Finding Ways Forward: overcoming the hurdles of female-led tech start-ups

August 7, 2019

 

Starting a business is never easy. From preparing a business plan to starting day-to-day operations, the hurdles are numerous. Things are even more difficult if you are a woman with entrepreneurial ambitions. According to Fortune, in 2016, female-led tech start-ups received only 2 per cent of the total amount of investments made by venture capital (VC) firms. This accounted for USD 1.46 billion of VCs funding in 2016, a stark contrast to the USD 58.2 billion received by male-led start-ups in the same year. In the United States, over 12.3 million women owned businesses as of 2018. This means that, arguably, most of these women will not have access to investment opportunities, female tech entrepreneurs included.

 

The data show that women are conducting business at higher rates than ever before. In the United States alone, female-owned business are growing at 2.5 times the national average, while the number of black female-led start-ups more than doubled since 2016. In Brazil, women were responsible for 51.5 per cent of new businesses created in 2016. In Europe, start-ups founded by women have a stronger return on investment than companies run exclusively by men. However, despite all these positive trends, it is still difficult for women to sustain their business in the medium term.

 

Many factors contribute to this situation. The most obvious one is that the majority of VC firms are run by and composed of men, which leads to biased investment decisions. On top of that, two other factors make the lives of female founders a challenge: the lack of trust in women leading tech start-ups, and the lack of mentorship and guidance given to these women before launching and in the early stages of their businesses. The first three years are decisive for the success of a business, and women struggle more than men do during this phase.

 

Fortunately, there are already some good practices in tackling these problems. The Global Banking Alliance for Women, founded in 2013, helps female entrepreneurs access funding for their ventures. The organization’s goals are aligned with the United Nations Sustainable Development Goals (SDGs), committing to providing financial access to 1.8 million women who do not have bank accounts in Latin America and Africa by 2020. The European Women in Tech Summit also helps over 4,000 female-led tech start-ups to pitch their businesses to investors, network, and develop and enhance technical skills. Some VC firms now focus exclusively on tech start-ups founded by women, such as Halogen Ventures, which invests in female-founded consumer technologies, and Female Founders Fund, that invests in impactful women-led start-ups across e-commerce, web-enabled products and services, marketplaces and platforms.

 

EQUALS partner She Loves Tech is a non-profit organization based in China that focuses on supporting female-led tech start-ups. It hosts the world’s biggest start-up competition for women in tech, at which women can find investors for their ventures from one of the event’s many partners or sponsors. In addition to the She Loves Tech Start-Up Competition, the organization provides mentorship, consulting services and workshops through its Acceleration Services programme.

 

In October of this year, 27 companies will have a chance to be part of the EQUALS Pavilion at the upcoming ITU Telecom World 2019, where they will be able to network with and showcase their businesses to experts in the ICT industry. Through this unique initiative, EQUALS aims to connect and empower female tech leaders and founders from all over the world, enabling them to boost their business performance.

 

Even though the environment for female business leaders is improving, there is still work to be done for women to be able to compete on an even playing field with men. EQUALS and its 94 partners — and in particular the Leadership Coalition — are working hard to close this gap.

 

About the author

 

Lucas Alves is a Junior Communication Officer at ITU. Born in Rio de Janeiro, Brazil, Lucas graduated in advertising in 2014, and worked at a communications agency for two years.

 

He left Brazil in 2017 to pursue a Master’s degree in sustainability management in Switzerland, which he completed in 2018. His thesis was on smartphones supply chains and their impact on the countries involved.

 

Image from rawpixel.com

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