There is a “dearth of women founders” in the global FinTech community, according to a recent report which urges investors, founders and financial institutions to join forces and commit to change.

The latest research from Deloitte’s ‘Within reach’ series looked at formation and fundraising trends in the FinTech industry over the last 10 years, and found that just 7% of FinTech founders around the world are women.

Key findings from the report include:

  • The number of FinTechs founded and co-founded by women has grown eight-fold this decade
  • However, FinTech startups founded or co-founded by women still make up just 12.2% of the community
  • Women are taking a much smaller slice of the funding pie, accounting for just 1.3% of the funding total in 2019
  • Women-founded FinTech startups raised 50% less capital than startups founded only by men

Slow progress in the 2010s

Since the beginning of the current decade, the number of women-founded and co-founded FinTechs has grown – reaching 369 in 2019. This brings the total share of FinTech startups with women as founders or co-founders to 12.2%, compared to 10.9% a decade ago.

However, despite some growth, FinTech startups with all-women founding teams accounted for just 3.1% of the pool in 2019, described as only a small improvement from 2.4% in 2010.

A tiny slice of the funding pie

When it comes to funding, there has been a consistent increase in funding for startups founded by all-women teams since 2014, the research found. In fact, in the past five years, funding for women-founded startups grew at a compound annual growth rate of 58.9% – compared to a rate of 29.1% for men.

But while startups founded and co-founded by women garnered a total of US$5.1 billion in funding globally in 2019, as a proportion of the total this accounts for just 1.3% of the US$40 billion pie.

Startups founded solely by women attracted US$540 million in investment funding, up from US$85 million in 2015. However, the report pointed out that a significant chunk of the 2019 statistic was raised by just two companies: Starling Bank and Tala accounted for 60% of the total investment in FinTechs led by women-only founding teams that year.

How can we move forward?

According to the report, both inequitable funding and low representation in the founder community remain key impediments for women in the FinTech industry. It also identified gender bias in the VC pitching process as a possible contributing factor to the disparity in funding between men and women-founded startups.

As a result, a call to action was issued to the three key stakeholder groups – investors, financial institutions and women founders – to help improve outcomes and create more gender diversity in the FinTech founder community.

Among the advice for investors is to widen the investment lens by considering whether unconscious bias could be affecting investment decisions; as well as pushing for greater diversity within the VC community to help bring a fresh perspective and to accelerate change.

Financial institutions are urged to cultivate valuable networks which could benefit women founders, to seek out greater numbers of partnerships with women-founded companies, and to bolster gender diversity initiatives when it comes to their investment strategies.

As for women founders, the report encourages the consideration of alternative sources of capital as a way to combat the gender disparity in traditional funding sources. It also suggests that would-be women founders seek out and develop mentorships to help achieve greater success, faster.

Written by Miranda McLean, Senior Director and Global Head of Marketing at Banking Circle and EWPN Executive Board member.

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