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1 percent and money

Did you know that only one per cent of venture capital goes to women? Why is that and what are the consequences?

Sofia Breitholtz
LU alumna and CEO Reach for Change, Sofia Breitholtz

“The situation looks the way it does today due to a combination of factors. There are currently both structural and systemic obstacles, some more visible than others. We often hear from the female entrepreneurs we work with that they lack female role models,” says Lund alumna and CEO of Reach for Change Sofia Breitholtz, continuing:

‟There is also a perception that women build companies in other sectors that are not considered to be growth sectors, or in which the potential for scalability is called into question. But we also see that investors ask female founders different types of questions compared to male founders. Female founders often get questions about risks and challenges, while male founders often get questions about vision and plans for growth. There are similar challenges with regard to public financing.”

It is simpler to invest in what you recognise

According to a recently released report (in Swedish) by the Swedish Gender Equality Agency (Public financing of entrepreneurship from a gender equality perspective), male-dominated sectors are also the rewarded recipients of public financing. Most capital is owned by male investors and it can be perceived as simpler to invest in what you recognise or have easy access to.

People often invest in networks similar to the ones they themselves belong to, says Sofia Breitholtz.
This becomes a major barrier for women who are excluded from these networks, and it becomes even more difficult for women from minority groups, for example.

The consequence is that we miss out on a lot of innovation and new companies that don’t get founded

A report was recently released by the think tank, Ownershift, showing that men own twice as much as women. This has consequences on female retirement savings, participation in the labour market, etc. But above all, we miss out on a lot of innovation and new companies that don’t get founded, says Breitholtz.

‟This is a socioeconomic loss. Especially in sectors such as healthcare and education, where we see that women are over-represented. In addition, gender equality is not only a matter of fairness but also a condition to meet the UN global goals for sustainability by 2030.”

What do you think we, as a society, should do about it?

Breitholtz thinks that a first step is to become aware of these challenges and get investors to start looking beyond their own networks. Only then will society be able to achieve diversity in innovation and entrepreneurship.

‟There is also potential to bring about exciting societal solutions that are needed today. Government capital can be used as a catalyst for more financing. In particular by taking early risks. For this to work, data showing how much capital goes to female founders, etc. is also needed. 

It is also important that we highlight female role models. That we show women and girls that it is possible to build strong companies as a woman.”

 

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