Anyone who follows the world of venture capital, the venture capital market where private investors invest in startups, can hardly ignore it: gender equality is playing an increasingly important role in the provision of capital. So-called gender lens investing is aimed at companies that are run by women or by a mixed board of women and men, or that make a demonstrable difference for women in the workplace, in care and beyond.
For example, gender equality plays a role in capital investment
Simone Brummelhuis was on the eve of this development when she founded the Borski Fund three years ago. This investment fund invests in emerging and expanding technology companies aimed at reducing gender gaps. Gaps in the plural, in fact, because Brummelhuis identifies three: ‘There is a financing gap, an innovation gap and a wealth gap.’
Less than 5 percent of all venture capital in the world goes to mixed teams, only 1 percent goes to women’s teams. This means that 94 percent of the capital goes to purely male teams. Brummelhuis sees several opportunities to bridge the gap. “First of all, there are new areas that are a great opportunity for investors: women are starting companies in areas unknown to investors before.” For example, in the field of women’s health: in medicine, the male body is still considered the norm, so many doctors have very little knowledge of the female body. Many women want proper help for their menopausal symptoms and do not want to be sent home empty-handed because their heart problems are not recognized as such. Women entrepreneurs find tools for this and turn to Brummelhuis for funding. ‘This is an area where we are trying to get regular funding.’
Another opportunity is online: ‘Many women are rapidly expanding their network with investors they trust or who trust them. Other female investors in particular help them with this.’ For men it seems easier to go to another man with an idea and gain confidence that it will work. Men with each other get the benefit of the doubt, with women they are more likely to look at what they’ve already done. ‘Women investors know that so-called past performance is not the only way to earn investors’ trust.’
This brings to light the third opportunity: “Women are often immediately focused on content, on well-thought-out ideas that make the world a better place, and there is a great need for this among investors.”
Gender-responsive investing is not only necessary for moral reasons. There is a rock-solid business case for investors to invest more in women entrepreneurs: They see things men don’t. “Women do business differently from men,” says Brummelhuis. ‘They see the world from a different perspective, so they find solutions to different problems than men.’ Not just in healthcare, but also very often in the field of sustainability. ‘Many of the ideas that women entrepreneurs come up with are aimed at solving the climate problem.’
She especially believes in mixed teams. ‘Companies run by women and men are often more innovative than homogeneous teams. This is why investing in diversity is so rewarding: more different perspectives at the table leads to more innovation and creativity.”
The venture capital market is booming: Despite the pandemic, the venture capital world turned over $300 billion in 2020. There are more and more investors, and there is a growing focus on gender-responsive investing. There are also more and more funds like the Borski Fund: funds that focus on women in teams. The total capital of these funds was calculated at 33,000 million euros in February, compared to 18,000 million euros last September. Still, according to Brummelhuis, it can go faster. ‘In absolute terms there is an upward trend. There are more women entrepreneurs and they are contributing more money. But compared to the mainstream, very little has changed. There is still much more money for men.
The wealth gap plays a role here, too: There are now even more men with deep pockets than women, even among tech entrepreneurs investing in the next generation. As a result, there are now even more male investors and men prefer to invest in men. However, Brummelhuis is cautiously optimistic: ‘More and more women are selling their businesses. At the Borski Fund, 70% of individual investors are women. And baby boomers are now reaching an age where they start investing in venture capital, and in between there are a lot of women who inherit money or succeed in the family business.’
To speed up the process, Borski Fund has joined a group of 25 female investors from across Europe. Together they pleaded with the European Commission and the European Investment Bank for a €3 billion fund for women-friendly businesses. This group is committed to creating a level playing field by 2028, ensuring greater sustainability, better healthcare and better education in Europe. ‘We only need women entrepreneurs for that, period.’
If Brummelhuis can give advice to women entrepreneurs: ‘You don’t have to focus only on a better world. You see many men who first earn good money with a model that does not contribute anything to a better world, and then bet on sustainability. Sometimes there is nothing wrong with such a high growth model: it makes a lot of money so you can improve the world with it.’
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