Why you should be investing in female-founded companies.

16.06.2021 | TOA Klub

All good investment reads start with some mind-blowing stats to encourage you to read on, right?

Did you know that only 2.8% of VC investment goes to female-led companies? Did you also know that the pandemic affected the funding of women-led startups disproportionately to the country’s broader venture space, and declined to 2.4% in 2020 (from the all-time high of 3.4% in 2019)? Was this due to women making up only 13% of U.S.-based VC firms?

We had the pleasure of having four incredible women grace our HD screens in 2020 for our Click.Future online conference. Investing in Female Entrepreneurship is the title of the talk and the full conversation is available here.

Susan Danziger, Founder & Investor, Eutopia mediated the discussion on Investment in the Female Entrepreneurship space with three big names:

  • Sarah Kunst, Managing Director, Cleo Capital
  • Lisa-Marie Fassl, Co-Founder & CEO, Female Founders
  • Alina Bassi, Founder & CEO, Kleiderly

The discussion highlighted important points in the investment space today that could be beneficial for investors, those interested in investing, and founders looking for investment.

In short:

  1. Women-founded companies exit faster, and on average they sell or go public at a higher valuation. Why are we missing this opportunity?
  2. A lack of confidence and education in the area of investing is making the knowledge gap larger — Several associations like Female Founders or TOA Klub help educate and build confidence.
  3. Making warm leads is hard if you’re not already in the game — particularly amidst a pandemic. How do you make warm leads? Online, of course.
  4. Learning not to be failure adverse.
  5. Let’s be solutions orientated.

In long:

  1. Is the world missing out on women-founded and women-funded companies? Yes.

“According to Harvard Business Review, if women and men participated equally in entrepreneurship, the GDP would actually go up from $2.5 trillion to $5 trillion.” Susan Danziger

Lisa reinforced that we’re missing out on huge opportunities. Statistics show that women-led startups and bigger corporates tend to perform better economically and develop a good culture and have a positive social impact.

Sarah notes that we should be asking ‘who has capital, and how do we get them to deploy it more equitably?’ “White men are often the people who have the most money and can write the most checks, and who historically have done the least in their careers to build a more equitable world. So I think it’s very reasonable that they should be at the table to help fund everyone.”

2. Confidence is EVERYTHING

We need to find a balance between this fitting into what it is right now and actually changing it to really have this gender agnostic ecosystem” Lisa-Marie Fassl

Sarah signaled that she generally pushes back on numbers as an investor when male and female-led companies are looking for investment. But not every investor does this because on paper it’s not clear. “men don’t say, hey, here are my press spin numbers. And women don’t say, hey, here are my deeply realistic, sort of downplaying myself numbers.”

Men and women tend to present the numbers in different ways. Investors need to look beyond the paper that they’re presented on.

Lisa has been running with the angel network for the past four years and has said that “One of the biggest reasons why women don’t invest not only in startups, but in general, when we look at the numbers is this lack of education in terms of investment.”

This platform will provide a space to ask any question, be with other beginners in investment, and create a network of trust: Female Founders

3. Nurturing warm leads when the boys club is full and meeting in person is impossible.

“I don’t come from the sort of background that might have, you know, connections to angel investors or VCs, or maybe people don’t necessarily know about that within my personal network.” Alina Bassi

The cyclical nature of wealth, investment, and those who control it is illuminated in this space. There is a tendency for VCs to invest in familiarity, and if most investors are men, then they’ll invest in who they know best — men. The problem with this is that the minorities in the space are getting overlooked. And as we’ve seen above — it’s affecting global wealth.

Sarah said that she recently invested in Lunchclub — a super-connector that makes introductions for 1:1 video meetings to advance your career. COVID made it harder to create and maintain connections with investors, so this current “digital moment massively levels, the playing field, in terms of being able to meet more investors.”

Alina entered the Google Female Founder program and built a powerful network of 20 women who gave encouragement and support. She realised that women from ethically diverse backgrounds have even less chance of gaining warm leads and intros, so she partnered with Google for Startups, Tech Stars of Silicon Alley, and London and Partners to provide a way to matchmake investors with these women. Tech in Colour — sign up as an investor, founder, and ally.

4. Risk, Failure, and Travis Kalanick

“If you’re very bad at failure, and you don’t like to fail, you want things to be always good. You’re probably better off not starting a company because you’ll fail at something.” Sarah Kunst

Sarah founded a company, then invested in her company, then became an investor. She argues that if you succeed at everything, then maybe you’re not taking a big enough risk — you can learn a lot from it either way.

When Travis Kalanick was starting Uber he wanted 25k from multi-millionaire investors, and he was turned away countless times. “Rest assured that you too will get turned down a ton”. Take calculated risks.

5. Two Solutions

We need to speed up gender equity through education — on both sides.

  1. Educate women to become investors. Entrenched gender norms are still taking up space on the board when it should be freed up for the women at the front and the evidence that women could make a HUGE difference.
  2. The long line of female trustWomen of means > Invest in women fund managers > Invest in women founders. Evidence shows that women invest in women — through empathy, trust, consumer goals, and overall understanding.

If you’re looking for an education in investment — check out our Investors Klub. Learn through a top-class lineup of speakers conducting masterclasses and AMAs and a supportive cohort of like-minded people.

If you’re on the entrepreneurial side of the fence, then please check out our Founders Klub too.

Meet the panel:

Sarah Kunst, Managing Director, Cleo Capital

It’s hard to fit all of her accolades on here but we’ll try: Sarah has been named a Future Innovator by Vanity Fair, Forbes Magazine 30 under 30, a top 25 innovator in tech by Cool Hunting, recognised by Big Business Insider is a 30 under 30 women in tech, Top African American in Tech & Pitchbook — and more (if you can believe it).

Alina Bassi, Founder & CEO, Kleiderly

Alina’s bio sounds like a tagline from a superhero movie: A chemical engineer turned entrepreneur with a passion for sustainability. She founded Kleiderly to solve textile waste and turn it into plastic, supporting women in the engineering field and people of colour in the startup world. And thus recently awarded the Forbes 30 under 30 recognition in the manufacturing industry category.

Lisa-Marie Fassl, Co-Founder & CEO, Female Founders

Lisa thinks as big as possible, and she achieves big goals alongside. She heads one of the fastest-growing communities in Europe that focuses on female entrepreneurial minds. With eight years in the European tech space from startups to angel investors, she’s set to build a pan-European ecosystem for female founders.

TOA Klub is a virtual space to connect, grow and forge your own path. 4-6 weeks of cohort learning with expert speakers and peer-to-peer learning.