Female founder seeking an investor? Try the sisterhood

Unsplash/Tim Gouw

Female founders receive only a fraction of the venture capital billions that are dished out around the world every year. In the US, it was just 2 percent of the total in 2021.

In the Middle East, the monthly figure for July 2022 was a tiny 0.1 percent.

Yet research conducted in Europe and the US has found that female-led startups perform better than male-led startups in several key areas: they pull in more sales, exit faster and generate higher returns on investment.

Most of these studies indicate that the low funding level is linked to the limited number of female decision-makers in VC. While the number of women in these organisations is gradually increasing, some reports suggest that only 12 percent of VC decision-makers are female, so this won’t change overnight.

As global markets slow down in terms of capital deployment, the urgency for new sources of capital is heightened. I see one easy solution – which leads me to wonder why we haven’t tapped this goldmine of a resource before – and that is women themselves. 

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According to RBC Wealth Management, women held 30 percent of all global wealth controlled by individuals or families in 2015, up from 28 percent in 2010. Some 44 percent of those women had grown their wealth independently as entrepreneurs. By 2020, women were expected to control $72 trillion, 32 percent of all wealth, up from $51 trillion in 2015.

So, who are these women? For the RBC study, the Economist Intelligence Unit surveyed 1,051 individuals with $1 million or more in investable assets – 502 were women.

Within this group, 22 percent of baby boomer women (those born 1946-1964) had $5 million or more in assets. Among the millennial women (born 1981-2000) surveyed, that figure was markedly higher at 32 percent.

As more and younger women earn more wealth, they are also asserting themselves as financial decision-makers. 

Among the women surveyed by RBC, less than half of boomer women said they were their household’s primary decision-maker for financial planning. For millennials, the figure rises to 72 percent.

Activating this untapped wealth of women around the world – and generating returns on investment for them on capital that is currently majority spent on lifestyle – must be a priority.

If we empower women to redirect this flow of capital, we can create powerful decision-makers who will shift the entire ecosystem. These women will be game-changers in the dynamics of fundraising for female founders.

The first step is to increase women’s awareness of venture capital investing and the opportunities it presents for wealth generation. According to Invesco, the top quartile of venture capital funds have outperformed other asset classes in each of the trailing 5, 10, 15, 20 and 25-year periods.

The 2022 Female Angels Movement, a non-profit, aims to build a public register of 2,022 women who can act as angel investors.

These women will join our workshops and knowledge platforms to network and to increase their understanding of female-founded companies, the due diligence process, negotiation and how to become a super-angel. 

Some of our first sessions have included Fabrice Grinda, a super-angel with over 300 exits, and Hambro Perks, a well-established venture capital firm in the region.

Through this knowledge sharing, we hope to drive the fundamental economic change that we want to see. If you’re a woman interested in learning more, or a male champion who wants to help spread awareness, sign up at our website. 

Romanna Dada is investment director at Brinc Mena, which is launching a $100 million fund for startups, and a co-founder of the 2022 Female Angels Movement