How can we boost female-led businesses in 2021?

Deepali Nangia is a mentor and advisor to female founders.  She is also an angel investor and was part of VC Fund, Atomico’s 2020 Angel programme.  Deepali, whose background is in investment banking, has a keen interest in digital health, femtech and sustainability, but has invested across the board.  She is also a co-founder at Alma Angels which was set up to democratise and demystify angel investing and create more female angel investors that invest into female founders.  Deepali’s vision is to create the largest and most engaged community of angel investors in support of female founders. She was recently nominated in the ‘Top 5’ Investor category in Top 100 Asians in Tech in the UK. Here she talks about the impact of Covid on women in business and beyond.

What a year it has been for all of us! For women in the corporate world, with little children working from home, while trying to juggle both home and personal life, I am sure it has not been an easy time. For female founders, has networking during COVID been harder and therefore access to capital even harder to reach? I am personally hoping that COVID has fast-forwarded corporate culture and employer mindset, aiding in the monetisation of the biggest asset class waiting to be monetised — the female workforce. In fact, some female founders as well as female GPs have told me that fundraising during COVID has been a ‘blessing in disguise’. Male investors on the other side of the zoom call couldn’t tell that these women were pregnant. While in 2020, we have made significant headway in space exploration, down on Earth, a woman’s womb occupancy status continues to remain an investment criteria.

My own journey into freelance work advising female founders started as I was passed over for a promotion in the City. Passed over since I wasn’t that ‘unencumbered mythical worker’, as described by Caroline Perez in her book Invisible Women. I had a very, supportive and hands-on husband, but he travelled a fair amount. I was lucky enough to have a nanny to help with the housework, but at the end of the day I had two human beings depending on me and I was responsible for everything from their homework to their head lice. As a senior woman who had put in many very productive hours over the years, I thought it was a given that the company I worked for would be supportive. And they were indeed supportive, but at the expense of my career progression. I felt completely let down and left a job I excelled at. My boss was a white male and there were barely any senior women in the company. Unfortunately, it often takes women in leadership roles to make changes and for such problems to be fixed.  Not just me but millions of women just like me leave perfectly good jobs, moving into lower paid, more flexible offerings, many of them way below their qualifications. This is really when the gender pay gap is aggravated even more. Changes such as more senior women in leadership roles and statutory changes to paternity policy that offer fathers full or close to full reimbursement of salary along with a fixed time frame to use this parental leave is shown to have a positive impact on female employment. We need many more such changes.

Female founders

But let’s move out of the corporate world into the world that I now live and breathe every day — the world of female founders in tech. How different is it in this meritocratic world? I fight for gender equality each day and I would say I fight for diversity — diversity of thought and diversity of leadership because it is a known fact that not investing in female founders leads to missed economic output and opportunity. The returns data speaks for itself that female-run start-ups generate 78 cents in revenue vs. male-run start-ups which generate less than half that amount. A recent Kaufmann research study found that women-led teams generate a 35% higher ROI than male-led teams. In light of this data, how disappointing and shocking is it that a black female founder was recently quoted saying that she needed to add a white male CEO to her team to be able to raise money?

So why do female founders see less than 5% of venture capital dollars? I started working in the investment ecosystem seven years ago and I feel the quality of companies being started by female founders has only improved. So while we can attribute some of this deficit to a lack of pipeline in the past, surely that can’t be the only reason. It may also be partly attributed to the fact the some women pitch perhaps a smaller (but sometimes more reasonable) vision and to impostor syndrome, more commonly found in women than in men because we all know that a woman would never apply to a job unless she fit the criteria completely whereas a man would apply even if he didn’t fulfill all the criteria.

There are also many well-known systemic challenges which come about when there are a very small percentage of women in decision-making roles. As humans we are all biased and tend to stick to what we are comfortable with, tend to stick within our networks and like to recruit and invest in the people who are most similar to us. With 80% of US fund partners being white males and 50% of them being from Harvard, Stanford and Wharton, it is no surprise that three out of four venture rounds in the US go to all-white male teams and I assume that a lot of capital is recycled within these boys’ clubs. Biases have also been shown to exist with senior women at these funds. After all, it is all about the company you keep — over time, you begin to think, behave and act like the people you spend the most amount of time with.

Added to these systemic challenges are businesses such as those in the under-represented areas of women’s health that may sound even less appealing to male VCs. The latest report I read by LBS Professor Dana Kanze goes beyond femtech into other sectors. Her research shows that a woman-led venture in a male-dominated industry receives less funding and at lower valuations while a male-led venture in a female-dominated industry receives no difference in funding and valuation regardless of the industry to which they cater. Strangely, coding and tech was originally a woman’s game. ENIAC, the world’s first fully functional digital computer unveiled in 1946, was programmed by six women. In 1967, Cosmopolitan magazine published an article encouraging more women into programming, saying “it is just like planning a dinner. You have to plan ahead and schedule everything so it is ready when you need it”. “Programming requires patience and the ability to handle detail…Women are naturals at computer programming,” it stated.

Male role models

While I was in the corporate world, one of my first bosses was a woman. She was a Vice President at GE, a phenomenal boss, a mother of two children and an incredible mentor. She taught me a lot, didn’t believe in office face time and was strong enough to create her own workplace policies for the people who worked with her. But are we going to sit around and wait for senior women to solve all our problems for us? I hope not since we will be waiting around for generations to come. Besides we can’t bring about change by alienating 50% of the world and 95% of capital by not involving men in this change. Men very much need to be a part of this conversation, and a very big part of it. A female founder building a women’s health company should not have to wait around to pitch to a female investor to get her business funded. After all, most men that we know have a mother and many of them have wives, sisters and daughters. Surely, period health should not be a taboo topic for them?

I feel proud saying that my one and only role model in life was a man — my father. A natural born entrepreneur, a scientist by training who built a successful business by commercialising what he built in the lab. I learned many things him from him about leadership, about the importance of equity at all level levels of an organisation and about the benefit of diverse teams. I am who I am because of him. And it was in his memory that I kept my maiden name, even after I got married.

Involving men in the discussion is a very key part of bringing about the change we want to see in this world. I talk to many male investors at funds every day and I know it’s not all doom and gloom. Many tell me that diversity is very high on their agendas. Change is happening at a much faster pace than I have seen previously. The recent NASDAQ announcement pushing corporate boards to set a target to improve boardroom diversity could have a huge impact in a very short amount of time. I hope to see many more announcements from funds such as Swedish fund Kinnevik which publicly announced diversity targets for their management team and portfolio companies and allocated 10% of their investment budgets to be invested in women founders. Quick wins for funds include setting female office hours for founders such as those announced by Playfair Capital, expanding deal sourcing networks, diversifying venture partners, implementing unconscious bias training but most of all, tracking gender and diversity in our pipelines. For we know that we can’t change something that we don’t measure.

New laws, more capital or more founders will not change venture capitalism. Instead it will be the new breed of diverse VC firms backing a much broader set of founders. These people will create the future and it will be great. Expanding our world leads to an expanding return on investment. These returns can be obtained by making some much needed changes in the way we think and work. One of my first angel investments in a female founder was in Romi Savova, CEO of PensionBee, a fintech company in the UK. Those who have heard of Romi know what a force of nature she is. She is also mother to two kids and is looking to take her company public in 2021 on the London Stock Exchange.

As a mother of boy a boy and a girl, who sees no difference between her children, I leave you with one thought — a male partner at a VC fund who has a daughter is 25% more likely to recruit a female investor into his team. However, these odds seem to be fixed.

As we head into 2021, let’s think of diversity beyond social impact. Let’s use diversity to our advantage. Let’s leave this diversity legacy for our children and let’s change the odds.

*This is a slightly modified version of a recent keynote at Wayra Germany. It was first published on Deepali’s blog here.

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