Gender bias or how investors are missing the best investment opportunities

By Selma Prodanovic, EBAN Vice President 

The overall assumption is that investors seek the highest return on investments. If this may sound like common sense, it is certainly not common practice as investors tend to invest in startups who generate half the possible revenue for every dollar raised!

Let’s take a closer look:

A global study by BCG shows that for every $1 of investment raised, women-led startups generate $0,78 in revenue, compared to $0,31 for male-run startups! First Round Capital found that female-led companies it had funded performed 63% better than the all-male counterparts. The Kaufmann Fellows Report reports that women-led teams generate a 35% higher return on investment than all-male teams. 

Combining the assumption that investors are always seeking the best investment opportunities and the above data, one would imagine the majority of VC funding would be allocated to female-led or mixed-team startups. Well, the opposite is the case! According to Crunchbase, female founders received only 2.3% of VC funding in 2020. In Europe, female founders received 0.7% of the total VC funding according to Pitchbook. 

This incredible discrepancy is simply illogical in today’s data-driven world. 

The next decade will bring a major shift in funding as LPs will no longer accept unawareness, ignorance of facts, or even deliberate misallocation. Considering that in 2020, 83 female (co)-founded unicorns joined The Crunchbase Unicorn Board compared to 18 in 2019, the change is already happening, and it is merely a question of how fast VCs and angel investors will adapt. 


Following are four strategies to adjust and perform better in the future:


  1. Diversify your deal sourcing

Deal sourcing is obviously directly related to your network. Depending how heterogenous or homogenous your network is, you will have access to more or less diverse startups. No matter how much you would like to invest into female-led startups, you will not be able to find them if you do not make a conscious effort to expand your network. The numerous fantastic initiatives, organizations, and accelerators focusing on female-led startups provide the fastest and most professional access. 


  1. Be aware of your “pitching bias” 

One of the major factors behind this inconsistency is unconscious bias. According to ILO, unconscious gender bias is defined as unintentional and automatic mental associations based on gender, stemming from traditions, norms, values, culture and/or experience. The unconscious, automatic associations feed into decision-making, enabling a quick assessment of an individual according to gender and gender stereotypes. 

According to Harvard Business Review, one study (2014) using identical slides and scripts but voiced by men or women. The researchers concluded, “Investors prefer pitches presented by male entrepreneurs compared with pitches made by female entrepreneurs, even when the content of the pitch is the same.” 

In addition, bias is present in how founders are questioned. Research from 2017 found that women are asked different questions than men when pitching to VCs. Across 180 entrepreneurs and 140 VCs at the TechCrunch competition, men were consistently asked more ‘promotion’ questions (highlighting upside and potential gains), while women were asked more ‘preventive’ questions (highlighting potential losses and risk mitigation). Entrepreneurs who addressed promotion questions raised at least six times more money than those asked the prevention questions.

There are different methods to diminish this bias, but already awareness creates change in the system. Just remember: you might be missing a fantastic investment opportunity. 


  1. Expand across industries  

The same lack of experience or even self-doubt which is assigned to many female investors entering highly technical fields, is also true for most male investors entering fields such as for example femtech. This maybe “unknown territory”, but considering there are 4 billion women, potential customers, the upside is evident.  


  1. The “Business Angelina effect” 

The quick fix yet most sustainable strategy is making sure your investment committee or business angel co-investor group reflects not only complementary expertise but also gender diversity. Keep in mind that women influence over 80% of buying decisions and potentially understand better the needs of female customers. The number of female angel investors and female focused VCs is growing. Last but certainly not least, women now control 32% of the world’s wealth (according to BCG) and this will rise at a compound annual growth rate of 5.7% to USD 97 trillion by 2024. 

There are many fantastic networks you can either join as a female investor or to identify female co-investors. To start with, get inspired by the EU-Startups Top 100 Europe’s most influential women in the startup and venture capital space or join EBAN events. 

The world is changing at exponential rate. Change will either happen to us or we can shape it.


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