Alex Depledge had a stressful start to her pregnancy. Eight weeks before discovering she was pregnant, she had raised $6 million in venture capital to expand her company. “Not just my investors, but even my own mother and close friends said: ‘Are you going to step down now as CEO?’ If that’s the first question you’re asked by men and women, it’s not very encouraging.”
She did not step down and says that, if anything, her pregnancy made the company’s expansion more successful. “This is a golden opportunity for a looming deadline. You know you have exactly nine months.
“I put together a robust team and a robust plan and it really helped to get the business into a good place much faster than if we’d let things languish; things you might have let slip to the bottom of the pile, like the legals, the HR, the back-office stuff, that really help things to run smoother once you start expanding. It forced us to make difficult decisions.”
She sold the business, Hassle.com, an online booking service for cleaners, for about €32 million just over a year later. “I got a price that was ridiculous and I got cash. I probably negotiated harder than any guy. We didn’t really want to sell, so we ended up with silly numbers. They underestimated us and it played in our favour.”
Ms Depledge is one of a lucky few to raise equity funding as a female founder. Only 10 per cent of the $31.5 billion of venture capital raised worldwide from 2010 to 2015 went to companies with at least one female founder, according to CrunchBase, a business data provider. Nor is the issue confined to venture capital. Only 17 per cent of so-called seed or angel funding, private rather than institutional investment, went to female-led businesses over the same period.
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Part of that is down to a lack of women starting businesses in the first place. A fifth of UK small businesses are majority-led by women, according to government data. In the technology industry, which attracts most venture capital cash, this is often put down to a lack of women studying science, technology, engineering and maths (STEM). Debbie Wosskow, founder of Love Home Swap and chairwoman of the national trade body for the sharing economy, argues that “the whole conversation around STEM is incredibly important, but it can put women and girls off.
“I’m an arts graduate. On a good day I’ve got very good communication skills, but I’m not [incapable of being] analytical because I didn’t study maths and engineering. We need to ensure that young people perceive technology and entrepreneurship as a fantastic opportunity that is not ruled off to them because they’re not a maths graduate.”
She adds that there is a reluctance to raise funding among female founders. “There is a whole range of issues around confidence, around networks, around role models. Who can I see and know who looks like me who has done this before? There’s something in the mix about not wanting to ask men for money, which is interesting.”
It is predominantly men that founders will have to approach for funding. Among the top 100 venture capital firms worldwide, only 7 per cent of the partners are women and almost two thirds of those firms have no female partners at all, according to CrunchBase. The fear is that this gender imbalance might affect the investment decisions that those firms make.
Anna Boffetta, associate at Balderton Capital, a London-based venture capital firm, believes that women tend to build companies targeting women, which she argues can be harder to sell to a panel of male investors. “Take, for example, a fertility app. It’s going to be easier to relate if you can be a user and you can try the product. It’s the same for skincare products, a lot of these fashion, lifestyle apps or marketplaces or products. In that scenario, having a male audience in front of you is going to make it more difficult.” She is a founding member of Diversity.VC, a not-for-profit organisation promoting diversity in investment teams and the founders that they back.
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There are alternatives to venture capital. Ms Wosskow recently launched AllBright, which combines a network of private investors with a crowdfunding platform to back female-led businesses. “We think it’s time to redress the balance. The killer stat is that women deliver very strong returns.” She cites research from the United States showing that female founders deliver 35 per cent higher return on investment than their male counterparts.
Ms Wosskow says that could be down to personality traits typically attributed to women. “There is a sense in which women run a business to hit targets and are very focused on delivering what they say they are going to deliver. They are very good at delivering a team, because they’ve got strong EQ [emotional intelligence quotient] as well as IQ.” Another explanation could be that, because it is so hard to get investment as a woman, only the best female-led companies get funded.
Ms Depledge says that she would not positively discriminate towards women when investing, but as entrepreneur-in-residence at Index Ventures, a venture capital firm, she is in position to help other female founders. “A lot come to me for advice,. If I think they are on to something, I try doubly hard to get them in front of angels, venture capitalists or whatever. A lot of women don’t get seen from lack of confidence, lack of network or lack of sponsorship, which is where I come in.”
High aspirations
The government has made its own attempt to tackle the problem of a male-dominated venture capital industry that rarely backs women-led businesses.
The Aspire Fund was set up in 2008 to provide risk capital on a co-investment basis to companies led by female entrepreneurs. One of the companies it backed was Wool and The Gang, co-founded by Jade Harwood. The online boutique specialising in fashion knitwear and knitting kits went on to raise funds from Index Ventures and subsequently was sold to a private equity firm.
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However, the Aspire Fund itself has fallen short of its goals. Originally advertised as a £25 million fund, it was eventually promoted as having £12.5 million available to back promising women-led companies. In fact, less than £5 million was ever invested by Aspire and it is now closed to new investments. As of March this year, its remaining investment stakes were worth less than £2.5 million.