Jo Living, co-founder and COO, Fertility Circle asks where are the female investors despite the success of women in the industry?
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Women are launching and scaling new businesses at an impressive rate. In 2011, 11% of start-ups raising equity were founded by women. By 2018, this figure had doubled, and it continues to rise.
Unfortunately, the picture is not so rosy on the other side of the table. Only 12% of decision makers at VCs are women and, when it comes to angel investing, women are frequently not embracing agency over their wealth. Plus, 5.3 million women have left the workforce since the pandemic began, leading to the coining of terms like “SHEcession” and “MUMemployment”.
Therefore, it’s more important than ever that female wealth-holders and high-earning women step up and support others to grow their assets, build businesses and fund innovations in femtech and beyond.
What is the secret to successful investing?
There’s an impression perpetuated by men - through over-confidence and jargon - that investing is incredibly complex and requires a sophisticated skill set that ‘regular’ people couldn’t possibly master. But that’s a fallacy.
Success in investing is actually about understanding people, consumers and markets. It’s about having empathy for the problem and listening to the solution. Since they possess these skills in buckets, and as huge consumers across multiple markets, women are undoubtedly well placed to identify good investments.
Within the start-up world, this is especially true for early-stage companies, where the focus on the strength of the founding team and market opportunity carries greater weight than later rounds, where fundamentals and revenue play a larger role in gaining investment.
The rise and rise of femtech
Femtech - a term that encompasses products and services that use technology to focus on women’s health and wellness - is a sector that has historically been underserved because of ignorance, stigma, misunderstanding or disregard for the problems women face. Oftentimes, women are solving their own problems and creating solutions on the basis of personal experience. Meanwhile, male investors struggle to understand the need, or see the potential value of their ideas - meaning there is a huge amount of untapped opportunity in this space. In fact, men may be uniquely ill-placed to invest in areas like femtech because their unconscious biases kick in. For instance, investors appear to unfairly favour male founders over women when it comes to pitches, according to research by HBR.
Plus, given that only a small percentage of VC partners are female, an imbalance of power undoubtedly skews where the money flows. Astonishingly, less than 3 pence in every £1 invested by VCs goes to all-female founders. And despite years of gains, last year this figure actually fell from 2.8% in 2019 to 2.3% in 2020, as investors became more risk averse during the pandemic.
HBR proposes scrapping the pitching process altogether and replacing it with a data-driven strategy that eliminates bias - thereby driving a healthy 40% of investment towards female CEOs. This strategy would serve investors, founders and consumers alike. On average, despite raising less money, female-founded start-ups actually go on to outperform their all-male counterparts. A BCG report found that for every dollar of funding, female-founded start-ups generated 78 cents, while male-founded start-ups generated just 31 cents.
This is why it is imperative that women step up as investors, to fund ideas that can be truly world-changing. There are a host of innovative femtech solutions in development on everything from fertility to menopause, and incontinence after childbirth - all primed to improve life for future generations of women. We now need support from an army of female investors to fund these innovations and help bring them to market.
Looking seriously at diversity
Too often, we see money flowing from urban-based, able-bodied, straight, rich, white men to other urban-based, able-bodied, straight, rich, white men. We are increasingly seeing overinflated valuations and over investment in start-ups who will dry clean a shirt, find them a date or hail a taxi, but not those looking to solve wider societal problems.
There is also an issue here about barriers to entry for more diverse would-be entrepreneurs. If you can’t afford to hustle, not take a salary, and you don’t have a wealthy network of ‘friends and family’ around, bootstrapping your MVP and breaking into VCs can be very challenging.
Fortunately, there are a host of solutions popping up on both sides of the fence, from female Angel networks to accelerator programmes for underrepresented founders. This year, FemTech Lab launched Europe’s first accelerator programme focused exclusively on tech innovations for women. They have been exceptional in identifying, attracting and championing top-tier talent in the femtech space, and equipping them with the skills and network to thrive. But we still need to move past the view that femtech is ‘niche’. This is after all, 3.9 billion people we are talking about.
One other helpful development in the investor landscape is the rise of crowdfunding. These platforms can democratise access to investment returns and help women to back the causes they care about. Crowdcube reports that 21% of investors in its network are female, but for femtech and female founder pitches, the proportion of female investors rises to 35%.
And the proof is in the pudding. Fertility Circle is a new femtech app supporting people trying to conceive with education, expert advice, community and emotional support. And we are rapidly making waves in the sector. Part of the inaugural cohort of femtech Lab, we have quickly raised £250,000 from a mix of male and female angels and syndicates. We are now leveraging the power of the crowd to engage our community and offer them the chance to be a part of our growth story.
