Positive discrimination needed to remedy shocking under-investment in fintechs founded by women

I am currently working on an analysis following the publication of Innovate Finance’s latest report.

I thought I would do a quick blog first to give people the opportunity to air their views while I put together all the comment I have already receive.

The report, which looks at fintech investment in the UK, contains a shocking bit of detail about the disparity between the amount venture capital money invested in fintechs founded by women.

Only 3% of the total venture capitalist investment in UK fintechs of £2.61bn in 2018. That’s only £54m.

Charlotte Crosswell, CEO at Innovative Finance said this is pretty shocking in terms of how much venture money goes to female-led businesses. “There’s absolutely no reason why that is, apart from the fact that a lot of venture capitalists don’t have women on the investment team.”

I think “pretty” shocking is an understatement.

I have contacted a few senior women in UK fintech and have had some great responses. For example I spoke to Sylvia Carrasco, CEO at gold trading fintech platform Goldex.

As an entrepreneur and seasoned financial services executive she has experience at first hand.

She said the venture capitalist (VC) sector is one of the few remaining boys clubs and although she is not usually in support of positive discrimination, VCs need to be forced to change.

But this will not be easy.

She said that VCs, which are male dominated, even ask women and men different questions when interviewing them about their businesses. “A study from Harvard found that the questions they ask men a geared towards success such as ‘what are you going to do when you achieve this valuation’ whereas the questions for the females were ‘what happens if you do not achieve the valuation’.”

She said if 15% of total venture capitalist investment was in female led fintechs the industry would have to work on strategies to address this but as it is 3% positive discrimination might be the only way.

The problem is that to attract investment to a fintech the founders need to have years of experience at the most senior level in the finance, which itself has a lack of diversity and is dominated by men. Fintech needs to overcome this problem.

She gave me some other great insights which I will expand upon in an analysis article.

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