Just eight per cent of venture capital money went to all-female founding teams in Europe last year, at least that is according to Atomico’s 2019 ‘State of European Tech’ report.

And although this is technically a fourfold improvement on 2018’s report findings (which pegged the number at two per cent), the number is still distressingly low.

Meanwhile at home in the UK, a British Business Bank report has found that, for every £1 invested in venture capital, all-female teams receive less than 1p. Mixed-gender teams make up 10p of all investment. The remaining 89 per cent comes from all male teams.

Small minorities, large gaps

The biggest reason behind the huge discrepancy in the gender investment gap is mainly down to the fact that there is only a very small number of women-led companies to begin with. More women entrepreneurs are needed to normalise the presence of women in spaces that are typically male-dominated.

Another reason behind the gap may be that just 13 per cent of venture capitalists are female, a discrepancy that allows unconscious biases to take root. For example, researchers at the Lulea University of Technology found that financiers often describe male and female entrepreneurs differently, sometimes revealing pejorative stereotypical views of women in the process.

For example, women were more likely to be viewed as “young and inexperienced” whereas young men were considered “promising”. It seems that as a society, we automatically place the characteristics of what makes a successful entrepreneur on the male candidate, to the disadvantage of the female. The same Leulea study also found that women were, on average, offered significantly less funding that they asked for, and were also (unsurprisingly) denied financing on more occasions.

Tackling unconscious biases

The World Economic Forum has reiterated many times why it thinks there should be more gender diversity in senior roles within venture capital companies. And in the UK it is not just the senior roles that are the issue, as about 50 per cent of investment teams have no women on them at all.

This could all be solved with a more balanced management team, with a more visible presence of women. Venture capital firms and investors should not undersell their importance when it comes to making a difference, and the role they can function as a playing field leveller. Currently, the World Economic Forum is trying to counter the imbalance by advocating its own pool of funds for women and other under-represented entrepreneurs only. The mindset that men — and men only — can be successful needs to be done away with, no matter how much they resemble some of the world’s most successful billionaires.

Other alternatives

But bolstering investors’ defences against unconscious bias is not the only way forward. Venture capital money can be secured from other options. One is the so-called ‘angel investor’ method. Where high net-worth individuals see promise and give a helping hand. Winning over angel investors is all about networking and building the right relationships with the right people at the right time.

An opposite route lies with crowd-funding. An option that, in theory, doesn’t require previous networking connections. And then there is a sort of middle-ground between the two: so-called ‘university incubators’ or commercial companies with links to the universities. The latter can be really handy for entrepreneurial female students.

Women, entrepreneurship & the future

Increasingly, work is underway to figure out how such a wide gender discrepancy came to be. Findings from Oxford Brookes University believe it is practically down to a lack of reliable women mentors to show the way. And as a consequence of that, a lack of well-connected networks. It is currently working on a way to create an ‘entrepreneurial pathway’ for women.

But progress is slow. Unbelievably slow. For example, the World Economic Forum reckons that it could take over 250 years for the gender pay gap to close at the current pace of change. Hopefully, a greater awareness of the male-female discrepancy will speed things up a lot.

There is a financial incentive, too. For example, a study by First Round Capital found that companies with a woman in the lead performed 63 per cent better when compared to all-male founding teams. Sure, the sample size isn’t enormous, but regardless the growing recognition is there that companies don’t just “get by” with female leads. They flourish.

This article was written by Eliza Cochrane, who works for an asset and fund management company based in Essex.