Why aren’t there more women founding startups? - Demium

Why aren’t there more women founding startups?

According to the European Commission’s 2018 figures, women make up 51% of the population of the EU, yet only a third of the total number of those who are self-employed are female. This is despite the fact that startups set up by women performed 63% better than those founded solely by men, according to the EC’s Women in the Digital Age study (also 2018). And to add to that, the 2016 Global Entrepreneurship Monitor revealed that Europe has the lowest numbers of women in early-stage entrepreneurship in the world. So why is this?

When we look at the results of the reports, it seems to boil down to four things:

  1. Fear of failure
  2. Financial insecurities
  3. Battling stereotypes
  4. Juggling work with family life

According to the Policy Brief on Women’s Entrepreneurship, compiled by the EC and OECD in 2017, in which they explore the gender gap in entrepreneurship, 52% of women polled said they’d be too worried about failing to start a business (compared to 42% of men) and that they weren’t aware of any startup training courses in their countries. And in 2016, the European Institute for Gender Equality (EIGE) ran a study in France on Gender in Entrepreneurship and found that 90% of the women polled were wary of borrowing funds.

In the same report, the EIGE discovered a predominant masculine bias in entrepreneurial role models, especially when portrayed in the media. Whether or not women are aware of this, the bias has a resounding affect on their perception of business ownership and can discourage them from entrepreneurship. The EIGE even states that this bias impacts banks, VC investors and customers’ perceptions of female entrepreneurs.

These stereotypes and lack of female entrepreneurial role models go some way to explaining why there are fewer women starting companies than men. As do the challenges in striking a good work-life balance. In Rachel Connelly’s 1992 paper, Self-Employment and Providing Child Care, she reveals that “one of the most consistent empirical findings [in studies of women in the workplace] is the negative effect of the presence of young children on the probability of participation”. She lists childcare arrangements as the biggest deterrent, for both cost and practicality reasons.

What is it really like for female entrepreneurs?

When Demium alumni Patricia García Llop founded Pandabox, an online personal shopper for children, she felt underrepresented. “Most of our investors and colleagues at other startups are men. Because of this, all content and events are prepared by men, for men. Sometimes we don’t feel identified with.”

The gender gap also presented problems when Pandabox sought funding. “As our customers are mostly women,” Patricia explains, “and our investors are mostly men, it was difficult for them to connect with the problem we solve.” But, along with her co-founders Ana Ruiz and Sonia Conde, she didn’t give up and the company is going from strength to strength. “Now we’re enjoying the experience. We’re convinced Pandabox is going to be a success, but in the case that it isn’t, at least all the things we’ve learnt in the process will be worth it.”

Similarly, Babyboo CEO Elisabet Branchat Freixa also runs a business aimed at families, but didn’t find her gender a hindrance in setting it up. “On the contrary,” she says. “We cannot deny that the startup world is a more masculine than feminine one, but we have to accept that we are different. That doesn’t mean that we are better or worse than each other; we seek equality when what we should look for is opportunity.”

With help from Demium, Elisabet founded Babyboo, which allows parents to rent rather than buy the essentials children require when travelling. “The definition of Demium to me is opportunity,” she tells us. “Their support meant I felt confident as I defined the first steps to building my business and in the creation of the MVP. After that I wasn’t so worried about making mistakes or failing.”

As for the work-life balance debate? Greyhounders co-founder Marta Frenna (who we previously spoke to about customer acquisition) says that’s something she’s still working on. “If you love your work and you’re obsessed with what you’re doing, it’s difficult to set boundaries and leave it behind, even when you’re not physically in the office. That’s the case for both men and women. But it’s my number one priority for 2020!”

Marta kickstarted her online optics business through Demium in 2018 and at the beginning, she admits, she was intimated by pitching in a “90% male-dominated business world”, but it’s something she quickly became used to. She also says she feels like she’s been treated differently on occasion for being a woman. “I think most men just aren’t used to dealing with women in business, for cultural and historical reasons, but they are now adapting to this new reality.”

Where can female founders find help?

The OECD concluded that to eradicate the gender gap in entrepreneurship, policy makers should support female entrepreneurs by “promoting female role models, offering mentoring and training courses, facilitating access to finance, and ensuring that their policies help women to participate in the labour market”.

In many cities, especially within Europe, you can find useful events, such as the ‘Peer-Learning Activities in Entrepreneurship Education and Women Entrepreneurship’ run by the EC (until 2021). The first of their workshops focusing specifically on female entrepreneurship took place in Prague in May 2019 and more are planned, so keep an eye on their website for updates. There are also a wealth of conferences to attend, including Brain Bar in Budapest, Nice One Barcelona and World Mobile Congress and 4YFN (also Barcelona).

Good advice is out there, you just have to track it down. Unless you’re already in the world of business, most probably wouldn’t know that a lot of local governments provide help for new startups and aspiring entrepreneurs. Take Madrid, for example, which offers tax incentives and special visas for international entrepreneurs. Or Budapest, which has an incredibly low corporation tax (9%) and free exports. Interestingly, Hungary has the second largest number of female founders at 23.7%, compared to the European average of 15.6%, according to the EU Startup Monitor study.

Finally, you can seek help from a startup accelerator or incubator, such as Demium. We have numerous sites all over Europe and our incubation teams are tuned in to the areas that might make female founders feel outnumbered or intimidated, and we actively support them in these processes.

We’ll also help aspiring entrepreneurs team up with people who have complimentary skills – something that takes place at our AllStartup Weekend. The Demium incubation team are experts at helping people identify suitable, likeminded cofounders, so you can shake off any pre-existing fears before approaching startup life.

At the moment, just 20% of founders to come through Demium are female, but we’re actively encouraging women to join the programme. After all, like the EC recognised of the startups they studied, more than half of those started by women performed better than the ones started by men. That’s not to say we’re only after female business founders – we want to reset the balance and, eventually, bridge that entrepreneurial gender gap.

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