Investment in women and people of colour is currently low and does not commensurate with the existing talent available. When looking at the number of entrepreneurs of colour, there are no feasible figures. That is how significant the disparity is. Stereotypical and prejudiced biases can influence investment behaviour. According to Niessen, founder of CapitalT (a fund that invests in tech startups), the problem starts with the investors themselves. Namely, they are primarily white and male. When reviewing financial applications, women are, in some cases, treated differently from men during their financial pitch. With men, the evaluator is more likely to ask about growth potential; however, with women, the evaluator is more likely to ask about what could go wrong. The preference for male entrepreneurs remains, even when the pitches for a man and woman are identical.
Lack of diversity leads to less innovation
The overrepresentation of white males in the entrepreneurial world has far-reaching consequences outside of it. Indeed, products and services are often tailored to those who developed them. As women gain more voice and influence in business, they bring fresh ideas and innovation. A better gender balance can help develop new products, services, and businesses in various industries. This is not only good for organisations, but also for consumers, who have more relevant choices available to them. This, of course, also applies to ethnic entrepreneurship. Nowadays, you often see that the lack of diversity leads to products that do not work equally well for everyone. Read more about this in our article Black businesswomen in Canada – don’t take NO for an answer.
Female startups still raise little seed capital
In 2021, Dutch startups raised 5.3 billion euros from venture capital investors. That’s three times as much as the year before. Companies founded exclusively by women represented about 4 per cent of all deals in the Netherlands this year. Together, they accounted for less than 1 per cent of the capital invested. That’s almost 28 million euros. Those with mixed teams did better. They were involved in 9 per cent of the deals. Finally, 13 per cent of all Dutch deals went to companies with at least one female co-founder. Together, these companies raised 8 per cent of the total invested capital. Compared to 2020 (11 per cent of deals, 6 per cent of value), this is minimal progress.
Women and men do not differ much in entrepreneurship
Approximately one out of three entrepreneurs in the Netherlands are female. Female entrepreneurs do not differ much from male entrepreneurs in terms of entrepreneurial spirit, guts, opportunity seeking and networking. The women who start their own business usually already have a job, a good income and are often highly educated. According to research by the credit bureau Graydon, women are less likely to go bankrupt than men. This is partly because women are often more cautious in work practices. In addition, unlike men, they do not always need to grow quickly. Women usually start a business at a later age, and they are more particular about what they do and do not want. They also generally borrow less money to start.
The tide is turning!
To win the global innovation battle, we desperately need diverse teams. Which startups are promoting diversity and inclusiveness in the Netherlands? Get inspired by these three appealing startups:
- Egualture: making job applications fairer. The Rotterdam startup Equalture aims to make applying for a job fairer– or unbiased, as entrepreneurs and sisters Charlotte and Fleur Melkert call it. Last year the sisters raised an investment of 1 million euros.
- Trickle: anonymous applications. Applicants with a foreign-sounding last name are often less likely to be invited for interviews. Sad, but true. Roos Aduagyei and Nica Renoult are tackling this problem with job site Trickle.
- Envision: software that converts texts to spoken word. Entrepreneurs Karthik Kannan and TU Delft alumnus Karthik Mahadevan developed software that converts texts to spoken word. This month ABN Amro announced that they are funding Envision through its new 425 million impact fund.
How is it that white male entrepreneurs have so many more opportunities? https://www.vice.com/nl/article/3aqjqn/witte-mannelijke-ondernemers-krijgen-meer-kansen
Research: female founders still raise very little capital: https://mtsprout.nl/startups-scaleups/onderzoek-vrouwelijke-founders-halen-nog-steeds-heel-weinig-kapitaal-op
Business loans for women – does it exist? https://www.capitalbox.nl/blog/zakelijke-leningen-voor-vrouwen
“With men, they look more at opportunities, with women they look at risks”: https://charliemag.be/wereld/veronique-bockstal/
These 5 startups want to make the Netherlands more diverse and inclusive: https://mtsprout.nl/startups-scaleups/deze-5-startups-willen-nederland-diverser-en-inclusiever-maken