Although there has been an increase in the presence of women in the fintech and finance sectors, figures are still showing a big investor gender gap between men and women.
Several studies try to clear up the reasons behind this low female presence. Although there are many different approaches, they usually come up with two main reasons:
1. Risk aversion
It is not a secret that investing in start-ups is a risky business; imperfection and failure come along with it. Does this mean that women do not invest in startups as much as men because of risk aversion and fear of failure? That is exactly what some studies point at. The question is why. This issue goes beyond finance and takes us to a new concept that explains why women are underrepresented in virtually any area we look at. This concept is “bravery deficit.” You only need 12 minutes to watch Reshma Saujani’s talk “Teach girls bravery, not perfection” and understand that the world we live in has taught women to aspire to perfection and, consequently, to live cautiously and even under an imposed lack of confidence. Men, on the other hand, are congratulated for being strong and brave since they are little and they are rewarded for taking risks – jumping high, playing hard, asking a girl for a date.
The investing arena is not a world of perfection but one of bravery. Traditional guidelines taught to women – based on risk aversion – exclude them from the investing path, and even from the entrepreneurial path, where women are also barely represented. To give an example:only 8 up to 100 startups selected in the South Summit 2017 were led by women.
2. “You can’t be what you can’t see”
This quote from activist Marian Wright Edelman helps us understand why there are virtually no women at investment fora or pitching on stage. Human beings learn by example, from stories and leaders who are an aspirational image of who we want to become. When we set up our goals, we look for role models – people who have achieved similar things to those we want to achieve. If there are little or no women who become a model in the entrepreneurial and investing ecosystems, chances are there will be less women who will aspire to be so. Here lies the risk of a vicious circle of inequality.
Anyhow, the increase of economically independent women who are able to do whatever they wish with their money has resulted in an increasing interest in investing among women. This has led to the creation of several initiatives at an international level which aim to increase female investors’ visibility, create new role models and break the vicious circle. A few examples are Global Invest Her in the U.K. and the SWAN network in Spain. It was precisely at a SWAN event where a surprising and interesting figure was brought out into the light:the percentage of female investors at equity crowdfunding platforms is way above that at traditional investment channels. To illustrate this point:27% of registered investors at Crowdcube are women while they only count for 14.5% at business angels networks.
We asked several female investors why they think the percentage of women increases when it comes to online investment platforms, and the reasons are tightly related to the ideas already presented in this article:
Online investment platforms like Crowdcube allow investors to invest small amounts starting at just €/£10, as opposed to high tickets imposed by traditional investment channels. This makes it easier for more risk averse investors – women or not – to start investing low amounts and get confidence along the way.
Many women who are interested in investment do not dare to take the first step because they do not feel confident enough to get into “a man’s world.” They see equity crowdfunding platforms as a suitable way to get comfortable with the ecosystem, take the first step and, in the future, look into other channels as well.
We know that this is just a makeshift solution and not a real remedy to a deeply-rooted problem. We know that this is just option B in a context where option A is still out of our reach. And we know that 27% is far from true equality. But we believe that if we make it possible for more women to freely explore this world, overcoming the fear of failure, we would be contributing to the empowerment of women who could become role models for many other women to come.