Serious inequality when it comes to startup founders
The Female Founders Monitor 2020 uncovered a major disparity between male and female founders:
The imbalance isn’t just confined to startups, it can also be seen at executive levels: according to a report published by AllBright in fall 2020, only 12.8 percent of German executive board members are women. The USA is doing slightly better on this front, at 28.6 percent. There, almost half of companies have at least a 30 percent share of women on their executive board, while the figure is unsettling in the German executive landscape, where not a single company reaches the minimum quota.
The “Thomas” boardroom phenomenon and other reasons
Why is that? And why are there so few women founders? The idea of a “self-starter” is largely associated with supposedly male qualities like action, boldness, and productiveness beyond the private sphere – even though on average, women generally perform better academically than their male peers. Mindset seems to play a significant role here: maybe women are less likely to take risks because they didn’t experience as many setbacks at school. Even among women who have already founded their own startup, only just under half of those surveyed for the Female Founders Monitor 2020 would pick themselves up and give it another go if their existing company were to fail, in stark contrast to 63.6 percent of male respondents.
Studies conducted by the AllBright Foundation show that the “Thomas” phenomenon is mainly responsible for the male dominance seen on executive boards and in management positions. Believe it or not, 5 percent of CEOs in Germany are actually named Thomas and are more likely to recruit male clones of themselves, thereby propagating more or less homogeneous, exclusive networks of men that women rarely gain (or rather are given) access to. Examples of this would be investors and business angels.
To highlight the gravity of the situation:
This division influences society’s conceptions of entrepreneurship on a wide range of levels. A similar trend is reflected in the subjects studied in higher education, according to the Female Founders Monitor 2020: while women and men are just about on par when it comes to economic and business degrees, significantly less women studied informatics, computer science, and mathematics (3.6 percent women compared to 17.9 percent men, measured based on the total number across all degrees). Natural sciences, on the other hand, accounted for 13.5 percent of female graduates versus 8.5 percent of male graduates. Initiatives such as Google’s “Made with Code” or the not-for-profit “Girls Who Code” aim to close the gender gap in the tech industry by taking action early on in young women’s lives.
A factor that shouldn’t be overlooked is family planning. For women, balancing family and career plays a huge role at the stage of their lives where they would be most likely to found a company, namely between the ages of 30 and 40. Female founders also have to contend with the fact that many venture capitalists, who are predominantly male, don’t want to invest in women startups because the returns promised by their business models, e.g. B2C shops, are not as high as those of scalable corporate models. Fortunately, opinions are changing in this respect, too. For example, the New York investment firm Golden Seeds has invested more than 100 million US dollars in women startups, the Female Founders Fund well over 27 million US dollars, and the female investors from the German angel group Auxxo have also made it their mission.
More women in the IT and tech industry, higher returns in the long term
The encouraging news is that the proportion of female startup founders in Germany is increasing, if only in baby steps. By way of comparison, German female founders accounted for 15.7 percent in 2019, 15.1 percent in 2018, and 14.6 percent in 2017 (German Startup Monitor 2020). If you consider the number of companies founded overall – so not just startups – 36 percent were established by women.
To reduce the tech industry’s gender gap, which amounts to 14.4 percent on average internationally, the WomenTech Network and the Founder Institute joined forces back in 2016 and launched the Female Founder Initiative. After all, studies conducted by the Boston Consulting Group and others have shown that startups founded by women generate 10 percent more sales over a period of five years than those founded by men. The following figures really bring it home:
So, investors should really think carefully about who they put their money on, because statistically speaking, mixed teams and women promise long-lasting growth.
More visibility and courage through networking and mutual support
The Female Founder Initiative strives to provide better conditions for women to build successful companies. Thanks to Female Founder Fellowships granted by the Founder Institute, the world’s largest pre-seed accelerator and provider of entrepreneurship and startup programs, the quota of new women-founded companies in its portfolio had already reached 31 percent in 2018. Networking and information sharing are what it’s all about here.
The WomenTech Network and the programs of the Founder Institute, based in Silicon Valley, create a symbiosis of these two cornerstones for launching a successful startup: webinar series on available funding, feedback sessions regarding one’s pitch deck, support from female mentors, monthly newsletters, and a global Slack channel are all part of the package offered by the Female Founder Initiative. Local and global access to useful contacts, such as female and male business experts, investors, and advisers, also serves as an important resource for women founders. The Mission Female network, founded by Frederike Probert, similarly focuses on providing a platform for female leaders to exchange knowledge and ideas.
The Female Founder Program: from Amsterdam to Silicon Valley
Thinking of starting a company during the current pandemic? For all women who are in the pre-seed stage of founding their own promising startup and require support despite or because of the pandemic, there’s good news. Together with the WomenTech Network, the Founder Institute has launched a Female Founder Program in the form of the Amsterdam-Silicon Valley Virtual 2021 program. The aim of the program is to give women the tools and input they need to successfully set up their own company alongside their usual job. Whether it be the initial business idea, putting a team together, acquiring the first customers, funding, or building a co-founding team, this format offers practical support, mental motivation, and countless resources from both male and female experts.
To take part in the program, budding women founders need to apply at https://fi.co/join/womentech by February 21, 2021.
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