The imperative reason
The venture capital and innovation ecosystem plays a pivotal role in shaping the products we consume, the solutions available to our problems and the health and performance of both the private markets and the economy of a country.
It is widely known that women are underrepresented in the Nordic and European venture and innovation ecosystem. Some key numbers supporting this statement.
Across Europe:
- Among VCs, only 20% of investment professionals are women:
- At senior level, the figure falls to 10%
- At junior level, the figure improves to 34%
- Among business angels, roughly only 10% are women
- Among founders, women led teams or teams with at least one female member, receive 10% of the total capital invested into startups.
The need to promote and support more women in Europe to become investors and entrepreneurs becomes, therefore, imperative.
The 5 arguments in favour of gender balance in venture
Below we highlight the 5 key arguments on why we need more women investors and entrepreneurs in the venture and innovation ecosystem.
1. More women investors mean more investments in women-led startups:
- Women investors are twice as likely to invest in female-founded startups (Kauffman Fellows, 2020). This not only supports women entrepreneurs but also taps into a wider range of innovative ideas and solutions.
2. Diverse fund teams lead to higher performance and returns:
- Diverse teams outperform homogeneous ones. All-male funds or those with partners of the same ethnicity underperform by 20-30% on average (HBR Report).
- Funds with partners from the same school underperform by 11%.
- All-male funds underperform by 20%.
- Funds with partners of the same ethnicity underperform by 30%.
- The presence of women in senior fund management teams is correlated with higher returns: Each 10-point increase in the representation of women in senior management is associated with a 1.3% increase in IRR (European Women in VC, 2023).
3. More women investors and entrepreneurs accelerate the sustainability and the green transition:
- Women-led startups are 73% more likely to be considered impact companies, focusing on solving social and environmental challenges (Unconventional Ventures Report, 2021).
- By supporting new and existing women investors in the ecosystem we can accelerate the sustainability and green transition: More women investors lead to more investments in women-led startups, resulting in more successful sustainable companies and accelerating the green transition.
4. Gender diversity is becoming a mainstream investment criteria for investors of all kinds:
- More and more LPs are integrating gender diversity criteria in their investment decision and DD process. Institutional investors, pension funds and Family Offices are increasing their gender diversity requirements in order to invest in VC funds.
- VC and fund managers, following LPs requirements, are increasing the gender diversity both at the GP level as well as at the portfolio level.
5. More women investors are essential for the role of venture in the market and in society:
- New investors, including women, are crucial for filling funding gaps in the market and ensuring promising startups receive the capital they need.
- Diversity of thought, skills, and strategy that comes with more women investors leads to greater innovation and a wider range of investment opportunities.
- Venture Capital shapes society, therefore it needs to be representative. Precisely because venture capital does so much to shape society, it should effectively represent the society it serves.
Two main European initiatives supporting women in Venture and Innovation
There are multiple initiatives supporting gender balance in the Nordic and European innovation landscape. Below we have highlighted the two main initiatives providing free support to emerging and evolving female professionals in the European venture and innovation landscape: