In 2018, global Venture Capital investment stood at $ 254 billion, according to KPMG’s Venture Pulse 2018 Report, marking an increase of 46% compared to 2017, when investment accounted for $ 174 billion. This increase is great news for the entrepreneurial ecosystem and shows the rising relevance of startup investment worldwide. On behalf of Faraday Venture Partners we would like to dive a little deeper into what has been the role of women within the investment and entrepreneurial space.
The Female Investment Space background
Numerous articles and studies have been written that analyse Venture Capital investment according to investor profile and wealth. However, often the same is not done for the investor’s gender.
It appears that the presence of women investors in the Spanish Venture Capital sector is increasing but is not taking off, accounting only for an 8% increase among all investors in 2017, which is put further into perspective when compared to 2016, where it stood at 9%, according to a report by the Spanish Business Angels Association (AEBAN) entitled La inversión en startups: actividad y tendencies (Engl: “Investment in startups: activity and trends”).
In response, we’ve recently seen the development of various initiatives with the objective of promoting investment in startups by women. Some of the different national projects that we’ve found were investment manager associations focused on investing in entrepreneurial tech projects run by women such as “Woman Angles for Steam” as well as private networks of Business Angels aimed at women such as SWAN by Seed&Click, among others.
The Role of Women in Startups
In 2018, the rate of women startup founders in Spain reached 22% compared to 78% of startups which were led by men. This constituted an 18% increase when looking at 2017, according to Mapa del emprendimiento 2018 (Engl: “The Map of Entrepreneurship 2018”), a report published by the South Summit Organisation. Spain’s figures in this respect are in line with other territories such as Europe and Latin America, which demonstrate 24% and 33% of women entrepreneurs, respectively. It therefore appears that encouraging more women to become entrepreneurs is not an issue that exclusively affects Spain.
Looking at a report published by The Boston Consulting Group, entitled Why Women-Owned Startups Are a Better Bet, startups led by women have a lower rate of failure, exhibiting a rate of only 22%, compared to 52% of startups headed up by men (this is based on a study of 350 companies, of which 258 were founded by men and 92 by women). However, despite the better performance of women-run companies, women’s investment proposals receive less funding than those presented by men. In fact, women entrepreneurs are subject to a greater number of rejections than men as women tend to make more realistic assumptions in their business plans, while men tend to be more daring and risky.
In conclusion… Where do we find ourselves?
We’re delighted to have seen a growing number of new female Partners enter Faraday. This past year, there have been 7 new female Partners representing an increase of 100% in number with respect to the previous year. In addition, we continue to co-invest with funds that support female entrepreneurs, such as MissTipsi or Dietox.
From our perspective, we have to continue to promote the role of women in business and support and encourage the creation of new professional networks where women have the same opportunities so that we may achieve a truly mutually enriching entrepreneurial ecosystem.
We cannot simply wait by the side-lines for women to gain more importance within the entrepreneurial ecosystem, so whenever possible we encourage more women to dive into this exciting world of investment and entrepreneurship and we would like to conclude with the words of American author and professor, Lynda Narry: “No matter what, expect the unexpected. And whenever possible be the unexpected”. Let’s undertake this adventure together!
By Leyre Marazuela and David Monterrubio – former Investment Analysts