When I founded my company, Global Digital Women, more than five years ago, I had to deal with the topic of financing for the first time. That might sound late to some people, but before that, I hadn’t given much thought to investors, equity, or growth strategies. It was my first time starting a business. It quickly became clear that my business model—diversity consulting—wasn’t exactly the kind that would bring investors to tears of joy at the time.
Today—more than five years later—diversity has become an indispensable topic. And yet, even though everyone is talking about the importance of diversity, the numbers show—especially in the investment sector—that there’s still a long way to go. 97% of venture capital firms are led by men.
The proportion of female business angels is also low: 12.9%. Yet statistics show that companies led by women are more successful in the long term. So why is it that, first, there are fewer female investors, and second, the investments themselves often don’t go to women?
More Financial Education in Schools
Let’s start with point a: the proportion of female investors. As I’ve published and written more frequently on the topic of investing in recent months, I’ve received many questions about investing itself. I noticed uncertainty, fear, and a lack of knowledge coupled with feeling overwhelmed—especially among women. Many wrote to me saying they didn’t tackle the topic until later in life because it seemed overwhelming and complex.
That’s why I firmly believe we need more financial education in schools. In particular, practical knowledge when it comes to finances. Whether it’s stocks, ETFs, or even investing in startups: the earlier people are exposed to financial topics, the easier it will be for them to invest on their own later in life. Women, in particular, would find it much easier to navigate the world of investing and would feel much more comfortable discussing investment topics. And the more female investors, women in the financial industry, and greater diversity in financial institutions there are, the better—not only for the respective industries but, above all, for our economy.
More Diversity at Investment Tables
Regarding point b—the fact that many startup investments do not go to women—I repeatedly observe that investors lack an entrepreneurial spirit. While there are many experts whose backgrounds lie in investment banking, few have actually been entrepreneurs themselves. As a female entrepreneur, I don’t just think about quick success; above all, I think long-term—especially when it comes to capital allocation and investments.
So there needs to be more diversity on the investor side as well—and ideally in every respect: female entrepreneurs and experts who bring not only capital but also knowledge and networks to the table. This would give business models that might otherwise fall through the cracks—even with traditional investors—a better chance. Take the women’s health market, for example: in 2019, femtech companies received $592 million, while fintech companies received $33.9 billion. Here, too, if there were more diversity among investors, there would certainly be more diversity in products across industries.
Investing isn’t rocket science—and investing in women certainly isn’t. On the contrary: it’s the best business decision you can make.
