Is the Investment Landscape Changing for Female Founders?

Is the Investment Landscape Changing for Female Founders?

Global funding and innovation platform Sustainable Network acts as a bridge between conscious investors and sustainable companies that operate on a triple-bottom-line model of people, planet, and profit. Founded by Matthew Cook and Harvey Knight, they have a very strong commitment to supporting and promoting female founders, an area they feel still requires transformation.

As has come to light in recent years, if we are to address the challenge of  climate change, we need to concentrate on sustainable businesses and focus on sustainable investment. The 2020 BNP Entrepreneur Report revealed women are leading the way in adopting environmental goals and sustainability in business and investing, and recent studies have shown female entrepreneurs are more likely to act on environmental issues.

With the growing numbers of women founders in sustainable businesses, why are they still facing so many hurdles when it comes to investment? In this article, we talk to women in business about the challenges they encounter and the advice they can offer.

Unconscious gender bias still persists

In 2009, Dana Kanze CEO and co-founder of mobile app development company Moonit Labs pitched to investors for funding. She and her male co-founder, COO, and President of the company, decided to meet venture capitalists separately to double their reach. Despite having very similar backgrounds, qualifications, and careers, Dana became aware of how differently she was questioned compared to her male co-founder. While he was asked promotion orientated questions, focussing on hopes, achievements, advancement, and ideals, her questions were prevention orientated, concerned with safety, responsibility, security, and vigilance.

Fast-forward 13 years and things have not changed much when it comes to female versus male founders with regards to securing investment. Last year the Harvard Business Review reported that in 2020 female-led start-ups received just 2.3 percent of VC funding while in the UK according to Dealroom, just 1.1 percent of Europe’s venture deals in 2021 went to all-women founding teams.

According to Founder Coach Jennifer Clamp, many investors are still employing unconscious -gender bias when it comes to female founders.

“When women are asked a prevention question, they invariably give a prevention answer. This results in women being seen as less ambitious, lacking in confidence, and being defensive” she explains. “Women are also seen as less visionary leaders because they are more hesitant to sell the ‘big vision’ to investors when it is still so far off – they don’t like to promise something they don’t yet know how they will deliver.”

Jennifer, founder of Aata works with female founder CEOs who are scaling their businesses and wanting to realise their potential in their role, bringing them clarity and a sense of agency.

“Coaching provides an opportunity to voice and process role pressures and evaluate decisions, and a space to gain perspective and receive compassionate challenge so they can continue to grow in their role as they achieve business goals.”

Some of the issues female founders bring to Jennifer are that they feel they will lose themselves or have to compromise their values in order to raise investment and grow their companies. They often feel isolated or suffer from imposter syndrome.

“Coaching gives them the opportunity to see there are options for both them and the business to thrive,” she says.

Women founders still lack support

These sentiments are echoed by Founder and CEO of The Futures Project Dr. Julia Stamm. Formed in 2019, The Futures Project is a not-for-profit organisation working with innovators whose business ideas are focussed on building a future that is positive for everyone.

In 2020, they launched their first call for Innovators for the Future. They received nearly 600 applications from 92 countries, from which they selected 18 businesses they believed were working to make the world a better place and which contributed to addressing the SDGs in a systemic way.

The Futures Project ran a fellowship for the winning eighteen, of which two-thirds were women and it became very clear how difficult it is for female founders to get the support they need.

“Women have to be much more meticulous, much better prepared than their male counterparts,” Julia explains. “Female founders feel insecure and alone, they don’t have the support systems.”

As part of the fellowship, the founders were offered group coaching, where they were able to open up about the challenges they faced and realised they were all encountering the same issues. They were able to learn from one another and give each other strength.

“We tried to give them visibility, a feeling of belonging to a community which helps them with the know-how to present themselves positively when they start talking to investors,” said Julia.

Penny Froggett, co-founder of ReGen Law LLP, offers legal, regulatory, and general business advisory services to a wide range of businesses, principally focused on sustainability and regeneration.

While their client base is not yet split 50-50 women to men, they have noticed an increase in the numbers of women starting their own businesses and not-for-profits. Women are more inclined than their male counterparts to approach ReGen Law at an early stage to help with articulation of their ideas and to consider different structuring options.

“I’ve found that women tend to appreciate being able to discuss their ideas with a range of people before finalising their approach,” says Penny. “Of course, some male founders are also open to engaging the services of legal, strategic, and other advisors early on in the start-up journey. This is what I’ve found so refreshing about working with Matt and Harvey at Sustainable Network as their approach is much more aligned with the open and collaborative approach we have tended to find working with women.”

For start-up CEO of Cande Consulting & Events Ltd and organiser of the Responsible Futures Conference Sam Cande, the biggest challenge has been investment and time. Currently self-funded, she sees lots of opportunities for the business but is often limited by funds and resources. “I would love to have some financial support and guidance from a mentor but have not been able to find anyone that is the right fit; I wouldn’t want to work with just any investor,” says Sam.

Sam’s advice to female founders: “Find people to network with and support you on your journey. If you can find a solid business partner then do. Someone that can do the things that you can’t. Modern-day business is more about collaboration than competition – we all come with different perspectives, and all have something to add.”

Clearly female founders are still facing more challenges than male founders when it comes to finding support and investors. However, there is some evidence to indicate that the tide is beginning to turn. Companies like London-based Pink Salt Ventures, Astia, the Angel Investment Network, and BBG Ventures are focussed on female founders and women now represent one in seven angel investors, double the number in 2008. The government has committed to a new Investing in Female Entrepreneurs Code, designed to support the advancement of female entrepreneurship in the UK and 2021 was a record year for female exits in Europe, with the UK heading up the list with a total of thirty-one female-led exits.