To kick things off with an understatement, the tech sector has a shortage of women. Initiatives in The Netherlands such as Girlsday and Female Tech Heroes aim to encourage girls and women to choose a study or career in tech.
Even Prince Constantijn is committed to increasing gender diversity in the workplace. In last week’s best-read article, he spoke to us about FundRight, a collective of 42 investors intent on increasing diversity in the tech sector.
Improve the world, start a business
But it is not just the tech world that has to contend with this problem. That this is also the case in the financial sector is something that Willemijn Verloop has experienced firsthand. As the founder of WarChild, Verloop devoted fifteen years to projects that improved the lives of children impacted by war. Now, through the national platform Social Enterprise NL that she founded, Verloop supports young entrepreneurs who want to use their company to make the world a better place. She wrote the book ‘Verbeter de wereld, begin een bedrijf’ (‘Improve the World, Start a Business’) about why entrepreneurs are the new do-gooders.
With that same thought in mind, she spearheaded Rubio Impact Ventures. This is an investment fund that invests exclusively in successful companies that want to make a positive impact on the world. Rubio is currently looking for a business analyst who can map out whether start-up companies are likely to be successful. The job posting has been online for a week and a half, and Verloop noticed that 90 percent of the responses came from men. It surprised her so much that she put out a call on Linkedin: ‘Girls waar zijn jullie?’ (‘Girls – where are you?‘)
Disparity greater than assumed
“We in the investment team have managed for years already to put together a diverse team fairly effortlessly. That’s why it surprised me so much. I refuse to believe that there might be so few suitable women candidates for this position. After my call, quite a few more women applied and we received a lot of good tips. Things are moving so fast that I still haven’t been able to respond to everything. I think this shows that this is something that is very much on our minds.”
Out of curiosity, Verloop reached out to the RD Recruitment Group, a recruitment agency Rubio works with. “As it turns out, this is not an exception in the financial world at all. Of the employees who through them went on to work for an equity or venture capital company, only 16 percent were women, and that was in a good year. I knew that the gender disparity was not equal. But I didn’t expect it to be so huge.”
Mixed teams perform better
Yet we have known for a long time that diversely mixed teams perform better. After all, Verloop is also aware that people with different backgrounds and views provide new and creative insights. “Especially in the investment profession, it is important to look at teams and revenue models from a variety of perspectives. You get a more balanced view that way and can therefore better assess whether an investment could be successful.”
But this insight doesn’t seem to have caught on in Europe yet. Of the 175 mid-sized tech companies that managed to raise a second or third round of funding in 2019, only 11 were led by a woman. The allocation of investments is also lopsided, to say the least. For example, only 9 percent of the money invested in tech went to start-ups with at least one female founder. The rest of the money invariably wound up with teams whose founders are solely comprised of men, as a report from Atomico revealed.
Women opt for security
And this plays out in investment funds as well, Verloop is convinced of. “In venture capital, there are a lot of experienced entrepreneurs who decide to invest after a successful exit. These have traditionally been men.”
Verloop is unable to say for sure precisely why this is the case. “It is true that women tend to make safer choices. Girls who study entrepreneurship or finance are in the minority and often don’t choose a career in venture capital. They seem to opt for a corporate career more often, which is a somewhat more cautious choice,” Verloop suggests.
Dutch women, she says, are more attached to security. “This seems to be more extreme in the Netherlands than in America, to name one country. But in general, I think you can say that women are more inclined to cater to the environment around them. For example, they are less likely to start risky businesses,” says Verloop. But with this, Verloop does not mean that women in the Netherlands are not choosing their own careers. “They are going for a different kind of career where they are actually doing great. However, they do seem to take less risks in doing so.”
Knowledge of the venture capital profession is lacking
As to where this stems from, Verloop says the following: “A lack of knowledge. I think that students’ knowledge of venture capital or private equity is generally still quite limited. Even though when I explain what we do with impact investing, namely helping companies grow to improve the world, girls in particular also become enthusiastic.”
Which is the reason why Verloop and her team want to come to universities more often to talk about impact investing. “Our ambition is to make sure we create more diversity and get more people excited about a career in venture capital. And by that, I am not just talking about women!”
At the same time, all sorts of things are also being done to encourage entrepreneurial women. Which is a good thing, Verloop firmly believes. “Techleap has taken the lead in this in the Netherlands with the Fundright initiative, in which we are one of the founding partners. There are all sorts of initiatives for more (gender) diversity, such as Diversity VC, TheNextWoman, Delite Labs, WomInvest and Included VC. The entrepreneurial vibe is definitely on the rise in the Netherlands. Also among women. I expect this to provide an additional boost to female entrepreneurs in the near future.” She adds laughing: “Then I won’t have to share a picture on Linkedin of a white guy in a suit when talking about diversity.”