Female technology founders receive significantly less investment compared to their male counterparts. It’s an issue that transcends technology and applies to all industries.
In this roundtable, organised by the Women in IT Summit & Award Series and Venturers Club — the free networking group for entrepreneurs and founders — and hosted by Avril Chester, founder of Cancer Central, a range female technology founders explore what micro and macro actions need to be taken to change the current investment landscape.
Enough talk, more ACTION — driving change for female tech investment
Linda Achan, CEO and co-founder of NatureWrap Ltd, and Partner at energy-wells.org, began by explaining that there is no need for more studies or research papers on the situation – everyone knows what the issues are. On a macro level, “any funding or resource available should now go into affecting structural change,” she said.
“For example, the British business banks (as government owned and are reportedly focused on reducing the barriers to accessing funding for female led startups / diverse entrepreneurs) or the pension funds that put money into the private equity funds, or VC companies, should ensure that circa 10% of investment goes to female-led businesses. And, if you don’t do that, a penalty should occur or you won’t get any more funding from us,” Achan added.
Seema Khinda Johnson, co-founder and COO at Nuggets, agreed that no more research is needed. “Only 2% of funding goes towards female-founded businesses. The situation is dire,” she commented. According to Johnson, there some key changes that need to be made.
She said: “Even before the involvement of VCs and penalties on the LP front, there needs to be a higher incentive, whether SEIS or EIS, for companies that fund female-founded businesses or those that are from an under represented background. Perhaps, those investors could get higher tax breaks and those that only fund white, male-dominated teams, could get lower tax breaks.”
From Johnson’s perspective this is where help is massively needed. If she hadn’t of had support in the beginning of founder journey, then she wouldn’t be looking at the VC stage.
“There are gender and ethnicity pay gap reporting requirements, which is fantastic, but I would also like to see gender investment gap reporting requirements.”
There is already a process and discipline in place for companies that have to report on gender and ethnicity gap requirements, and this should be continued when it comes to investment.
“Organisations should be made to report on how many diverse organisations they are investing, and if they’re not, identify why they’re not,” added Mitchell.
The challenge of changing the status quo
“There aren’t a high number of female applicants and then question arises, how far would a company go to hire a female chairperson, even over a more suitable male candidate,” she said.
On top of this, if incentives like tax breaks were added that made it compulsory to hire diverse teams, what’s to stop male founders hiring diverse candidates for roles, not because of their merits, but because of their background, gender or race?
“This is not a black or white issue, there is a lot of grey around it. On one side, we don’t sense this lack of funding anymore, because we’re so used to a lack of funding that it’s become normalised. On the other side, there’s the risk that founders will place the right type of people in the roles for the wrong reasons,” she said.
She added: “Crucially, the data shows there is female talent in tech. The pipeline of women in tech coming out of university is growing, but what is also growing is the rate at which women are dropping out of the tech sector. Across Europe, for instance, women enter their tech careers and progress, before dropping out and moving into roles that are more female dominated, such as marketing and HR.”
More support for these tech roles is needed compared to the current employment structures in place today.
Going further, Johnson said the need for “accountability” is crucial for actionable change.
Women in IT and Venturers Club roundtable: the investment challenge and diversity of thought initiative
A roundtable discussion, organised by the Women in IT Summit & Award Series and Venturers Club, explored the challenge of investment for female tech founders, what success looks like and the importance of including diversity of thought in your organisation. Read here
A change to funding
Echoing previous thoughts, Nanu continued that the government has a role to play in setting a tone for how investment gets distributed, and that was a missed opportunity during the Covid-era.
“When the Future Fund was launched to help businesses during Covid, the big misfortune was that they linked this to VC funding. You had to have VC funding to access the Future Fund, which ruled out the majority of female-led businesses.
“The government has a responsibility to promote equality across the board, and they need to work hand-in-hand with the private sector to address this problem,” she added.
Regarding grant funding, before VC or PE funding, Achan continued that “Innovate UK could help by offering more money at this stage to more female or ethically diverse founders. This would encourage other companies to come in and invest, because it de-risks the project.”
A different type of support
Elena Sikorsky, CTO and co-founder at digital agency Ink Mills, said “we need more transparency and accountability,” and that female founders need a different type of support when it comes to investment.
“Funds and accelerators targeting women are doing a great job, but their support can be limiting. Female founders competing with other women for investment and the reality of women-specific funding at times intrinsically promotes this evident division,” she said.
“Eliminating bias towards women in senior roles via inclusive tech education and a visible shift in the culture of inclusion can contribute to increasing investment into women-led companies. The whole process of funding should be more seamless — this is where fast track investment programmes, digital tracking and AI in investment management can come into play,” she added.
Champion each other
Shilpa Kaluti, founder at Scrumconnect, said: “In my role, as a founder, I want to provide equal opportunities for female employees and promote them to higher positions, because this is not how it works in the rest of the world.”
Concluding the thoughts of the roundtable, Kaluti added: “My aim for 2022 is to continue to create a an inclusive environment, where our female employees have an equal growth opportunity and can come to senior leaders with their problems.”
If this approach is taken industry-wide, then the problem of a lack of investment in female-led companies will be addressed, rather than spoken about.