Are less women applying for VC funding?
The Next Women isn’t just a VC fund. The Network side of the organization is focused on educating female entrepreneurs about the ins and outs of pitching and preparing for VC funding. And education is a really important side of the story. As Rixt explained:
“What we see is that there's a gap in funding but there’s also a knowledge gap. Women are risk aware. So, if they don't understand the full picture, they’ll see more of a risk and won’t be comfortable taking that step.
If you look at the sociological/psychological side of how we raise different genders, women tend to be raised more as part of the community and as caretakers, needing to be there for others. There's this sort of burden on our shoulders and that makes it more difficult to take these big leaps of faith and just go for it. Meanwhile, men are raised more as individuals so they often feel that they can take more risk.
What you see happening is that a lot of women keep funding themselves with their own cash flow and growing organically. In the end, that does build very sustainable, long term businesses.”
But for those companies that could use a capital boost, The Next Women organizes funding morning cycles where they help review founders’ pitch decks, investor memorandums and term sheets. They also help entrepreneurs determine when it's the right time to go for funding, what different opportunities are out there, and what the granular growth path would be. This educational journey goes across the spectrum, from preparing for their first pitch to angel investors to applying for VC funding.
“There's a different mentality. I'm not saying that there aren’t a lot of women who already go for venture capital funding because, as we’ve seen with our own fund, they do. But, in general, you'll see that if women understand the full picture, then they're also more keen to go for it.”
It’s not about simply inviting women to the game, it’s about rethinking how it’s played
A study by the Boston Consulting Group found that, for every dollar you invest in a female-led startup, they generate 78 cents in revenue. While for every dollar that you invest in a male-led startup you get 31 cents. And, indeed, the fact that so many more female led startups fund their own growth is a testament to their ability to bootstrap and create lean, sustainable businesses.
Yet, according to Techleap’s Gender Diversity Report, between 2008-2019 only 5.7% of Dutch VC firms invested in startups with a female co-founder. And, female founders that did receive funding received significantly less per round than their male counterparts.
“The game is played on different stakes. It's set in such a way that you're investing in 10-20 companies, knowing that 90% will fail but looking for that one shooting star that will make up for everything. That's the name of the venture capital game.
And that’s not the way that women in general build companies. I've never really spoken to a female entrepreneur that's just in it to make money. There's a lot of them that are profit driven, want to be successful and make it big, but it's never the sole driver. Often female founders are looking to make a longer-term, social impact, provide for their employees and their community.
But I have met male entrepreneurs who say, I just want to be a millionaire by the time I'm 40 or I just want to shoot big and then go home. So there's a different mentality.
And that also translates into the communication of these VC funds because they're looking for companies that want to go big, fast, hard and not to the ones that might have slightly more gradual but stable growth.
How are we going to create that change? It's not by saying, ‘This is the game, this is the way we play it. If you want to join our club, then you need to learn the rules and wear the right jersey.’
It's about looking at what our current situation is, what the roles and motivators are, and asking, ‘Why isn't everyone already in? What are we doing right now that's excluding a large portion of the population?’”