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Life as a woman entrepreneur
Fintech has become a major force since the financial crisis, with venture-backed fintech startups raising record funds and births of new fintech unicorns. However, according to KPMG, of the nearly 500 deals closed in the US in 2016, less than a dozen went to companies founded by women. Out of the billions of dollars that went into the sector, only a handful raised Series A or Series B funding, including Ellevest, Wise Banyan, PolicyGenius, ApplePie Capital, and SupportPay.
The picture gets grimmer on both sides of the pond:
- Based on a survey of U.K.-based fintech firms published last week, women represented just 3 in 10 employees.
- According to the Financial Times, only 8% of the fintech board directors globally are women, compared to 22% in big banks.
- Per Catalyst.org only 5.4% of S&P 500 Finance and Insurance companies have women CEO.
- Only 10% of venture-backed companies had a female founder, as reported by the Case Foundation.
- The share of all new female entrepreneurs decreased from 1996 to 2016, according to the Kauffman Index of Startup Activity published by the Kauffman Foundation.
Against the grim backdrop, there are some interesting data points:
- Women make or influence up to 80% of household buying decisions worldwide; Women’s consumer spending is projected to rise to US$28 trillion by 2018, according to Global Banking Alliance for Women
- 73% of women globally reported being unsatisfied with their banking services, according to Boston Consulting Group
Given the vast potential opportunities, one would have thought we would try hard to promote more women entrepreneurs and/or creating solutions for women.
Expectations versus reality
I attended a week-long fintech event recently where one of the sessions was dedicated to presentations by various accelerators around the country and their startups. The lineup was as follows:
- Seven accelerators (introduced by 7 men)
- Fourteen startups (represented by 14 men)
In all, 21 guys came on stage, with no woman founder in sight.
Which begged the question: Did any of the accelerators have female entrepreneurs? Were all of the female founders “coincidentally” occupied and not available for arguably one of the most well-known fintech conferences of the year?
While I was disappointed, I was not surprised. Truth is, this has been far too common in not only Silicon Valley, but tech industry in general. The only good thing is that there is never a line at the women’s bathroom at such events. There is always a silver lining I suppose.
Inclusion, or lack thereof
If I could time travel, I would return to 1998 when I started a new job with a firm in Northern Virginia. I was pretty young and inexperienced then. Yet, the national sales director asked me to present in an industry conference at Clemson University because he thought I could benefit from the experience and the exposure: “I have done this too many times; they all know me. But you are fresh and this would be good for you.” I treasured the opportunity and did not let him down.
Little did I know, his inclusive attitude was more of an exception in the industry rather than the norm. For more than twenty years since I have been working, I have lost track of the many times I would get dismissed, ignored, or get mistaken for an assistant. I feel that I have to work extra hard to overcome the bias (conscious or not) over my gender and sometimes my ethnicity. I have learned to adjust my attitude (sadly) because “niceness” and “thoughtfulness” can be viewed as a handicap rather than something to be valued. A close female co-founder has once told me that the investors would barely pay attention to her even though she is the co-founder and only female board member of a successful startup. Rather, they would focus solely on her husband (the other co-founder of the startup). The company recently raised a big round of funding from venture capitalists. I hope the money is not coming from the same group that has been dismissive of her.
Misconducts are not new
One of the questions we all wonder out loud is: How did it get so bad?
Truth is, there is no easy answer. Some people blame the pipeline while others blame the culture and bias towards women. Some attribute to the lack of social support network for female entrepreneurs and role models. And in Google’s case, some blame biology.
The recent unraveling of incidents in the tech industry might offer a partial explanation as to why there are not more women in the field. Unfortunate thing is, as much as the misconducts in 500 Startups, Uber, and SoFi have managed to raise awareness of the open secrets that we all know too well, has anything really changed for women in technology? Aside from a few public apologies, change of guards, and occasional uproars from investors, are we ignoring the possibility that what has happened in those selective high profile cases might just be a reflection of deeper cultural problems in the industry?
The repercussions run deep: According to a recent article on Bloomberg: “Only 18% of computer science graduates are women and if a significant number of them eschew a company because of its bad reputation, there won’t be many left to choose from.”
The gender equity problem in the startup world is multifold. Only 8% of VCs in the US have female partners. This gender gap could lead to VC firms being less likely to invest in female-founded or female-led firms due to emotional disconnect or lack of access to the familiar social networks, since they tend to fund individuals like themselves. As a result, fewer than 5% of all VC-funded firms have women on their executive teams, and only 2.7% had a female CEO.
According to the National Association of Women Business Owner, women own more than 9.4 million firms in the US, which is nearly a third of all privately-held companies. Yet, female founders are struggling to raise the funding they need for their startups. Even when they manage to raise funding, it is significantly less than that of male entrepreneurs. According to PitchBook, VCs invested $58.2 billion in companies with all-male founders in 2016, while women received just $1.46 billion in VC funding last year.
Resolve to make a difference
There are no easy answers when it comes to closing the gender gap. It will require persistent effort from every one of us (and all genders) in the ecosystem to be able to drive meaningful change.
Organizers of events must become more conscious in inviting more women and including more of them on stage. (Hint: not just for moderating a panel of male speakers). Companies must be mindful in providing more opportunities to raise the profile of women at work and give them a chance to shine. If you have a speaking engagement, consider the women in your team first instead of heading straight for the guys who have had plenty of spotlight. Include their opinion if you are working on a publication. Implement mentorship programs for women and consider a “returnship program” that develops talented professionals looking to restart their careers after an extended absence (such as a newborn mother or a caregiver for aging parents).
As for accelerators, don’t just provide lip service and show on paper how diverse your portfolio companies are. Put the spotlight on diversity and give your underrepresented entrepreneurs stage time. As with VCs, work harder to actively seek out women entrepreneurs and look outside your usual social circles. Trust me, they are out there. And no, you won’t have to “lower your standard” just to accept more women-led companies in your programs.
One of the wonderful accelerators I have had the privilege to get to know is Village Capital. Here are some pretty impressive stats on their portfolio companies:
- 43% of portfolio companies have female founders or co-founders.
- 79% of portfolio companies are located outside of New York, Massachusetts and California.
- 18% of US portfolio companies have people of color as founders.
They are a perfect example of “walk the talk” and have been successful in raising the profile of otherwise underrepresented entrepreneurs around the country.
More female founders will bring about more women in the industry, attracting more VCs funding women-found companies, and resulting in better financial outcomes for women and more inclusive solutions. Without women in positions of power, male investors may not even recognize there is a problem.
What role would you play?
As the Sofi and other recent scandals highlight, it is hard to be a woman in fintech. I applaud the effort of those who regularly call out the inequalities in our society and challenge us to do better. Truth is, it will take effort from all genders for meaningful change to occur. The road ahead is long, but I remain hopeful that one day, we will get there.
One grain of sand, however small, bears a significance in the universe. Its impact can be felt, long after the sand is washed ashore. (Unknown)