Female founders lose out when it comes to financing – OECD report

Start-ups founded by women much less likely to receive funding than those led by men

When start-ups with one or more women founders do secure funding, they tend to receive a third less

When start-ups with one or more women founders do secure funding, they tend to receive a third less

 

Access to early-stage financing is a key determinant of success for high-potential start-ups, but companies founded by women are significantly less likely to be able to get funding, a new OECD study reveals.

Indeed, the likelihood of funding for all-male start-ups is about 10 per cent higher than for those with at least one female founder, the “Levelling the Playing Field” study confirms.

In addition, the report shows that when start-ups with one or more women founders do secure funding, they tend to receive a third less, with male-led companies securing on average $13 million (€11.6 million) per round versus $9 million for those founded or co-founded by women.

The report looks at 70,000 start-ups from around the world using data from Crunchbase, a database that catalogues funding deals.

The gender gap in securing funding is seen to be most visible in Europe, and is only marginally significant in the US, and negligible in Asia.

Senior levels

Analysis of the gap suggests that as well as gender stereotypes, there is an issue with women being held back by a lack of experience in technical disciplines such as engineering, and at senior levels.

The gender gap in innovative high-potential start-ups is considered to be much larger than in entrepreneurship in general, with the gap particularly noticeable when looking at incidents of successful exits through mergers and acquisitions. The study finds that early-stage companies with at least one female founder are half as likely to be acquired as those founded by men only.

“The overall pervasiveness of the gender gap indicates that unobservable factors play a strong role. These can include gender bias on the investors’ side, unintended effects of policies but also personal traits and preferences that cannot be accounted for with available data,” the report authors said.