Diversity in startup ecosystems

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It might seem like there are more and more women founders and investors in the startup world, and that there are more initiatives than ever to bring women into the tech scene. However, the numbers show only slight progress in this area. There’s still a long path ahead to reach the point where women and men are in truly equal positions.

Recently we invited four role models of the startup world to share their experiences, observations, and advice in a panel discussion about women’s power in the startup world. The panel was led by Anna Gaudenzi, Editor at StartupItalia, and joined by Johanna-Mai Riismaa, CEO and co-founder of Zelos, Camilla Falkenberg, co-founder of Female Invest, and Fausta Pavesio, Business Angel, as participants of the discussion. 

The panel discussion was full of rich content and findings. We have highlighted the key points of the panel that speakers shared in light of available data and research. Some of the findings are drawn from the Baltic Startup Scene Report 2019-2020, as one of the big topics of this year’s report is diversity in the Baltic startup ecosystem. 

Number of women founders increase

For the Baltic Startup Scene report 2019-2020 brought to you by Startup Wise Guys, EIT Digital, and in partnership with Crunchbase as a content partner, we took a deeper, data-driven look into diversity among Baltic startup founders. To our knowledge this is the first such attempt for our region.

Crunchbase added gender-specific data in 2015 to its dataset, to begin to measure funding to women founders. We have seen percentages of newly funded companies with at least one woman founder increase over the last decade from 10 percent in 2009 to over 20 percent in 2020.

Gené Teare, Senior Data Journalist, Crunchbase

The data published by Crunchbase in their 2019 Diversity Report shows that in 2019 startups with a woman founder received only 13% of all seed, venture, and corporate venture investments, clearly showing the gender gap in the investment scene. 

In our report, we take a closer look at all Baltic countries and benchmark them against Nordics and CEE. We see that while Lithuania is clearly taking the lead by having 20% of founded startups in 2019-2020 with at least one woman founder, Estonia is catching up with 13% of startups having a woman founder, and Latvia is lagging behind with this number being at just 6%.

Our panelists also touched upon the data, and while they come from three different countries – Estonia, Denmark, and Italy – with Denmark being ahead of other countries in terms of gender equality, the question of having more women entrepreneurs is equally pressing across Europe. 

Why don’t we see more women founders and investors? 

Lack of knowledge, the thought that one needs to know everything before getting into something, and fear of failure were named among other things as reasons that hold women back from taking the entrepreneurial path. 

We see it a lot that for women feeling that they need to be experts in everything is what holds them back from investing. And that does not mean that they are risk averse, it just means they like to know what they are getting themselves into before they get started. Risk aware, not risk averse.

Camilla Falkenberg, co-founder of Female Invest

An important note Johanna emphasized is that there’s not enough bad examples for women. “The idea of having to be perfect, of having to be right, to do the correct things, is more present with women that it is with men. The fear to do things that you have never done before, because it feels like the possibility for failure, is grand! Yes, it is! But it’s okay to fail, because that’s how you learn. It’s okay to be imperfect because that’s what makes you better,” said Johanna. She mentioned that for some reason men are more ok with sharing failures and stories of how they tried again, but that among women these examples are missing, and therefore women are holding back as they think they need to be perfect.

Throughout the panel all three speakers agreed on the same things that are vital for more women to consider becoming entrepreneurs and Camilla summarized it nicely. 

  1. We need to highlight role models. If you can’t see it, you can’t be it. 
  2. We need more educational offerings not only for potential founders, but also VC’s. 
  3. We need policy initiatives to help out with the risk factors such as maternity leave.

There is a high degree of unconscious bias and women don’t get the benefit of the doubt. There’s typically some sort of idea that it’s more risky to invest in women than it is in men even though women actually tend to do really well once they do take the leap and become entrepreneurs.

Camilla Falkenberg, co-founder of Female Invest

All of these things come together if we acknowledge the fact that we, people within the startup ecosystems of our own countries, actually live in a startup bubble. We believe that everybody knows about startups, becoming an entrepreneur or various investing opportunities, but it’s not true. It was Fausta who emphasized this fact, by saying that if you’d talk with a random person on the street, they’d know nothing about what you are talking about. Therefore it’s also a responsibility for every startup ecosystem player to make sure to educate people and especially women about their opportunities, in that way also breaking the stereotypes that becoming an entrepreneur is more for men. 

It was hard in the arts, where I was. It’s a really, really tough area to be in. So everything that had to do with business sounded even more difficult. And now that I have seen both sides I can say – it’s at least as hard to succeed in the arts, but somehow women are fine with that! We have these arts management programs full of girls, but it’s exactly the same program as business management which is mostly full of boys. The core skills are exactly the same. The difference is – when you are an arts manager, you pull off these huge events for thousands of attendees without any budget. You have a golf cart and a roll of duct tape, and you pull it off. Because that’s what you do! And then in business management you learn that you need a budget, you need to fundraise, and so on. The core skills are the same, but these are somehow different programs. And why – I don’t know!

Johanna-Mai Riismaa, CEO and co-founder of Zelos

Diversity is not just about the gender balance

Even though discussion about the importance of gender balance is the most common start of the diversity conversation, it goes way beyond that. In last year’s Baltic Startup Scene report we looked at the number of women in tech across Europe. This year – with help from Crunchbase – we deepened the diversity topic by looking not only at founders’ gender, but also their background like education and international experience. And while we believe this topic needs a dedicated report of its own, we hope our analysis in this report will serve as a stepping stone forward.

All our panelists agreed that even though there’s a need for a push towards more women entrepreneurs, the startups who succeed the most are the ones who have even more diversity in their team be it gender, nationality, education or any other experience.

Having different countries and different cultures talking to each other will add value in any case. For example, people in the Baltics, Nordics, and Ukraine are very good with tech, while Italians are better at communication or creativity. Mixing these skills would help.

Fausta Pavesio, Business Angel

Johanna pointed out the overall need of having different backgrounds and knowledge: “It’s always hard to deal with homogenous teams. It’s very human to get stuck in a bubble if everyone in the vicinity is like you. If it’s all men, all women, all teenagers, all Estonians whatever this homogeneity is it makes it very, very hard. Therefore it is a very, very good thing to have complementary skillsets to cover each other’s shortcomings. Having this otherness near you brings extra level of respect and attention. This is why it’s crucial to have diversity.” 

Just by googling it you can quickly come across articles like this one from Forbes on “Diversity As $uperpower” and others about research on how diverse startup teams – be it based on gender, ethnicity, or any other factor – actually perform better. A good note to end on is Johanna’s advice at the end of our panel discussion (and while it was directed more towards women, it’s a good thought to keep in mind for anyone who has felt like holding back): “It does not matter. Nobody is judging. Get over it. Start having fun. Just be yourself. You are wonderful. You will be successful if you do that.”