The Gender-Investment Gap

Klarna, Spotify, Truecaller, iZettle, Tink, Detectify, Wrapp, Magine … The list of successful Swedish tech-startups is never-ending. Same goes for the list of male names, it seems, as scrolling through the founders' pages. In fact, not one of them has a woman in the founder’s team. Sadly, this is nothing exceptional. According to a study conducted by Di Digital, only one single percent of the capital invested in Swedish tech startups goes to female teams. Today, the 19th of November is Women's Entrepreneurship Day. Let’s talk about the gender-investment gap and its effect on female entrepreneurship.

Previously mentioned examples of successful companies show that all-male teams can be very successful. Having used many of their products myself I fully agree that their ideas are great. So, one might wonder, why is the gender distribution a problem? Well, the groups might work well together and create great things, but it is quite worrying to let one homogeneous group dominate the innovation and direction of our society. Many brilliant examples of this can be found in the book “Att uppfinna världen” by Katrine Marcal, which enlightens how notions of masculinity and femininity have characterized the emergence of modern society. Marcal describes how the idea of masculinity inhibited the innovation to put wheels on suitcases. “Real men should carry their bags" the norm said at the time. The male-dominated society did come up with the simple idea of putting wheels on a suitcase, but not until 1972 - three years after the first moon landing.

So, how does it all connect to tech startups? Well, the tech startup space is heavily dominated by young males. This means, that the male norm will control what innovations are launched and who they are created for. Of course, the problem would be equally large if another group controlled the innovation. The problem lies in the “groupthink” itself, not the gender per se. With a climate crisis at our doorstep, we can simply not gamble. We cannot rely on one group and wait some extra 50-100 years for them to come up with it. We need all the bright minds and ideas that we can get!

But why are female founders so rare? One might think that the solution to this problem lies in attracting more women into tech. This would help to some extent. However, the problem with male dominance among the founders is an industry-wide problem. Especially in Sweden. According to a research paper by Oxford Research Sweden is among the worst countries in the EU when it comes to gender diversity among entrepreneurs. With its 5.38 percent, Sweden is below the EU average of 10 percent.

In Sweden, we only have one state-funded entrepreneurship program directed towards women, which can be compared to nine programs in Ireland and six programs in France and Belgium (Oxford Research). This means that female founders are in most cases dependent on investors. A study published in Harvard Business Review shows that Swedish investors judge male and female entrepreneurs differently. A young male is on average described as “promising” while young women are described as “inexperienced”. More experienced men are described as knowledgeable while experienced women on average are described as “worried”. The study also showed that female entrepreneurs are more likely to be judged by their physical attributes.

How do we change this? One action could be to create more state-funded programs exclusively for female entrepreneurs. This might boost our numbers, but it does not change the way investors assess female applicants. At least not short term. According to DiversityQ, a more efficient solution is to attract more females to venture capital firms. This idea is also emphasized by Henrik Aspén who is General Partner at the capital investment firm Verdane. In an interview with Di Digital, he says “Data are indicating that women are three times more likely than men to invest in women.”

With all this said, let's look a little on the brighter parts. The study by Di Digital shows that even though only one percent of the capital invested in tech startups goes to female teams today, the number of female teams overall that receive funding has increased since 2018. In the study, Di Digital found that of the teams that received funding 80% were all-male, 13% were mixed and 6% were all-female. And of course, we have many amazing women out there! Here you find a list of 54 inspiring female tech-leaders and founders.

Tritech has worked with a lot of different startups throughout the years. And we’re always excited to help entrepreneurs complete their dreams. The next thing is our thing, we usually say. But what if the next thing could be your thing? Reach out to us to learn more!