptoChicks, women do need help, encouragement and support a tad more than men. I look to help other women by inviting them into all opportunities that I come across. The first thing I did after we raised seed money for Metis, was to hire Audrey Nesbitt for the Head of Marketing position.

We will keep bringing more women into strategic positions as we go, which we feel is the best way to help. We are named after Metis, a Greek goddess after all. Likewise, in the CryptoChicks Hatchery we help women building their businesses by bringing them the best mentors in the industry and the best education package that we can create for them. We challenge ourselves and we help others.

“Overcome unconscious bias by continuing to deliver substantive, undeniable value.”

Ellison Anne Williams, CEO and founder, Enveil

 What are some of the obstacles to women achieving VC fundraising success in fintech?

Compared to even a decade ago, there is now a wider acceptance of women in leadership positions within the tech sector. However, women pursuing such roles in our industry unfortunately still face a challenging path, particularly if that woman happens to be a mother. 

Have you got a personal example to share?

When I first founded Enveil in 2016, I intentionally avoided talking about my family and the fact I have five children to remove the investor bias of ‘how can she possibly run a business and be a mum at the same time?’ In a competitive fundraising environment, I didn’t want to risk anything that might impede their vision of my abilities as a technologist and entrepreneur. Does my role as a mother undermine my ability to be a successful founder? Absolutely not, and arguably it enhances it, but as most women who work in this space can attest, that is not always the reality of the situation.

What action can be taken to help women in fintech access a greater portion of investments?

Unconscious bias is real, but the best way to overcome it for myself and the woman who will walk this path after me is by continuing to pursue and deliver substantive, undeniable value. I’ve never aspired to be a successful woman in tech; I aspire to be a successful founder and CEO – all other labels excluded.

How can we #ChoosetoChallenge this massive divide?

My message to other women, and to investors considering supporting sole female founders, is that being a mum and a successful business woman are not mutually exclusive. You don’t have to be superhuman to have a happy family and run a tech firm. The education sector has a vital role to play in helping young women understand that they have a choice. They can choose to focus on a career, or, if they prefer, to raise a family. Or they can choose to do both. We should celebrate and publicise the fact that young women today really should – and do – have that choice.

“We should ensure women are in positions where they can influence decisions on what gets funded.”

Olivia Sibony, CEO, SeedTribe.

What are some of the obstacles to women achieving VC fundraising success in fintech?

The real challenge to helping women achieve more VC fundraising success is the lack of women investors. It is harder for men to understand a female perspective and therefore they are less likely to back women-led businesses. 

Have you got a personal example to share?

I know of one Fintech app that enables women to plan finance around life events, for example maternity leave. It was a great idea but didn’t win the backing it deserved. The traditional male perspective on these products is more around a traditional pipeline view of what would maximise earnings the fastest, rather than what would be based around someone’s life stages. Women tend to be far more focused on this. 

What action can be taken to help women in fintech access a greater portion of investments? How can we #ChoosetoChallenge this massive divide?

The solution to this challenge has to be encouraging more women in VC investment and ensuring women are in positions where they can influence decisions on what gets funded. As they make up 50% of the population, it is the right and sensible thing to do.

When it comes to bridging the divide in gender investment inequality, there is still a ways to go. However, women like these are breaking barriers everyday – and the future is already looking brighter.

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