Gender gap exists in venture capital too, however in Italy 20% of angel investors are women
Gender gap? It exists in accessing venture capital too. Data confirms this, even those from evolved markets such as the US: according to the most up-to-date research, in 2017 only 2% of all VC funding went to female start-uppers and only 8% of members of venture capital companies were women. These might be small numbers, but they draw the picture of a changing world.
According to a survey carried out by EY in collaboration with the Women Presidents’ Organization (WPO), and published by Fortune – in which 430 women-founded businesses were interviewed – in 2016 only 1% of women start-uppers obtained a venture capital loan. This small figure is actually an improvement compared to previous years: of the 6,362 companies that received venture capital funds in the United States between 1991 and 1996, only 31 were led by women, according to a study dating 2001.
In short, the general mood is changing, albeit very slowly: 2017 is in fact the best year for women in VC since 2006 – i.e. since the start of the study by PitchBook. In 2017, all-women teams received $ 1.9 billion from venture capital, which invested a total of $ 85 billion, again in the US. So the share of financings to women is equal to 2.2%, while that ended in the pockets of all-male teams is 79%. The rest however went to mixed teams.
In terms of number of deals, women hit the record of 4.4% – although the comparison with all-men startup deals is still just 368 against 5,588. The average size of women funding remains lower than that for men: $ 5 million against 12.
What’s the reason for such a difference? There is no simple answer, but according to Fortune, there might be many explanations: one of them is the lack of female-headed VCs – indeed, only 8% of VC managers are women. PitchBook’s statistics show that many funds who give confidence to women have female executives on board. So the lack of women business angels is mirrored by the lack of women start-uppers who are given access to funding. But perhaps one of the reasons might be that women are less used to asking than men, and tend to rely on bank loans, friends and relatives, as well as their own personal finances.
Again, the general trend suggests that women are judged on the basis of performance while men are judged by their potential – which undoubtedly is a disadvantage when asking for funds. These are mostly qualitative reasons which can be changed with awareness campaigns.
Some people are trying to reverse this trend. For example, in Europe, a project was launched by the Women Business Angels for European Entrepreneurs (WA4E) to support female angel investing. Women business angels are managers or entrepreneurs aged between 30 and 50, who have at least one successful exit in their track record, pay attention to the impacting features of investments and to the female leadership of the startups in which they invest. This identikit is sketched by a research conducted on a sample of 640 women in 6 countries, within the same project.
It also appears that women, in this context, don’t just invest money but contribute to the growth of companies through an intense consulting and managerial activity and therefore represent a source of enrichment for startups – as is always the case when a business embraces diversity. As for WA4E, the actions to contribute to a more women-friendly venture capital world will be establish within the project: we hope that this will strengthen the positive trend that is timidly arising.
From this point of view, Italy shows important results. The IBAN 2017 Survey, carried out by the Italian Business Angel Network (IBAN) with SDA Bocconi, shows that one out of five angel investments in Italy has been carried out by a woman. The research reports that angel investing grew by 10% in 2017 for a total of € 26.6 million, compared to the 24.4 million of 2016. Besides, this study confirms the incisiveness of female contribution to risk capital: women business angels account for 20% of all the investors.