Venture capital investment continues to prosper in 2022. After the UK start-up scene received a whopping $100bn of venture capital in 2021, there are high hopes for a funding focused future amongst the global start-up landscape.
2022 is set to be a year full of VC opportunities. As COVID-19’s push for digitalisation has seen online entrepreneurship on the rise, fast growth businesses continue to seek backing from a number of VC investors. From climate change to post-pandemic hybrid working, there are a number of trending investment hypes that are catching the eye of venture capitalists seeking significant returns.
However, while VC funding is at an all-time high, new studies show that only 1% of all VC funding in the UK went to female-led businesses and less than a quarter went to start-ups with a female founder on their team.
As we delve deeper into diversity within the venture capital world, let’s explore what the future could hold for female-focused investing and meet the VC leaders pioneering the way forward for a more equal future.
Is Diversity Still An Issue In The VC World?
Diversity within business practice is still within its infant stages. Nearly half of all employers agree that their company needs to diversify their hiring process and work on improving race and gender diversity within the workplace.
Studies show that teams that prioritise diversity are 15% more likely to perform better financially and are more likely to capture new markets in the process.
While the financial studies sway in their favour, diverse teams are still relatively rare, especially within the venture capital industry.
According to a 2019 report from Equal Ventures, over half of successful venture capital firms were led by white males, 11% by white females, and a shocking 1% led by black females.
It’s no secret that both female and minority VC investors are underrepresented in venture capital firms, but the industry needs to start making changes if it is to move forward with post-pandemic business trends.
“Equality, and diversity in all of its forms, is not just something that we should strive for because it’s ‘right’ from a moral perspective: there’s substantial research to suggest that it actually just makes better business sense. More diverse teams are typically more successful, due to the broader diversity of thought and ideas, which ultimately generates higher returns,” claims Beatrice Aliprandi, Principle at Lakestar.
According to the 2019 Morgan Stanley Report, venture capital firms that refuse to act on the data supporting the success of diverse entrepreneurs will miss out on significant returns in 2022. In fact, just under half of the firms surveyed didn’t even know how the returns from a company with a female founder compared to their current profits.
Could We See A Female-Focused Future?
The same Morgan Stanley report found that if the revenues for female entrepreneurs were proportional to their overall representation in the global labour force, it would generate over a trillion dollars in return.
In response, market experts suggest that VC firms need to start viewing female-lead business ventures as an emerging market in 2022, while also diversifying their own investing teams. With an abundance of funding options available for small businesses, VC firms need to be on the lookout for rising female talents.
Let’s have a closer look at some of the female-focused investing companies pioneering the way forward.
Meet The Female Focused VC Firms Diversifying The Industry
While a completely female-dominated VC scene may be far away, there are a number of female-focused VC firms rising up in the industry. From angel investors that specialise in early-stage funding for female talent to all female venture capital firms that aim to transform VC profiling, it’s clear that the future is, well, female.
Female Founders Fund
One of the VC firms that aim to support the female entrepreneurs of tomorrow is the Female Founders Fund, which invests solely in women lead ventures in an attempt to “balance corporate equality”
First founded in 2014, the VC group specialise in early stage funding for female-led startups ranging from wedding registry companies such as Zola all the way to Peanut, a social app for new mothers.
After finding that businesses with female founders performed 63% better than their male competitors, the VC firm believes that they can use their platform to empower a future of successful women.
Angel Investment Network
Angel Investment Network also strives to support women-led business ventures. With a network made up of 30 individual branches and over 300,000 investors on board, it has become the largest angel investment company across the globe.
Better still, this powerful VC firm is female-led and has used its platform to invest over £200 million into some of the UK and USA’s most innovative female startups.
Voulez Capital is a female-founded company that actively invests in female-only business ventures. Providing series A capital to fast-growth start-ups that focus on improving the daily lives of women across the globe, the company aims to help females thrive in and out of the corporate sector.
“I do not believe in equality. But I do believe in equality of opportunity,” states Anya Navidski, Founding Partner. “As Europe’s first VC for female founders, that’s exactly what we provide to our female founders. We level the playing field.”
While there is still a long way to go, female-focused VC firms continue to open their doors for a future of equality in the workplace. As more women work together, the VC industry could be set for a serious transformation that will see funding returns soaring as investing in diversity is prioritised.