It’s been a tough year for the tech industry. With Silicon Valley stalwarts such as Meta and Google making big cutbacks and the once sky-high valuations of tech companies dropping fast, 2023 has unsettling echoes of the notorious dotcom crash of 2000. This harsh economic climate makes it hard for startups to get venture capital for their big ideas, and the threat of a long funding winter looms large. But the current situation is even tougher for all-female startups.
In 2022, female-owned companies received only 2.1% of the total capital invested in startups in the U.S. And that’s down from 2021. These stats make for sombre reading, and they’re a reflection of a wider representation problem in the tech industry, with 72% of women in tech saying they have worked at a company where “bro culture” is pervasive. And the lack of women around the table doesn’t help, either, with 26% of women in tech saying they’re outnumbered five to one by men in business meetings.
But there is hope. In this week’s episode of Payment’s Innovation, our host Cara Hayward talks to Ruth Foxe Blader, CIO at Anthemis Group, and Elizabeth Davis, Principal at the Female Innovators Lab Fund at Anthemis Group talk about how female entrepreneurs can support each other and help improve access to venture capital funding.
The myth of the “pipeline problem”
Davis’s experience in running her own company revealed the challenges that women face getting funding in the tech industry, and informs her work for Anthemis Group. “I saw such a disconnect with these founders really struggling to get VC funding,” she said, “and I was thinking, ‘what is the issue here? Is it something that’s not venture scalable?’”
Foxe Blader doesn’t think it’s a “pipeline” problem. She hears many people say that they would love to invest in more female startups but they simply don’t see them. When she hears that, she said, it’s time to push back: “The question is, do we want to solve the problem as an industry? If so, I think it’s eminently solvable. And I do think that, to the extent that we understand and know that female led teams are highly performative, and that diverse teams are highly performative, we as investors really do have the opportunity to influence not only who we invest in, but how the companies that we invest in grow.”
Anthemis Group is proof that female entrepreneurs can flourish if they’re simply given the opportunity. The group’s Female Innovators Lab Fund was launched in 2019 and started making its first investments in 2020. Since then, it has seen more than 1,500 female founders within the fintech industry.
Giving more women a seat at the table
For Davis, one way to ensure more female founders get funding is to ensure that there are more women involved in the VC funding process itself. “Less than 15% of VCs that actually write the cheques are women,” she observed.” And so when we think about some of that implicit bias that exists within the VC ecosystem, there’s more of a need to have women check writers at the table, so that we’re driving more capital to gender diverse teams, whether it’s all-female founding teams, or co-founder teams.”
With each investment comes a certain amount of leverage, which Foxe Blader believes VCs should be using to persuade companies to hire more women to senior positions.
“We know that if women have high-ranking roles in startups, more women are going to start companies and more women are going to have exposure to this particular part of the market economy,” she explained. “It doesn’t make sense to try to serve a large population and have your employee populations be totally unrepresentative. So I think to the extent that we can chip away at these norms, we really can change the industry.”
As Anthemis Group continues to invest in more female founders during this challenging economic environment, Foxe Blader is excited about the opportunities the current market presents to resilient founders who are focused on the underlying unit economics of their business. “In some ways,” she said, “the world has never seemed more problematic, so we do have a huge opportunity to invest in world-changing companies. For those who want to solve big problems and back amazing founders, now will definitely be the time.”
Until next time!