Invest in Women: The State of Female Investors and Entrepreneurs in 2020

In May 2019, I learned that female entrepreneurs receive significantly less funding than their male counterparts. And that’s when I decided I want to be a female investor when I grow up. Since The Next Web Conference 2019, I’ve made an effort to learn more about investing, participate in investment events, and invest in women when I can.

I still have a way to go, but here’s what I’ve learned so far about female investors and entrepreneurs.

In 2019, the percentage of venture capital funding that female founders received increased from 2.2% to 2.7%

Do women receive less funding than men?

Yes – and it continues to be a problem. All of the female founders who received venture capital funding in 2018 received less funding combined than e-cigarette company Juul. And in 2019, the percentage of VC funding that women received increased from 2.2 percent to a whopping 2.7 percent.

To put this in perspective, unicorn turned dumpster fire WeWork received $5 billion from holding company SoftBank. That’s approximately $1.5 billion more than what all female founders received combined in 2019. Additionally, while Juul has skyrocketed to success, the company laid off hundreds of people at the end of 2019 and is currently facing a plethora of legal battles regarding its marketing efforts.

Of course, there’s no way to prove that a lack of funded female founders directly causes other businesses to fail. But this information does beg the question: why aren’t investors funding more women?

Whether investors aren’t seeking out female entrepreneurs, or there just aren’t many women asking for funding, it’s an issue many people have chosen to address.

What are people doing to increase investing in women?

After achieving enlightenment in May 2019, I spent the rest of the year learning about events, people, and businesses that encourage investment in women.

Startup Funding Event realized that only 30% of applicants for their pitch events were women, so they organized their first Women in Tech and Innovation pitch night

Startup Funding Event

Startup Funding Event realized that only 30 percent of applicants for their pitch events were women. Plus, all of their winners had been men. So in November 2019, Startup Funding Event hosted their first Women In Tech and Innovation pitch night.

In the panel discussion before the pitches, Head of Partnerships Yasmin Wilnis spoke with three women who also work to encourage more diversity in their fields. They talked about different initiatives that encourage female representation in innovation, one of which is #FundRight.

#FundRight

The Dutch #FundRight initiative, coordinated by Techleap and other VCs, asks investors to compose at least 35 percent of their portfolios with female-founded companies within three years.

During Startup Funding Event’s panel discussion, Investor Eline Vrijland van-Beest mentioned that her (male) partners were hesitant about pledging to the #FundRight campaign. They feared that, by making such a commitment, they would potentially miss out on the best technologies. “And what if there are no females?” they asked her.

That line of thinking is exactly why initiatives like #FundRight are so important. Investors need to overcome biases in their process. We like to think that we make choices based on quality and merit, but we still have an inherent bias towards people who look like ourselves.

And besides, how does anyone quantify a “best technology” anyway? Because as we’ve seen with Juul and WeWork over the past few years, the best or hottest technologies aren’t always the best investments. Ultimately, the “best technology” is subjective, and if you’re not seriously considering all the disruptive innovations out there, maybe you need a little push.

Arlan Hamilton highlights the fact that WeWork received more venture capital money in 2019 than all female founders that year.

Backstage Capital

Arlan Hamilton has been keenly aware of the diversity gap in investment and entrepreneurship for a while. In 2015, she started Backstage Capital (while homeless), an investment firm that supports female and minority founders. One of those founders is Dawn Dickson, the first black person to raise over $1 million in equity crowdfunding.

Arlan has no experience or formal education in the financial world, but she’s built a team that does. And by choosing the right people to join her crew, she learns from them, and then shares that knowledge with her community.

Sterling Schuyler is a freelance copywriter (native English) and marketing consultant.

What I’ve Learned

On Arlan’s podcast Your First Million, she and Dawn talk about the obstacles they overcame, not just as entrepreneurs, but as black women in the venture capital world.

Having a strong network is just one of many examples. “I keep seeing these things floating around about Uber. Somebody invested $5,000 turned $25 million,” Dawn says. But she talks about how that person was able to make the investment in the first place: “You had to have a friend to put you on to that deal.”

And to me, this is a perfect example of a barrier to becoming an investor. I’ve asked for advice on how to get started, and usually people respond with “It’s about having the right network.” If we’re going to lift each other up and break down barriers, that just can’t be it.

But building a network has to start somewhere, and Dawn shared her strategy:

Before I was on the stages, I was in the seats, and I paid to be in those seats, and I invested in myself, and I invested in building my network, and I was always very deliberate and intentional with my networking, and what I wanted to gain, and what I had to offer.

We can’t depend on others to hand us a network. We have to be intentional not just about how we build a powerful network, but how we lift each other up through our connections. And sometimes that means we have to spend money to (eventually) make money.

I also had no idea that equity crowdfunding was a thing, and now it’s my new obsession. After seeing the incredible success these women built for themselves, I feel empowered to keep learning about how I can invest in women.

That’s also why I’m so excited about Awesome Rotterdam. Anyone can be a trustee if they have 50 Euros to contribute! It feels like a small step into the investing world, without the legal obstacles and paperwork.

In 2020, there hasn't been much of an increase of female investors and founders - but that's changing for the better.

How Can I Invest in Women?

Investing in women isn’t hard – you just need to figure out how you want to do it. Search for initiatives like #FundRight to support, attend events like Startup Funding Event or The Next Women Summit, or join an equity crowdfunding platform like StartEngine. If you aren’t an investor but want to learn more, follow people like Arlan on social media.

Because once you take that first step, the possibilities to invest in women become clear.

Looking to work with a female entrepreneur and all-around badass? Let’s work together!


This post took 4.6 hours to write, 0.75 hours to create graphics, and 0.5 hours to create social media marketing posts

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