Taking a portfolio approach to investing in female founders

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Taking a portfolio approach to investing in female founders

Last week the International Finance Corporation (IFC) released a report and quite frankly, the results were quite shocking to me.

In short the IFC found that:

  • Acceleration exacerbates the gender financing gap in equity financing
  • Acceleration removes the financing disadvantage for female-led startups when it comes to raising debt
  • The persistent gender financing gap cannot be easily attributed to differences in the quality of the startups, suggesting that investor bias and risk perception may play a role
  • There are no clear accelerator program design elements that overcome the gender financing gap

Unfortunately in hindsight, I’m not sure why I was surprised. At the end of the day, one key measure of success for accelerators is whether there is follow-on VC funding into accelerated startups.

It’s widely known that the majority of venture money still goes to startups that have no women on their founding team. According to PitchBook’s 2019 report, in the US, only 2.8 percent of venture capital investment was directed to female-only founding teams with just 11.5 percent invested into male and female founding teams.

At Accelerating Asia, so far we’re bucking the trend with 40 percent female-led ventures - 4 times the amount the average venture fund. And 5 percent of our portfolio is female-only founding teams.

We’ve invested in female-only founding teams, male and female founding teams and teams delivering solutions for women. We’d like to keep growing this number and invest in more female founders, ladies please apply for our next cohort - we’re looking for you!

And, when you look at women who are investors themselves, this number is pretty small too. There are a whole number of reasons for both of these issues, but things are changing. More women than ever are setting up their funds, becoming angel investors and founding their own companies.

Diverse teams are better equipped to handle challenges

There are early studies to suggest that founding teams with women on them, tend to do better than those with just men. This is not surprising if you consider it from a diversity perspective - not only a gender lens - because when you have diverse teams, you are better equipped to deal with various issues that come up during the startup journey. When the ultimate business of an investor is to make money, you want to make sure that the companies you invest in have the best chance of succeeding. So diversity then doesn’t just become something that’s a ‘nice-to-have’, but a ‘need-to-have’ to de-risk an investment.

When we look at our portfolio startups, founding teams that come from diverse backgrounds personally and professionally, are better equipped to look at business challenges and opportunities. It's the same in the investment space, and a diverse team is more likely to spot unique opportunities or identify gaps.

Moving past the men vs women narrative

As an industry, we need to move past thinking about what men versus women bring to technology - it implies that the industry isn’t big enough to fit everyone and starts from a perspective that the industry shouldn’t be for everyone. We need to start from the point of view that there are more than enough opportunities in the industry for all kinds of people and that the challenge is ensuring that everyone has equal opportunity to access the opportunities.

When you have different people looking at the same thing but coming from different points of view, experiences and skillsets, you are not only able to create solutions that are unique or serve an underserved segment, but you can identify potential challenges or risks earlier on.

Accelerating Asia’s Approach

At Accelerating Asia, I am proud of what we have managed to achieve so far but we aren’t done yet. Our approach is not just about ensuring equal access to investment for female-led ventures; it’s also about investing in startups that are improving the lives of women. For example, our portfolio company BeamAndGo which gives female migrant workers more power over their remittance to families back home and Hellotask which upskills female domestic workers and provides safe employment opportunities.

We have also worked to introduce a range of initiatives to make Accelerating Asia accessible to female founders. These include the Code of Conduct, Gender Advisory Group (stay tuned for that announcement), how we structure the program, flexi-time and a child-friendly work environment.

Also, everyone including Accelerating Asia’s team, startups and external stakeholders who engage in our community must accept and adopt the Model Code of Conduct which was pioneered by Blackbird Ventures, Startmate, Airtree Ventures, Square Peg Capital, Rampersad and Blue Sky Venture Capital in 2018.

As a company, we’re also diverse and have a 50/50 gender split across all areas and one of the few female General Partners in a Venture Capital fund.

We know there’s always more that we can do to support diverse teams. It makes sense from a portfolio perspective and to generate returns for investors.

Amra is Co-Founder of Accelerating Asia and General Partner at Accelerating Asia Ventures. Amra has been involved in 80 investments with startups and SMEs. She is the Southeast Asia Lead for Shaper Impact Capital and Outgoing Curator for Global Shapers Singapore and host of the Doing Good Podcast

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