The investment gap is bad for tech

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This week we’re quoting Elnaz Sarraf (Founder and CEO at ROYBI Robot)

What Sarraf said:

“I think the biggest challenge has been fundraising. I am not sure if it actually has much to do with me being a female CEO, but I’ve seen many companies with way less traction than my company secure funding faster.”

The gender investment gap

There’s a very good chance that her gender did affect the way she was received by investors – until she changed tactics, as she told us in this interview, and started taking a male colleague to every pitch.

The 2021 Halo Report found that on average, nonminority female CEOs raise USD $1.8 million, compared to the $2.6 million their male peers raise.

And according to TechCrunch in the US, only 2.1% of all VC funding in Q1 2023 was allocated to women. That amounts to $800 million, out of the estimated $37 billion invested in US startups in that period.

While Saudi Arabia is increasing its funding for female entrepreneurs, a 2022 report by Wamda wider MENA found that all-male startups took 99% of the total $374 million investments raised in August last year.

We’ll talk about this forever

We still need to do better. More investors need to invest in women. And as we’ve said before, this isn’t just for the sake of closing the gender investment gap because it’s the right thing to do; gender equality drives good business performance. And it’ll drive good industry performance into the future as well.

Evidence shows that female founders make more money:

• A 2018 study of 350 startups looked at more than a decade of data, and concluded that businesses founded by women recorded higher revenue (over 2X as much per dollar invested) than businesses founded by men.
• 2019 calculations by Morgan Stanley estimated that $4.4 trillion is lost in missed revenue as a result of lack of VC funding in women- and minority-owned businesses.

And there’s a huge amount of data to suggest that female-led companies are more likely to drive corporate social responsibility initiatives and adhere to strong ethical codes in business decision-making.

Research by Laura Kray (University of California at Berkeley) and Michael Haselhuhn (University of Wisconsin-Milwaukee), for example, found that men are more likely to find ways to justify poor ethical or moral decisions than women – partly because men are more likely to feel pressure to prove their masculinity.

Along similar lines, research by Kellie McElhaney (Founder of the Center for Gender Equity & Leadership) found that companies with women on their corporate boards are more actively focused on ESG issues than companies with no female board members.

And it’s not about gender wars

Not at all.

We need men in tech.

But we also need women in tech. We need a diverse industry, in which diverse founders receive funding to elevate technology overall.

Tech is better when everyone’s involved. So let’s keep working to get everyone involved.

We’re very excited to welcome everyone in tech at LEAP 2024. Are you coming to Riyadh?

Have an idea for a topic you'd like us to cover? We're eager to hear it! Drop us a message and share your thoughts.

Catch you next week,
Richard McKeon
Marketing Director

P.S. - Mark your calendars for LEAP 2024 📅 4-7 March 2024. Want to be a part of the action?