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Startup growth as a female founder

Alex Batlle Bosch, Brand Manager Since 2016, Alex has led SFC Capital's digital communications, leveraging her background in social media management and creative work.
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The hurdles of growing a startup as a female founder and three Startup Funding Club Alumni that are doing it right.

Starting a company and growing it is difficult as it is, but if you happen to be a woman, it becomes even more challenging. Coinciding with the nomination of three Startup Funding Club funded companies – Big Couch, MeVitae and Tapoly – for Best High Growth Woman Founder at tonight’s UKBAA Angel Investment Awards, we wanted to take a look at what it is like to be a female-founder in this day and age when it comes to securing funding and scaling up.

Recent research conducted in the UK’s startup industry shows that despite there has been a significant increase in the amount of female-led startups receiving seed investment – from 7% in 2011 to 16% in 2018–, women are still light years away from their male counterparts. In fact, the Entrepreneurs Network says men are 86% more likely to raise VC funding and 56% more likely to receive funds from angel investors. On top of that, research by Beauhurst observes that only 8% of the total amount of funding invested in early stage businesses went to women-run companies in 2018. To make things worse, this figure is lower than that achieved in 2016 – 13% .

These numbers are just a reflection of the challenges female entrepreneurs often have to face when entering the male-dominated startup scene and, more specifically, when trying to raise funds for their businesses. Gender stereotypes and prejudices play a big part in business, and women founders often face discrimination by the decision-makers at financial institutions such as banks and investment bodies, which are typically male-dominated. Be it due to unconscious bias or plain gender discrimination, the fact remains that investors are less willing to invest in female-founded startups on gender grounds. This is further evidenced by the Daily Telegraph’s recent study that found that two-thirds of the women surveyed felt they had not been taken seriously by potential investors.

The consequences of this funding gap go beyond failing to raise substantial investment – or to secure any money at all. A lack of funds can easily lead to issues when trying to attract talent and developing growth opportunities. This is illustrated in Beauhurst’s study, which found that female-founded businesses struggle more than male-founded ones to grow past early stages. 40% of female-led startups that raised equity within the last seven years are still in seed stage, in contrast to only 28% of male-led ones – a predictable output given they typically receive higher amounts of funding that facilitate faster growth.

Despite the challenges, female-led startups have experienced a significant increase in the number of deals closed since 2011. Further, the average deal size secured by women increased from £2.22m in 2017 to £2.33m in 2018 – a record-high average for the collective. Also, despite the general decline in investment amounts, women experienced less of a drop than men – 12% vs 17%.

Although research is yet to be conducted on the reasons behind these numbers, it is safe to assume that the rise of female-led investment bodies, and entrepreneurship events and associations for women entrepreneurs have played a part in it. These organisations can act as support groups and are helping tackle the lack of female role models and mentors in business.

At Startup Funding Club, we can proudly say that – even though it is still a modest number overall – 26% of the total funding raised has gone to companies that have at least one woman in their management teams, which is more than three times the UK’s average for female-founded businesses (8% since 2011). When it comes to number of companies, female-led startups make up approximately a third of SFC’s portfolio, a considerably higher number than the UK average – 18%.

These optimistic figures are possible partially due to SFC’s funds targeting a broader range of sectors and geographies than traditional venture funds. This makes it easier to improve the diversity of the management teams the firm supports. Diversification has allowed SFC to dive into unexploited areas as those traditionally associated with women.

Big Couch, founded by Irina Albita and Maria Tanjala, is a fintech platform empowering filmmakers to bring security and transparency to film projects and the crew involved in them. They are standardising the payment process in the film industry in a safe and legal manner by using smart-contracting based on Blockchain technology. Together, founders Albita and Tanjala, have extensive experience in the technology startup space, finance, and of course, filmmaking.

MeVitae, co-founded and led by neuroscientist Riham Satti, is an AI solution aiming to make intelligent and personalised HR decisions, tailored to each company’s needs. The company is supporting existing hiring processes by using neuroscience and big data technology to scan applicants in order to adapt to the hiring style of businesses and remove unconscious bias. Besides holding postgrads in neuroscience and biomedical engineering, Satti also has extensive experience in business strategy and is often invited as a speaker in business events and conventions as well as is featured on publications as Forbes or Tech Nation.

Finally, Tapoly, which provides on-demand insurance for freelancers, sole traders, contractors, home letters, equipment lenders and anyone who is part of the sharing or gig economy. Co-founded by avid advocate of female entrepreneurship Janthana Kaenprakhamroy, the insurtech company aims to make it easy and safe for people to share their assets and services. Kaenprakhamroy has a solid background as a chartered accountant and in top-tier investment banking, and is one of the Top 10 Insurtech Female Influencers ranked by the Insurtech Institute.

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