Innovation Origins is delving deeper. As of today, in addition to our regular news on innovation and technology, our journalists will routinely cover important themes in depth across the week. Our first dossier features start-ups by women. Read all our articles here.
It is not so long ago that Dutch women had to stop working once they got married and started having children. While my own single mother had to work full-time and even six days a week in my native country, communist Hungary in those days. The fact that she also worked in a technical profession would be highly laudable from an emancipatory point of view. However, my mother didn’t like that at all – no more than many Dutch women did who were forced to waste their time at home without being able to develop their talents and without any prospect of economic independence.
Ultimately, what matters is that you have a choice. And that the preconditions are in place to be able to make such a well-informed choice. Which goes further than just equal pay – however important this may be. It’s about equal opportunities for women and men. And it’s not just about who is appointed, but also about the underlying structures. Why is this important? Besides the value for women themselves and the economic importance of ensuring that female talent is not overlooked, it has also been proven that greater diversity benefits organizations.
I am continually fascinated by women working in such traditionally male-dominated work environments. How do they do it, how do they manage to hold their own? I made a series of portraits of female scientists once for Opzij (Dutch feminist magazine) as part of the Westerdijk Anniversary celebrating the appointment of the very first female professor one hundred years earlier.
Over the past two years, I have also interviewed women working for Intermediair (Dutch weekly for educated professionals) in occupations that were previously reserved exclusively for men: from football international player, forest ranger, helicopter pilot in the Dutch Air Force and captain of inland shipping to cardiologist, police chief, ambassador and Member of the Dutch Senate. Although there has definitely been a shift within many professions in recent years and things are much more taken for granted by the younger generation than by the generation before, I take my hat off to the courage and perseverance of all these women.
Entrepreneurship for women
Entrepreneurship: another professional field that is still commonly associated with men. Even though women are not necessarily better but are certainly no worse as entrepreneurs than men, as is shown by research and in practice. Yet the bulk of venture capital is still invested in start-ups run by men. Why is this? What underlying mechanisms play a role here? And above all: what needs to be done in order to change this, to close the gender investment gap? Finally: what are the experiences of female entrepreneurs themselves?
For Innovation Origins, I took a tour along various initiatives aimed at linking venture capital to female entrepreneurial talent. I also spoke to the founders of a handful of female start-ups with a wonderful and diverse range of products and services. From energy-generating facade panels and a search engine for sustainable clothing brands, to a platform for finding the right artist and another one that provides knowledge and networks to other female entrepreneurs.
A fascinating experience that deserves a follow-up!
The ratio of women-run start-ups is way lower than that of start-ups run by men. Besides that, funding that capital investors are willing to invest are unevenly distributed as well. Initiatives such as FundRight, the Borski Fund and HearstLab want to change this. With the aim of closing the investment gap.
At a disadvantage
Women are not better or worse entrepreneurs than men. Nevertheless, women-run start-ups are systematically marginalized. They have to deal with prejudice and a lack of financial support according to the report ‘Gender Diversity in the Netherlands’ that was recently published by TechLeap. Conclusions presented in this report confirm earlier findings in the report ‘Fixing the funding gap.‘ This was written by researchers and investors Eva de Mol and Janneke Niessen and released in September 2018.
According to De Mol and Niessen, only 1 in 50 teams that were invested in 2017 were comprised solely of women. That, compared to a meagre 6.8% average in mixed teams. TechLeap also states that in the past ten years a mere 5.7% of investment money went to Dutch start-ups with a female co-founder. This includes 4.9% in mixed teams and 0.9%. In other words, less than 1% in women-run start-ups. Consequently, the remaining 94.3% of start-ups that were set up all had an all-male workforce.
Prejudice and the investment gap
Why is that? Venture capital investors are more inclined to invest money in start-ups which have male rather than female staff. Female teams also raise less than men on average: €200,000 per round compared to €600,000 for men.
Women entrepreneurs are also judged differently than men. In short, women are judged on their actual performance, while men are judged on their potential. Character traits that are perceived as positive in male entrepreneurs are instead construed as negative in women. Such as audacity. When it comes to men, it’s regarded as: “See, in a nutshell that’s a real entrepreneur. After all, he has the courage to take risks.” Whereas when it comes to women that quality evokes an association with recklessness. As in: “She takes unnecessary risks, should we really be investing our money there?”
Or take decisiveness. In men, this is seen as ‘someone who dares to take the lead. They don’t shy away from making decisions.’ While that same characteristic in a woman is interpreted as: ‘dominant, not a real team player’.
The Boy’s Club
Finally, most investors are themselves men. Therefore they are more inclined to invest their money in entrepreneurs and products that are closer to their own world of experience. Products or services offered by female start-ups are perceived as less relevant or market worthy. To put it bluntly: birds of a feather, flock together. The bottom line is that even though 30% of start-ups are now run by women, only 1.6 % of them receive any financial funding.
Change is desperately needed
Why is this such a bad thing? Because a lot of entrepreneurial talent is lost this way. Talent that the Dutch economy could put to good use. After all, there is a lot of money involved in this industry. In 2018 alone, no less than US$580 million in venture capital was invested in The Netherlands. But also because research, including Sander Hoogendoorn’s PhD at the UvA, has shown that mixed teams function better than homogeneous ones. They are more innovative and deliver stronger performances.
It is high time to shake things up a bit as far as some women (and men too) are concerned. Around 25 investment funds recently launched the ‘It’s time to fundright‘ initiative in collaboration with TechLeap (formerly StartupDelta). With an appeal to investors to commit themselves to the cause which enables female talent to flourish. Some 200 start-ups have now signed up to the fund.
In addition to FundRight, other investment funds have recently been set up to support female entrepreneurial talent. Several investors have joined forces within the Borski Fund, an initiative from Laura Roosenboom, managing director of Start Green Capital and Simone Brummelhuis, founder of investment fund The Next Women. Lat but not least, media company Hearst recently set up the HearstLab investment fund to help female entrepreneurs with exceptional, marketable ideas develop further. Aside from money, the chosen teams can also count on support in the form of advice and networking. Times are a-changing.