The European venture capital scene experienced record growth in 2021, with over €100 billion invested in a single year in European startups.
These investments created nearly 100 unicorns in the region and contributed to a strong startup pipeline going into 2022.
Despite these astounding results, there are still challenges on the road ahead, particularly in terms of gender diversity. Progress is flat. Comparing 2021 to 2020, there has been hardly any change in the share of funding raised by all-male, all-female or mixed-gender founding teams.
To address this, European Women in VC commissioned IDC to analyse the female funding gap at both funder and founder level in the first ever truly pan-European report (covering the EU 27 + UK) providing a survey and data-based overview of gender diversity in the European VC sector.
From a funding perspective, the gender gap is everywhere.
The combined desk and questionnaire survey of over 400 venture capital firms managing at least €25 million in AUM, shows that on average 85% of VC general partners are men, 15% women.
However, moving towards a balanced gender structure at VC/funding level clearly demonstrates the need to increase the number of female general partners. More importantly, while these female general partners need access to larger pools of capital, they need to manage larger funds if they want to exert influence in the startup market and be able to follow portfolio companies. Analysis of current investment firepower shows that female general partners have less investment power (9%) of total assets under management compared to 91% of male general partners, indicating that women tend to be general partners with smaller allocations.
– The strong emergence of biotechnology and life science funds of significant size, in some parts of Europe, is the early sign of progress in bringing more capital to women investors and creating diverse investment teams. If this fund segment is removed from the analysis, the picture of European VC management will show significantly lower performance for women’s presence in general partnerships,” says Kinga Stanislawska, co-founder of European Women in VC.
Moreover, according to the report, the funding gap for female founders from a founder’s perspective is broadly the same as in previous years, even though capital to mixed founder teams increased slightly. In 2021, female startups accounted for only 1.8% of investments in Europe.
– The problem is systemic and therefore we need to look for holistic solutions. Capital imbalance is not only visible at the startup level, it exists across the entire value chain and needs to be addressed from the top of capital flows. We need more capital for female-led funds and female general partners at the fund management level! This is a solution for more venture capital to reach women founders and in general to better manage impact and smart investments,” says Anna Wnuk, Head of Community at European Women in VC.
The report shows that women founders are driving positive impact in critical verticals across the ecosystem, such as education, sustainability and healthcare. At the same time, female investors are more likely to back these women-led companies. Michał Kramarz – Head of Startups CEE at Google
The survey results suggest that women are largely represented in junior investment positions and therefore seem to show an increased interest in entering the VC world. The problem is that the employment pyramid is steep and many women drop out on their way up to partner level. The funds that women raise and manage are also smaller on average in terms of assets under management.
– In the current situation, we are investing in a homogeneous group of entrepreneurs which is problematic. We are not only leaving a lot of opportunities open, but also a lot of untapped potential. We need to create a level playing field with equal opportunities for all,” says Corinne Vigreux, founder of TOMTOM.