After all records for start-up financing were broken worldwide in 2021, rising interest rates, economic uncertainties, inflation and an impending recession have severely clouded the market environment. Investors around the world have therefore become much more cautious – also in Austria. But in 2022, local start-ups still collected one billion euros. Female founders are still at a disadvantage here. Almost 90 percent of the financing volume went to startups and scale-ups with all-male founding teams. This is what the new Female Start-up Funding Index Austria from Female Founders, “Fund F” and EY says.
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In 105 of 130 financing rounds in 2022, the founding teams consisted only of men – that corresponds to 81 percent. In 23 rounds of financing, the founding teams consisted of male and female founders (18 percent). In 2022, there were only two rounds of financing for purely female management teams – this corresponds to around two percent. This means that female startups, i.e. young companies with at least one woman in the founding team, receive a below-average number of investments.
“The venture capital market is still predominantly a ‘boys club’. Almost nine out of ten euros invested in Austria in 2022 went to all-male start-up teams. This is also due to a still strong structural imbalance: the proportion of female founders in Austria is not even one fifth, and even lower among female investors. As many studies show, male investors invest primarily in male founders. These numbers underline how important initiatives for female entrepreneurship and female investors are, as well as special funds for investing in gender-diverse teams,” says Florian Haas, Head of Startup at EY Austria.
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Fund F invests in gender-diverse teams
“Mixed teams show a significantly higher level of resilience, which is a success factor, especially in uncertain times. On the other hand, mixed teams have historically had a harder time fundraising and had to be even more persuasive than their all-male competition. This means that mixed teams are used to showing better performance in terms of product and company development and are therefore less deterred by the current situation. In addition, gender-diverse teams often build companies that have a strong impact mindset and are therefore exactly the kind of companies to invest in now,” says Lisa-Marie Fassl, Managing Partner at Fund F.
The venture capital fund Fund F is worth twelve million euros. He relies primarily on gender-diverse teams and impact-driven business models, especially in the areas of health tech, fintech, climate tech and HR tech. “With Fund F, we are addressing the difficult financing situation of gender-diverse teams on two levels: On the one hand, we invest in companies with at least one woman in the founding team. On the other hand, in our fundraising, we specifically address women who have the financial means to invest in venture capital funds. With 36 percent female investors who have invested directly in Fund F, we have succeeded in motivating women to invest in this asset class,” says Fassl.
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Female investors can trigger a “positive spiral”.
A total of 130 startups with 294 founders completed at least one round of financing in 2022. Only 26 of these 294 founders and thus every eleventh founder were female. This means that the proportion of founders with an investment round of nine percent is well below the annual average (17%). The proportion of women in the founding teams is highest in the sectors AgTech (40%), hardware (18%) and mobility and health (16% each). In six of the 14 sectors examined, there are no women in the respective founding teams.
“Austria has the highest proportion of startups with at least one female founder in the EU. Especially in the last few years there have been very positive developments towards greater gender diversity and more female entrepreneurship. However, the following still applies: the higher the growth phase and the higher the financing volume, the lower the proportion of women. One reason for this is the extreme male dominance among business angels and venture capitalists. It is important to set a positive spiral in motion here: if female founders receive financing and make a successful exit, this increases the proportion of female investors, which in turn increases the opportunity for investments for female founders,” explains Haas.