The fact that women are less involved in entrepreneurial activities is well known, as is the fact that women are less likely to take up technical education, which feeds much of our entrepreneurship and innovation.
A wide range of policy actions have been developed and deployed over the years to address the inequality: in the form of awareness campaigns, community building, networking, highlighting role models, nominating ambassadors, as well as direct facilitation and support. Some of these initiatives have been more effective than others, but what is worrying is that it seems to always come in spurts, when a continuous and consistent action is needed. It is telling that the most recent large statistical studies date back to before 2016.
While the broader topic of women entrepreneurship is on the radar, the blatant inequality in investment in women led startups and scaleups is much less so.
It took a talk show on Dutch national tv in 2018 to make me aware of the extremely low levels of investment in women lead startups and scaleups. Much quoted is the 2% venture capital investment allocated to women led companies. It was a shocking eye opener, and after doing some research, I began engaging in more discussions on the topic. The first push for sustained action came at the K4I AI and Big data summit at the end of 2019, which was followed up by an excellent debate at the European Innovation Summit in February 2020, which mobilised strong political support in the European Parliament.
The more the topic was discussed the more the complexity became clear, and at the same time the lack of general awareness as well as the limited and highly fragmented information and knowledge were painfully prominent.
These are the main reasons why we founded the Wominvest platform and its observatory, together with Jara Pascual and Carol Tarr. The main goal is very ambitious: to start a movement for cultural change leading to equal opportunity for investment. The main activities are to build a cross stakeholder community – entrepreneurs, teachers, investors, policy makers – to boost broad awareness, and reduce fragmentation by bringing together ongoing activities and policies, mobilise decision makers to foster change, and develop a comprehensive knowledge base. At the moment the work is done entirely pro bono, with the help of volunteers. We hope to attract sufficient sponsoring to scale and further professionalise our activities.
It is good to see that we are certainly not the only ones actively engaged in addressing the investment inequality. Across the board in Europe, change is happening. In terms of policy, the European Commission is making headway; while in politics, the European Parliament is doing likewise; and within finance, the EIF and EIB are taking much needed action. So we are seeing this increased attention, with concrete actions and studies appearing, and the momentum definitely picking up. Most activities are what I would call downstream, developing support mechanisms, setting up specific funds, as well as incentivising and facilitating investment in female startups and scaleups, both from the investor and investee perspective.
These are all good initiatives, but by themselves they are insufficient. As we have seen in the past with comparable actions, the moment the support or incentive stops, everything goes back to ‘business as usual’ and limited lasting effects are visible unless real cultural change is achieved. Setting cultural change in motion is complex, and although role models, networks, good examples and good practices certainly contribute, they don’t properly address the root causes. These root causes are a difficult beast, they are only partially known and understood, and they are multi-facetted. It starts with the culturally defined position of women in society, and includes diverse elements like education, schooling – including technical curricula, acceptance, perceptions, dreams and equal possibilities – such as regulation and policies that either hamper or foster female entrepreneurship. It also includes the fundaments and criteria for doing business and being successful, and the related financing decisions. Hence, all stakeholders, women themselves, teachers, policy makers, financiers, politicians, need to go through that change.
The ultimate goal should be that the ‘business as usual’ is real equality, without specific support and incentives. A careful balance between shorter term downstream actions and long-term actions addressing cultural change and the root causes is needed. The complexity, lack of deep knowledge and understanding, together with the long term considerations, are some of the reasons policy makers and politicians tend to focus more on the downstream actions. Wominvest does not have the illusion that it can single handedly take away the root causes, but by creating broader awareness, building deeper knowledge and reducing fragmentation, we are committed to making a serious contribution to putting the change in motion.
The inequality is not only ethically wrong, it also means that a very large part of our economic capacity and productivity is not used, which is neither acceptable or efficient. The debates at the upcoming 12th European Innovation Summit will certainly be a big next step. After that we need to put the words and good intentions into action.