VCs are often still a ‘men’s world‘. What can female founders do to still get money? This is revealed by the co-founder and CEO of the AI startup Summ.AI.
Flora Geske reveals how female founders can claim their own space Flora Geske; Getty Images / Hector Roqueta Rivero
In this guest article series, founders of the Digital Hub Initiative share their view of the start-up scene. They show how they overcame key challenges and drove their growth. A contribution from Flora Geske, CEO and co-founder of the data startup Summ.AI.
When it comes to funding, you quickly realize: It’s a man’s world. Most of the donors are men. It’s still far too rare to meet female investors. Worldwide, their share is less than ten percent. As a founder, I wasn’t impressed by this – even if it was difficult at times.
Our team is diverse, at least in terms of gender: two female founders, one founder. According to statistics, they are eliminated In Germany, eleven percent of all venture capital deals on such mixed founding teams. If the teams are all female, they only receive a meager five percent of the investment. Investments are primarily made in male founders. The lion’s share of German venture capital ends up with them. We would have liked to have maintained our quota even after fundraising and had predominantly women involved. Unsurprisingly, we didn’t manage to do that. We already knew that it would be very challenging to find any investors.
Gender Funding Gap: Men invest in men
In my opinion, the gender funding gap, i.e. the fact that female founders receive significantly less venture capital than their male counterparts, is due to the fact that when making a difficult decision, people are more likely to trust a person who is similar to themselves.
After all, you decide which startup to bet on with a lot of uncertainty. Since most investors are men, they unconsciously prefer founders. This different perception of gender can even lead to investors asking different questions in the pitch. A study has shown that they… ask the male founding teams about the potential successes of their company. Female founders, on the other hand, are more likely to have to provide information about how they want to prevent failure.
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There are now funds or initiatives that primarily want to provide female founders with capital. From my experience, these efforts have so far been rather toothless tigers. It’s usually about co-investments and there is clear hesitation – à la: ‘If an established lead investor with a big name is found, I’m happy to do so’. I can understand that, but it undermines the desired impact: with the well-known, large VC, in case of doubt, a man is once again in the decisive position. I wish I had more courage here, because the initial commitment is crucial!
We need more female venture capitalists
Women remain rare in the venture capital sector. Diverse teams with men and women are more successful – this applies not only to founding teams, but generally. So it’s always worth relying on diverse perspectives and decisions. I don’t believe that male investors are inherently more risk-conscious than their female colleagues. Especially in the angel sector, they have a different financial starting point, as in the past they were able to build up more capital when in doubt and can therefore take more risks.
If the gender pay gap closes in the future and women are given fair access to careers and start-ups, they will be able to take greater risks in the future. That’s why we need more successful women who are active as business angels after an exit or a corporate career. Lea Sophie Cramer and Tina Müller showed how it’s done. In order to bring about change, more role models are needed – not just for female founders, but also for female investors.
How female founders claim their own space
Given the facts, female founders should in no way be intimidated by an upcoming round of financing or even denied opportunities for venture capital. Courage and self-confidence have always helped me to overcome challenges – including our financing round. I advise every founder not to make himself or herself smaller than he or she is.
You are an expert in your topic, have already achieved success in your field and belong exactly where you are now. Even if you have a different age or gender than potential donors.
Approaching other people always requires courage. Last year my co-founder Vanessa and I went to countless events. There, women were usually in the minority or there were none present apart from us. The male guests were often older than us. It is now easy for me to imagine ourselves and our AI startup in such contexts. But it’s completely normal that you first have to learn to initiate a conversation confidently. This usually results in a very nice conversation. And if not: that’s ok too!
Preparing for the investor pitch is everything
For me, there is one thing that cannot be avoided before speaking to investors: being very well prepared. Be meticulous and make sure everything is correct. Especially when it comes to facts and figures. Be prepared so that you don’t end up in a situation where you have to improvise too much. If this happens, try to remain confident and always learn from the situation. Write down questions you weren’t prepared for and prepare an answer for the next appointment. And don’t put yourself under pressure: Hardly anyone masters the first pitch perfectly.
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I would like to start with our founding story. This is how I show my personal motivation. It’s best to do this so clearly that it’s clear that you’re passionate about your startup. People are interested in other people and I’ll get to the facts and figures later. The numbers and our traction – i.e. our previous successes – obviously play a central role. Even in a startup with a social impact, you should definitely argue why it is a good economic idea to invest.
Stay tuned
Be open, curious and never lose courage. Fundraising takes effort, but over time you build a very good pitch, personal resilience and a large network. And then nothing can actually go wrong – regardless of whether you are a founder!
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Flora Geske is CEO and co-founder of Summ AI. She studied business informatics at the Technical University of Munich and founded her AI start-up with two fellow students, which implements digital accessibility using the latest technology. The first product enables authorities and companies to publish accessible content in plain language at the push of a button, so that it is understandable for people with learning difficulties and little knowledge of German.