For many years, start-ups could hardly save themselves from money. But since the interest rate environment has changed, investors are more cautious. Companies run by women are hit particularly hard – start-ups with all-female management teams in Europe receive just two percent of the money provided by investors.
This is the result of a new study on gender equality in the founding and financing of start-ups, which Capital has received in advance. The consulting firm BCG and the French equality initiative Sista examined thousands of start-ups in France, Great Britain, Germany, Spain and Sweden.
Not only is the proportion of risk capital allocated low, but women in start-up teams are still clearly in the minority – this is one of the key results of the study. And: Almost nowhere do the start-up and financing conditions for women seem to be anywhere near ideal.
On average in the five European countries, less than every fourth start-up has a female founder, and only ten percent of the founding teams consist exclusively of women. “None of the European countries can claim to be at the forefront of gender parity,” says the study. Nevertheless, there are differences between the countries. Sweden is therefore the clear leader when it comes to female founders. With 30 percent female participation, the country is well above average, while Spain clearly brings up the rear with 18 percent. Germany has an average of 21 percent and also performs better than Spain and France when it comes to all-female start-up teams.
Nevertheless, according to the study, the conditions for women in Germany are among the most difficult to set up a start-up. There has been a lack of female entrepreneurs in this country for a long time, and in 2022 the proportion of female founders has fallen again by eight percentage points compared to the previous year. This is mainly due to the significant decline in purely female founding teams: in 2022 it was only ten percent, in the previous year it was 17 percent. When it comes to financing rounds, mixed teams also perform visibly worse, while purely male teams are nowhere else more successful than in Germany.
Looking at the start-up and funding conditions together, the UK offers the most advanced ecosystem for women. According to BCG, this could be due to the large number of foreign investments and government programs that specifically promote female entrepreneurship.
As far as the financial possibilities are concerned, male- and female-led start-ups differ significantly. The average amount raised by all-women teams is about four times lower than that of men. The main problem, however, is that inequality has increased over the years. After more than nine years, men’s start-ups have three times the financial resources of mixed founding teams and even 13 times more than women. This even applies to sectors in which women primarily start businesses, for example in the lifestyle sector or in healthcare.
In addition, the proportion of women decreases as funding rounds progress. In the pre-seed phase, women are still responsible for seven percent of the money collected, later only for a maximum of two percent. Hardly any of the financing rounds conducted by women exceed 15 million euros. “The financing gap between men and women in start-ups clearly shows that there is still a lot to be done and it is urgent,” write BCG and Sista in the study. “These startups are shaping the world of tomorrow, and that shouldn’t happen without using half the population.”
Mixed start-up teams seem to be the best way to change that at the moment. Although only 12 percent of the founding teams consisted of both men and women, they raised three times more money than all-women teams in 2022. In addition, almost two-thirds of the mixed teams already have equal numbers. Women are more likely to partner with men (55 percent) to start a business than the other way around (13 percent).
This article first appeared on Capital.de.
