Did you know that only 5 per cent of pitch decks that reach Venture Capital (VC) firms are from all-female founded teams? Only a further 20 per cent of investment is won by mixed-gender founding teams. Here, Patricia Keating, Tech Manchester’s Executive Director, discusses the contributing factors to these stats.
Whatever the reasons behind the facts, the clear reality of both tech and investment ecosystems is that the scales are significantly out of balance. Female-led companies don’t need special treatment, but we do need to approach the topic of investment in a different way. We have a huge challenge to overcome in the tech sector.
In response to the growing issue, HM Treasury this month launched the ‘Investing in Women Code’ which commits organisations to improve female entrepreneurs’ access to tools, resources, and finance.
While some forward-thinking VCs are already acting to tackle this issue, signing up to the Government’s initiative and taking their own steps, there are many that remain unaware, and so are part of the problem.
How can we address the imbalance?
1. Gender diversity in investment boards
How can we expect investment boards to see the ventures of women and the ventures of men equally without equal representation of genders on these teams?
Time has shown again and again that female VC advisors are more likely to be able to identify promising female companies than male VC advisors. We must have successful female entrepreneurs filling non-executive roles on investment firms’ boards of directors.
2. Greater female representation in larger rounds
Grassroots research shows that the vast majority of female VCs are involved primarily in early-stage, seed and series A funding. The truth is that for female-founded companies to achieve series B or growth investment, there must be female VCs involved at these stages.
3. Collaboration with incubators
Investment teams must engage more with early-stage incubators during the pre-funding stages of tech startups.
4. More effective communication
Traditional VC funds should employ better communication training from female-led communications agencies. This will enable an enhanced understanding of the language that must be used to encourage more females to pursue investment and the impact that changing communication styles have when speaking to different genders.
5. Provide investment education
Provide funding workshops specifically for women, delivered by both men and women from VC funds. This will achieve greater balance by raising awareness amongst women of the different investment routes and guidance on how to win funding
6. Share ‘women in tech’ experiences
Roundtables with female founders who have been on the VC circuit are a great tool. These enable the sharing of first-hand experiences, which investment and tech professionals alike can use to identify patterns of experiences and obstacles. Only then can we begin addressing the issues in full.