The Shecession
Including a gender perspective not only in entrepreneurship but into every aspect of our lives is not only a pressing moral and social issue but also a critical economic challenge. We all know by now that if we were to fix 100% of the gender-parity issues meaning matching women and men’s participation in the workforce, their sector mix, and full-time mix of jobs we could see an annual global increase in GDP the size of China or even the United States.
It comes to no one’s surprise that even though women play a fundamental role in the global value chain, the COVID-19 pandemic affected them the most. This crisis has had a regressive effect on gender equality with women being 47% more likely to have lost or quit their jobs to take on more childcare and household responsibilities than men.
On average across the globe, women spent 4 hours and 22 minutes per day in unpaid labor, compared to only 2 hours and 15 minutes for men. COVID widened this gap further with women now spending an additional 15 hours in unpaid labor each week, decreasing substantially their participation in the workforce. As more women turn to entrepreneurship as their only option in a hostile job market, we must tackle how their journey into the entrepreneurship ecosystem is being supported.
The structure of a male-dominated entrepreneurship ecosystem
When seeing the effects of the regression directly in relation to entrepreneurship, we continue to see the same pattern with higher rates of closure on small and medium female-led businesses. This correlates directly with the fact that women are a third more likely to work in a sector that was either shut down during lockdown or has lower productivity such as beauty, arts and culture, retail or social care.
On top of that, statistically female-led businesses receive less financial support, making them more prone to economic shock and less able to pivot under a crisis. If and when they do raise funds, they tend to raise lower sums of money than their male counterparts at each funding stage.
One clear example of this would be the UK government with the Future Fund launch last April where £500 million worth of convertible loans between £125,000 and £5m were available to support growth and innovation in sectors “as diverse” as technology, life sciences and the creative industries under two “simple” requisites: startups that applied must have already received equity investment of at least £250,000 in the last five years and have investors.
Because of the limited funds female entrepreneurs receive, the requirements set up to access the Future Fund were excluding female founders at the root.
Of the +700 companies that applied to the Future Fund, 82% had mixed-gender management teams, but just eight companies had an all-female senior leadership team compared to 181 all-male teams. Funding for female-run businesses totalled £7.2m versus £118.4m for male companies.
This makes complete sense when we take a step back and see that 68.33% of the capital raised across the seed, early and late VC funding stages in the UK went to all-male teams, only 28.80% to mixed gender teams and just 2.87% to all-female teams in the UK.
On the other side of the Atlantic the situation is quite similar, in 2017, 16% of the nearly $83 billion invested in U.S. venture-backed startups went to companies with at least one female founder, and just 2.5% went to startups with all-female founders.
The root issue of access for female founders
Another example of this would be the Nordics – a region widely recognised as a leading entity when it comes to gender equality in the workplace. Most of us quite innocently would think that this is a region where men and women are treated pretty equally right?
Well, it may come as a surprise that this view is not reflected in funding where only 1.3% of available capital in 2019 went to all-female startups. The large majority of the funding, a total of 93%, went to all-male teams where they represented 83% of the startups, the rest going to mix gender-teams. This means all-male teams not only get the most deals but the bigger deals too, raising more money than all-female teams.
We find the same situation in sub-Saharan Africa where according to a World Bank report, Profiting from Parity, women founders across the region continue to earn 34% less on average than male founders and in 2019, less than 5% of VC funding for African startups went to companies with women co-founders.
This is a global phenomenon, independent of country or socio economic status and it should be tackled as such.
Not only women but a diverse group of women
The picture is even worse if we take a look per stage or into diversity where even in pre-seed, the tickets available to men are 39% higher, an average of £3,200 versus £2,300 for women in the UK. Typically, only companies with a proven product-market fit go beyond early-stage financing rounds (series A or B) and complete series C.
Only 0.24% of venture funding over the last 10 years went to Black founders. A total of 10 black female entrepreneurs received venture capital investment, 0.02% of the total amount invested with none so far receiving late-stage funding and just one early-stage (Series A or B) venture capital investment recorded for a Black female, compared to 194 early-stage investments in white female entrepreneurs. In the U.S. less than 1% of VC funding has gone to Black and Latinx female founders.
The fact that female entrepreneurs receive less and smaller deals has a lot to do with the type of investors that back them up, typically government, family offices or via crowdfunding who generally invest in smaller ticket sizes than venture capital firms. But even when you do look into VC’s globally only 6% of capital goes to female-led teams.
The truth is women-led companies attract more investment at later stages, once they have a track record of revenue and impact. Evidence shows there’s a higher risk aversion from investors when it comes to women-led enterprises, so trying to access funding at an early-stage being a female-founder is basically mission impossible.
The gap starts in VCs
When we look into the percentage of female partners in VC’s only 9% of general partners at leading U.S. venture capital firms are women. It varies all around the world with a high 23% in San Francisco, 19% in New York while we find a 1% of women representation in Mexico City or a 2% in Berlin and Tel Aviv according to Women in VC’s directory. The average globally being at a low 10%.
According to research on the US venture ecosystem, investment firms with women partners are more than twice as likely to invest in women-led enterprises and more than three times as likely to invest in enterprises with women CEOs.
This is just the peak of the iceberg. The challenges the entrepreneurship ecosystem faces just replicate in every country with both public and private investment and across all stages of entrepreneurship affecting all women with the highest challenges being the gender-gap in VC’s, the access to early-stage support in higher productivity areas of innovation and the access to funding.
It’s not only about having a gender-perspective in entrepreneurship, but doing it with intersectionality. It’s not just about including women in entrepreneurship but a diverse group of women from all types of backgrounds and realities, not just those coming from elite higher education institutions.
The fact that VC-backed startups are still significantly male (89,3%), white (71,6%), based in Silicon Valley (35,3%) and Ivy-educated (13,7%) speaks to the reality female founders face when deciding to pursue entrepreneurship as a way of being financially independent and a lever of growth for our economies and societies.
Long story short: A more balanced community of entrepreneurs doesn’t just magically appear.
So, how can we improve as entrepreneurship-support organizations to tackle all of the above?
Disclaimer: We, at Bridge for Billions, are too still learning. We believe we’ve come a long way with 46% of our founders being women in comparison to around the 20% of supported female founders that most entrepreneurship support organizations in the ecosystem achieve so we wanted to share our learnings in order to truly democratize access to entrepreneurship support worldwide.
Let’s dive into bringing a gender-perspective to the fore-front of our agendas and operations by digging into how we handle things internally, externally and when it comes to the use of our technology against the most common biases.
Program Design
The Team: Gender diversity among staff enhances the capacity of an organization to communicate, attract and structure the program for female entrepreneurs.
- Our hiring process is a thorough one. We make sure we focus on skills rather than gender and even though finding the right set of hard skills is key, we prioritise purpose-fit. Of a set of 3 interviews, one is purely focused on purpose. Hiring people who want to change the status quo is key to achieving it.
- We are intentional in our fight for gender-equality. Even though being intentional is not always enough. It sure helps you focus on where you’re going. Now we have a 50% female founding team, 60% female management team and 52% female representation overall.
- We make ourselves continuously aware of the journey ahead. Attending gender-parity workshops, talks and events keeps us on our toes. Back in September, before our expansion to Latin America we took a “Gender Mainstreaming” workshop with our partners from Ashoka, VC4A, Lefil Consulting, The Swiss Agency for Development and Cooperation and New Ventures to make sure we were holding each other accountable
Even though we are aware that building a team that has a high percentage of female representation is easier as a social enterprise we believe it is possible. So, if you are a drone startup or an IT multinational it’s also possible, not just by being intentional but by making sure the way you acquire and keep talent is aligned with women’s realities.
The Marketing Strategy: Your marketing and communication strategy should be thought out to welcome female entrepreneurs, women with diverse backgrounds and life paths.
- Our communication materials are thoroughly reviewed for gender-bias in copy, from the website to every social media post.
- When it comes to events in the past months we’ve learned to always have more than one woman invitee in our panels and try to make panels, and content in general, a 50/50 gender split where possible. We must admit that in the past we have made mistakes with this, most notably when a last minute cancellation left us with an all white male panel for our tech day events.
- The images we use all over our presentations and communication materials come from galleries such as The Gender Spectrum Collection, an inclusive library created by Vice and Nappy, a library of pictures featuring Black and Brown people to make everyone feel included and represented.
- The testimonials and examples we use are strategically chosen to portray female founders in areas where they’re usually underrepresented such as tech, energy or finance, to name a few.
- To make sure we are always increasing our number of female mentors and role models, we run targeted scouting campaigns through digital advertising channels.
Program Kick-Off
The Selection Process: We look for people’s potential and not venture risk. We do not follow the traditional ways VC’s analyze their dealflow.
- We have a transparent online selection process integrated into the Bridge for Billions platform. Our application process focuses on the strength of the entrepreneur’s project, their motivation and the validity of their business model.
- Our Incubation Managers make sure to explain the flexibility of the program in terms of commitment so everyone knows from the beginning that they can work at their pace and combine with their regular schedule. This decreases the amount of pressure for everyone juggling multiple roles.
- Even though we do ask for a level of studies for impact purposes it’s not taken into consideration during the selection process. Understanding the previous gap women face when it comes to access to education is key so our program doesn’t require an MBA or previous startup experience.
Incubation Journey
The Proprietary Technology:
- As we know, women are underrepresented in the tech industry but having a gender-perspective within our developers is fundamental to create a product that is aware and adapts to the realities of women. Having a partner like Adalab who’s specially focused on training female developers helped us found María Sola, one of the members of our tech team. And we are looking for more!
- Even though in the acquisition phase we make sure we have enough female mentors as role models for the entrepreneurs the matching phase is focused on chemistry and value-given between entrepreneur and mentor. They choose each other and this gives female entrepreneurs the freedom to choose whoever will add the most value to their startups.
- The fact that our technology allows for the program to be 100% online and done from the comfort of home or remotely gives female founders the possibility to receive entrepreneurship training while they still carry the pressure of fulfilling the role of caregivers. Creating a program structure that doesn’t exclude women because of its lack of flexibility is fundamental.
Closing and Evaluation
- Asking the right questions like the number of female founders and co-founders, if they’ve received support or funding before and their specific challenges helps you see your blind spots and optimise for that. Once you know what’s happening you can address their pain points.
- Though demographic data like gender and ethnicity are received through the process, these are only used in aggregates and impact analysis and not as a requirement or limitation for them to access the support.
Where to start?
Fighting gender disparity in entrepreneurship support doesn’t strictly lie in how many female founders you support as an ESO, University, Public Entity, Corporate or VC, it also lies also in how you make them feel welcome and included into an ecosystem that naturally rejects them, how you support them and how understanding and flexible you are to their realities.
A starting point would be to challenge yourself and your organization into what efforts you’re doing to understand those realities. You need to realize what you don’t know in order to learn, change and improve. So, get out there, gather the data, learn and reflect on it. After that, you act to make sure that female entrepreneurs have access to the same opportunities male entrepreneurs have enjoyed to this day.
Whether you’re creating the architecture of your program, setting the selection criteria or the founders themselves, all the way to how you accompany them through the journey of entrepreneurship and help them secure funding opportunities. It all counts to boost, motivate and guide female founders into creating resilient businesses that will rebuild our economies and societies.
Even though this is a challenge women face in the entrepreneurship ecosystem -and in their daily lives- the root issue is historical and so embedded into our realities that to really tackle it we must think systematically. Including women in the education system, the labour market, into policy changing and in decision-making roles and into male-dominated industries like VCs to fix this gender gap from A to Z.
It’s everyone’s responsibility to make this world a place where equal opportunities are a reality, regardless of gender, race, culture, religion, sexual orientation or education.
Why we care
Bridge for Billions supports more female entrepreneurs than the average business incubator. This success has rested on making gender balance a priority agenda and bringing a gender lens into all our operations and organizational structure. To date we have supported 867 female founders through various initiatives with partners but we are especially proud of our programs fully focused on supporting female founders.
By partnering with Coca-Cola in their program “Gira Mujeres” we supported 30 female entrepreneurs from rural areas of Spain in the development of their own businesses and Coca-Cola sparked the conversation around female innovation with local town halls.
Through our partnership with Ashoka Philippines we supported 40 female social entrepreneurs by creating “Women Together for a Better Normal”, a program where female founders were trained and guided into new business models. The objective was to help them build strong businesses able to pivot and thrive in a COVID-19 market. And last but not least, by creating Kinaya Labs we worked with 20 female entrepreneurs from Senegal in the building of new solutions to spark innovation in the region.
We still have a long way to go and there’s definitely room for improvement but with these conscious changes in our architecture and amazing partners we can now say that 46% of the entrepreneurs we’ve supported are women.
Contact us below if you want to create your own innovation program to tackle gender-bias in the entrepreneurship ecosystem.
