Overcoming the Funding Gap: How women in tech can win funding battles

Hilda Mwangi
Chief Financial Officer
Automatic Summary

Overcoming the Gender Gap in Tech: Fostering Women-Led Companies

Hi there! I’m Hilda Mogi, your host for today. As a CFO with over 25 years of experience in tech, today I’d like to discuss a significant challenge in the industry- the gender gap. From funding to representation, we have a lot to cover. So grab a coffee and join me on this enlightening journey!

The Current Situation: Statistics Speak

Did you know that only 28% of the tech workforce at big tech companies, like Google, Facebook, and Apple, are women? And it isn’t much better elsewhere in tech, with women representing only 26% on average.

But, there are gleams of hope. In 2021, 25% of all startups were women-founded. Also, it’s encouraging to see that the majority of small businesses being created today are women-led! Yet, the funding scenario is far from ideal - only 1.9% of Venture Capital (VC) funds in 2022 went to women-founded startups.

Interestingly though, the funding amount does increase significantly, from 1.9% to 17.2%, if the all-women team includes even a single male founder, reflecting the unfortunate reality of male dominance in the funding sphere.

What Causes the Gap?

At the early stages of VC funding, investors feel most comfortable investing in people who resemble themselves: people who talk, think, and even dine like them. This inherent comfort bias often means they perceive women-led businesses as riskier propositions—it is simply harder for male investors to see themselves in a woman founder, despite many of these businesses actually having higher growth, traction, and lesser risk.

Moreover, women founders often design solutions for women's needs, something that male investors might not understand or appreciate, creating another barrier to obtaining funding.

The Invisible Barriers: Myths & Misconceptions

Female Founders & Funds

A glaring misconception is that women are less confident and informed about money than their male counterparts, especially in the context of long-term planning. Such biases can deter potential investors.

The Femtech Revolution and its Impact

Female-led tech (Femtech), which tailors products to women’s unique needs and lifestyles, has seen a surge in recent years—from roughly 70 startups a decade ago to over 600 today. This development reflects an increased awareness and acceptance of women and women's health issues. And hopefully, it will lead to a comfort shift among investors.

Bridging the Gap: The Importance and the How

The tech sector's rapid growth means the creation of a new wealth class. If women cannot actively participate, the global gender gap will increase, reinforcing male-dominance in funding. This is why it’s paramount to bridge this gap.

Leveraging Communities and Networks

Building a strong community can be extremely beneficial. It can provide both valuable feedback and connect you with potential investors. Prominent tech-women groups like The Next Women and Women Tech Founders are excellent resources.

Boost Confidence

Believing in yourself, your product, and your business plan is half the battle won. So approach investors confidently and assertively!

Empower More Women to Write Checks

It is a proven fact that investors twice as likely to fund women-founded startups are female. So, more women out there need to be writing checks!

Demonstrate a Billion-Dollar Vision

Convincing VCs about your billion-dollar vision is critical. From sales strategies to hiring plans, to features and customer retention— every small detail needs to be explored and explained meticulously.

Wrapping Up

As we wrap up, remember that founding a startup is all about combining your passion with practical steps to achieve your dreams. And remember—you’re not alone. If you need a list of investor resources that are more inclusive for women-led businesses, feel free to contact me. Let’s join hands in bridging the gap, one step at a time!

Please reach out to me at hilda.mogi@mydomain.com for any queries or specific support in startup funding.


Video Transcription

Hi, everyone. Um, thank you for joining me today. And, uh, today we're talking about overcoming the gap, um, especially when it comes to women led um companies within tech. And um with that, so I'm your host today. I'm Hilda Mogi and um, I'm a CFO.Um II, I work a lot with tech technology. I've had over 25 years of experience within tech, helping tech companies uh through their finances for bookkeeping to CFO advisory services. And, um, definitely there's such big gaps within um funding. And so today we're gonna talk about why.

So those gaps exist as well as what are some of the things that, you know, you can consider and think about as you navigate your journey towards? Well, it's building your own company, thinking about building your own company, et cetera. So with that, let me share my screen. Let's see your screen. All right. And um, so let's go through some statistics, 28% of women make up the big tech companies workforce. Now, what do I mean by this when you think of Google, Facebook, Apple, um those companies, those are tech companies and they made up of 28% women in their workforce, which is great. Right? And then, and 26% on average is the female representation in overall tech companies. So a little bit less but still 26%. Now these numbers are going in the right direction, right. They're going up, they're not going up as fast, fast as we would like them to go, but they're going up regardless. Which is a good thing. 2021 25% of all start ups were founded by female, which is like amazing, right? And that number continues to grow up. As a matter of fact, the most small businesses that are being created today are women led. Very exciting. But here's the thing, only 1.9% of VC funds in 2022 went to women founded start ups, like less than 2%. And so majority of everything else obviously went to the male founded start ups. And so this is a staggering statistic.

How do we get from 1.9 to a bigger number? Right. Um But here's another fascinating statistics that I came across the percentage of funds raised increases when an all women team turns into having at least one woman founder. What do I mean by this? The minute you introduce a man, it's no longer all women, but now there is a man in the mix. The funding goes up from 1.9% to 17.2% you know, which is unfortunately signifying the importance of having a male in the room. I so why does this happen, venture capital at the early stages? It's, it comes down to what people think right, at the very early stages, when your company doesn't have as much traction, you know, as much revenue, right? The V CS are betting on the founders and people are comfortable with betting on somebody that looks like them, right? Talks like them, went to the same schools, drinks, the same wine goes to the same country club, goes to the same restaurant, eats the same foods, right? Ultimately, it's a comfort thing. And, um, you know, majority of the V CS, majority of the LP S, they are male. And so, um, you know, when they look at a founder, you know, when they see themselves in that founder, it becomes easy, it becomes comfortable to find them. But, you know, when it's a woman or a minority, you know, things tends to be a little bit different.

You know, they might perceive the company as higher risk, they are uncomfortable, it's not as easy, you know. So these are some of the things that, you know, play against us women when, when it comes to funding. So, and like I said in my previous slide, investing in women is still perceived as high risk, which is pretty unfortunate because some of these businesses have high growth, high traction, they are less risky than male domin than some male dominated or male founded companies.

But because they are women, they have this perception of high risk. So, but here's the thing, women led companies are more likely to exit, right? They have higher internal rate of return. They hire 22.5 more women. And when you have more women in these leadership positions, uh when you have more women mentors, you know, they bring up even more women, you know, and finally, um they have higher growth rates. So this is something that is proven, women led companies equals to higher growth rates.

So what are some of the barriers that are holding women back? And I call these theories because um you know, they're just not true, but these are some of the things that hold us back. So women founders often create solutions for women problems solving a need that male investors don't necessarily understand or appreciate and who can blame us. You know, what we go through in our lives, what we go through our bodies, we wanna help other women. But you know, the male investors who dominate this industry might not necessarily understand or appreciate it. And this happens even if the companies that are women founded have more compelling growth and traction than start ups ran by male founders. Um So this works against us.

Um even though it really should not, and then we also perceive women are also perceived as less confident and informed about money to their male counterparts. And especially when it comes to a long term, long term planning. You know, if you think about it, when an investor gives you money, like they're giving you money to be used for the next seven years or 10 years, you know, before they get a return. Um And because of these biases, some of them, most times they might be unconscious, um you know, they're not willing to invest. So there's something that has come up recently, which is the Femtech revolution. Um So what do I mean by Femtech? So these are organizations of start ups that are creating products that are very specific to women's needs and women's lifestyles like menopause tech, fertility tracking apps, menstrual tracking apps, pregnancy monitoring devices, right? All of these are very specific to women.

And you know, if you look at 10 years ago, there were about maybe 62 to 70 start ups who are really in this space. And today there is over 600 start ups that are really creating products in this space, which is really, really amazing. Women need it. We, we need it and the increased awareness and acceptance of women and acceptance of women, health issues. So which tells me if this trajectory continues, right? Hopefully the male VC can start being more comfortable and it's not all male VC. But um you know, they can start to see the need, they can start to see, you know, this is not going anywhere, it's just growing, right? So what is the importance of bridging the gap? These women funding gap. So tech is one of the fastest growing industries, you know, think about A I and machine learning, right? It's gonna keep getting bigger, it's gonna keep being a bigger part of our lives and a new wealth class will be created, right? And if women are not involved in this wealth creation, the global gender gap will continue to increase. What does that mean? Right, especially in the tech space, more male dominated um um funds, you know, will continue to really influence the funding environment, you know, and if going back to my earlier slides, if you invest in people who look like you, we women are gonna be at such a big disadvantage.

So it's really, really important for us to start bridging this gap. Um So how do you do that? Um And it's, it's difficult, right? It's baby steps, it takes a long time. But one of the ways is leveraging your own community and support network, especially if you have mentors or role models who can introduce it to potential investors. You know, those warm introductions come so handy because all of a sudden the male investors are not seen as, as you know, women led businesses more. So what product do you have? How are you monetizing your product? Right? And if you don't have really strong community or if you don't have any community. There's so many um tech women groups out there that can be of real, real support. And one of them is the next women. It's a global, global network of women leaders from progressive driven companies. It's called the next women. There's also women tech founders. It's a grassroots organization on a mission to connect and support women in tech. So check out the next women and women tech founders, they're great organizations to start building a community.

The second is confidence and you know, and I know so many of us, you know, obviously we, we go out there and we are confident and we're, we're, we're trying our level best. Um But, you know, sometimes you can go in front of these investors and you start second guessing yourself and wondering, well, because some women dr it's a woman led business. I may not get funding, but, well, all I can say is believe in yourself, I believe in your product, believe in what you're offering in the marketplace because without confidence, without belief, hopefully it's not all times, but it might make a small difference, right? When you, when, when you, when you portray, you know, this is what my sales, my sales um strategy is, you know, you can negotiate better. Um You're driven by your belief in yourself and your product, it can take you to the next level. It can um but not all but not always. And then the third thing is this is a big one. More women need to be writing checks, right? And it's been proven that women investors are twice as likely to finance companies with female founders, right? So we need more women out there writing checks and, and continuing to invest in women led businesses.

Uh As of as of last year, only 5.6% of us VC firms are women led and almost all of them, a big number, 90% of them are in the very early stage of space. Uh But that nonetheless, um leveraging women led funds um can at least get you going, can at least get you started. And um if you need a list of some of the women led funds that I have, I have a pretty long list. I'll provide my email at the end of this presentation. Feel free to write to me. I'll send over the list and I have to mention that it's just not all women led funds that are helpful. There are some male, male led funds that are funding women led businesses and I can include that as well um in, in the list. Um But targeting this, it will be an easier um transition or an easier pitch or it is easier to approach uh these types of funds that are very dedicated to women led companies. And then the fourth one is demonstrating how you will build a billion dollar businesses. Now. Uh as I, when I support tech start ups, honestly, 88 out of 10 times, these businesses cannot be funded by V CS because venture capitalists are always looking for 10 X return 20 X return.

So it's, it's a, it's a burden on the founder to be able to demonstrate how you can grow your idea into that billion dollar business. So the investors can be make back their money and more. Um Now what does this entail? So this entails, you know, figuring out how you're gonna start and how you're gonna be able to scale into making, I don't know, 100 plus million in revenue if you're using a 10 X multiple. Um what is gonna be your sales strategy? What's going to be your, who are you gonna hire? You know, how are they gonna help you, you know, move to the next stage? Um What are the features? What products are you offering? Can you add at the features where you, you can cross sell or Upsell? Um How you do take care of your customers to reduce your churn, right? All of these metrics, you know, do you have positive unit of economics? So all of these metrics, um you know, especially with us being women, it's, it's important to have all of this figured out all of this buttoned up so that you can be able to, to demonstrate that you can build a billion dollar business. And with that, I know we have about five more minutes left. I'll leave it to see if there's anybody who has any questions for me. Uh Stop sharing. See here. All right.

And as I wait for the questions, what I can do is I can put on the chat. Um the two women groups that I had talked about earlier that you can use as resources to, to build your community because building community is, is going to be one of the most important things that you can do to um to be able to help you. And that is uh let's see here, community, the next women. So here I'll put in the next women. And also another one that is really, really amazing is women tech founders. So these two communities are really great. And what they do is um you know, whether if you have like a pitch like a pitch deck, you know, you have a community that is reviewing that they're giving you feedback on some of the things that you can walk on that you can improve on add subtract, et cetera. Um So, and then also um they might connect you to investors. Um And the beauty about especially being around other founders, women founders, they can be able to tell you the investors that they work with um the investors that are good for the type of business that you're doing um the investors um or, or whether it's V or Angels um how to approach them doing those warm introductions, et cetera.

So these communities are really, really, really beneficial. The other thing I have to mention is when you're evaluating or when you're looking for investors or angels, it's, it's, it's also important for you to make sure that you're working with investors that, that fit your personality.

You know, you don't want to work with the investors that are not respecting you or you know, that that are not taking what you're saying seriously. So, as much as investors vet you as a founder, it's also very important for you to be able to vet them as founders. I mean, as investors to, to make sure that um you're connecting, you're on the same page. Um And, and they're helping you grow and they're helping you grow your business. Um So, so those are some of the things that, that I can think of. And again, if you need a list of, um if you need a list of investors who can really help with your business with, especially women dedicated um in funds, whether they are investors or angels, let me put my email here and um and, and please reach out and, and I'll send over that information to you and I think with that it doesn't look like um there's any more questions.

So um I think with that, we can go ahead and end the webinar