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6 ways to jet set funding for female-led fintechs in the UK

women-fintech

Georgia Hanias, a fintech specialist in the UK tech space, speaks to some of the UK’s leading female investors to discuss the issue.

Despite the pandemic and fears over Brexit, the UK’s technology sector attracted record levels of investment in 2020. According to Tech Nation’s recent report, tech startups and scaleups in the UK more than doubled their collective value over the past four years. The total industry is now valued at over £400 billion, which is more than any other nation on the continent, and double the next most valuable European scaleup ecosystem, Germany.

One of the most robust tech sectors is fintech, where the UK remains a global leader. According to trade body Innovate Finance, investment into UK fintech stood at nearly £3 billion in 2020 – more than the next four European countries combined.

How to attract more investment to women-led fintechs?

Female-founded fintechs accounted for 17% of the UK’s total fintech venture capital (VC) investments over 2020, up 6% from 2019. In total female founders landed more than £500 million in funding. 

While this is a significant increase, female leaders in fintech are still underserved by the investment community. They make great entrepreneurs and statistically outperform the industry average with higher returns. 

What can be done to attract more investment to women-led fintech firms and to level the playing field? 

More females in leading positions 

“The most important thing is for the ecosystem of investors and entrepreneurs to understand how outstanding female leaders are in bringing about sustainable business success,” says Dr. Ruth Wandhöfer, principal investor at early-stage fintech investment firm Gauss Ventures.  

“This is still a slow process, despite so much factual evidence out there. Having more females in leading positions in venture capital, family offices and other investor communities such as angel networks would certainly be a good start. It is about bringing in that different perspective and approach that will enable successful outcomes.”

More diversity

Bindi Karia, founder of boutique advisory firm bindi ventures and venture partner at Draper Esprit agrees but believes different backgrounds and experiences are equally vital to backing the best new talent. “We need diversity in the investment world to move things forward but I have seen progress over the past few years with more women entering the profession. On top of this, funds are looking at ESG metrics to make investment choices – which means investors are increasingly using gender as a measure of sustainability for business. This will help bring more investment to women,” she explains. 

“We also want individuals – man or woman – who come into the VC space to hold different perspectives and backgrounds that can see opportunities that others don’t. Just because you’re a female VC doesn’t mean you will understand female entrepreneurs better than your male counterparts – and it also doesn’t mean you are more likely to invest in them either. Having said this, we can begin the process of welcoming more entrepreneurs through the door and if their pitch isn’t for me – explain why and offer constructive feedback on how their business model can be modified to appeal to investors.” 

This kind of helpful support should be available to all female founders across all fintech verticals, including male-dominated environments such as the world of cryptocurrency. 

Looking past common biases 

“Startup teams that comprise of diverse founders build faster, distribute more effectively and sell better,” says Min Teo, who leads venture investments at ConsenSys Mesh, which backs blockchain ventures and crypto assets, and deploys capital and resources to the most innovative companies building solutions throughout Web3. 

“There is a tangible business reason to support equal opportunity and elevate diverse founders. However, we have to remember that every day, female founders are told that they aren’t technical enough, aren’t charismatic enough, are too aggressive or not aggressive enough. The microaggressions are endless. As one of the only female general practitioners in the crypto venture capital space, I can attest to this first hand. I am grateful to my investors and portfolio founders who are able to look past common biases and focus on what matters, and hope that more investors will check their biases and realise the incredible business opportunity of backing female founders and diverse teams.”

Demystify the processes 

Investment literacy is also important, and Marieke Flament, CEO of Mettle, a free digital business account for sole traders, startups and freelancers by NatWest, believes more needs to be done to help women navigate the funding landscape. 

“Through the Alison Rose Review into Female Entrepreneurship, we saw that over 40% of women did not know where or how to start the process of seeking funding, so it’s clear that our industry needs to work together to demystify that process for female business owners. Online resources such as the Invest in Women Hub, launched earlier this year, bring together educational materials and open funding channels for women at all levels of business to help take them to that next step. If we combine this with a sustained commitment from VCs to support more women, we should see a more balanced playing field for female-led businesses in all sectors, such as those we help start their business journey with Mettle, all the way through to scale up success stories of the future.”

Successful female-led fintechs should help more female entrepreneurs

The growing number of successful female lead fintechs should also help to convince investors to back more female entrepreneurs. 

“As we see more exits in fintech companies led by female founders, we will see more funding flows into women building large, scaleable fintech companies,” says investor and advisor Deepali Nangia. She is also a venture partner at Speedinvest, focusing on female founders pre-seed and seed transactions. “I am personally very excited about my own investment in fintech PensionBee, founded by female founder Romi Savova, which is looking to go public this year.”

Another shining example is Starling Bank, founded by Anne Boden. The digital bank is one of only five companies to become a UK tech unicorn – and the only female-led business to achieve this impressive milestone. Anne Boden is also the only woman in this country ever to have founded a bank.  

Her autobiography- Banking on it: How I Disrupted an Industry– divulges the challenges of securing funding especially if you don’t fit a male banking stereotype.

“I’m a woman. I’m 5ft tall. I’m Welsh. I’m middle-aged. I’m from a very ordinary background and I’m the sort of person who’ll chat to somebody in the ladies!” She told The Guardian “Fintech startups are all young white guys with goatees – usually with rich parents. People did think I was crazy, that no one ‘starts a bank’, especially people who looked like me, but I’d reached the stage where I was prepared to fail. I was 54 and confident enough not to care if somebody said I was stupid.”

Government should play a more active role

Her self belief has paid off and the rest – as they say- is history. If Starling Bank and PensionBee’s success stories aren’t enough to get investment flowing to entrepreneurs, then we need more supportive legislation to shake up the funding landscape and level the playing field once and for all. As Dr Ruth Wandhöfer explains: “If things are still moving too slowly in the context of funding female-led fintechs, the government should play a more active role in promoting this or even incentivising it.” The potential economic opportunities are simply too big to ignore.