Why is there a need for action?

AuthorCastellano, Letizia; Skonieczna, Agnieszka
side. There is an increasing focus on diversity and motivations of the providers of finance, driving the
supply side. At the turn of the century, a literature review concluded that only a limited proportion of
studies on gender investigated women’s experience in accessing equity investment (Leitch and Hill,
2015). Nowadays, social media and the press, in particular in the United States, feature many female
founders and investors denouncing the lack of diversity in the investment community and launching
their own ventures, thereby helping to change the status quo. Women are no longer simply the
beneficiaries of social finance, but the drivers of a sustainable investment ecosystem that has female
financial power at its heart.
Diverse teams exhibit stronger returns and outperform market benchmarks (Christiansen et al., 2016).
Greater gender diversity is correlated with higher profitability, innovation and value creation
(McKinsey & Company, 2015; Nordea, 2018). It also has significant macroeconomic effects in terms
of GDP growth, higher productivity and rising wages (Lagarde and Ostry, 2018; Ostry et al., 2018).
The European Institute for Gender Equality (EIGE, 2017) estimates that the implementation of gender
equality measures in our economy and society could lead to an increase in per capita GDP of up to
10% in EU Member States. Similar studies estimate that increasing the presence of women in digital
jobs could boost EU GDP by around 16 billion thanks to more diverse innovation processes,
management and marketing practices (European Commission, 2018) and that with equal
entrepreneurial participation, global GDP could rise by 3-6%, boosting the world economy by
USD 2.5-5 trillion (Boston Consulting Group, 2019).
Women-led companies tend to require less VC while delivering higher returns. In a Boston Consulting
Group study (2018), women outperformed their male counterparts despite raising less money. For
every dollar of investment raised, female-run start-ups generated 78 cents in revenue, whereas male-
run start-ups generated only 31 cents. A survey of nearly 600 founders found that those who were part
of a team with a female founder performed 63% better than all-male counterparts (First Year Capital,
While women represent more than half of the EU population and create roughly a third of companies,
female entrepreneurs have more difficulties than men in raising finance for their ventures.
Women-led businesses are often under-capitalised and use less external financing, relying more on
personal savings and spousal funds (OECD, 2018). They attract less early-stage equity investment:
According to Atomico’s report on The state of Eur opean tech 2018, in Europe, VC backed
tech companies with all-male founding teams receive 93% of the capital invested and account
for 85% of deals. 5% of capital goes to mixed teams and only 2% to all-female teams. There
has been no improvement in recent years.
In the USA, about 3% of VC goes to all female-founded companies. Only about 15% goes to
companies that have at least one women in the founding team. In the EU, companies with at
least one female founder secure about 11% of overall VC funding (PitchBook, 2018 and EIB’s
InnovFin Advisory, 2019).
For every £1 of VC investment in the UK, all-female founder teams get less than 1 p, all-male
founder teams get 89 p, and mixed-gender teams 10 p. At current rates, it will take more than
25 years for all-female teams to reach even 10% of all deals in the UK (British Business Bank,

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