Why invest in female founders? They’ve been outperforming for years, so clearly, they don’t need the extra help…
(re-read that while I quietly remove my tongue from my cheek)
In the fast-evolving world of fintech, disruption is always the name of the game. Startups are redefining banking, payments, and everything in between. Innovation is coming through at pace: thicker and faster than the regulator can keep pace with.
But, for me and many, many others, there’s a nagging disconnect that continues to persist.
While the startup world thrives on new ideas, one glaring old-world issue remains: the chronic underinvestment in female founders.
Despite well-documented evidence that gender-diverse teams generate higher returns, many investors and venture capitalists (VCs) are still moving at a glacially slow pace to embrace the potential of female-led fintech startups.
Why is this, and what are those investors missing out on?
The Data Doesn’t Lie – Female Founders Outperform
It’s Women in Tech Week – so let’s cut to the chase. Numerous studies show that companies with female founders and gender-diverse teams outperform their male-only counterparts.
A 2020 report by the Boston Consulting Group found that startups founded or co-founded by women generate 10% more revenue over five years than those founded by men, despite receiving a stupidly small percentage of the total funding and less than half of the typical allocation when it does occur.
Imagine that. A double whammy of generating more with less!
And it doesn’t stop there. Research from First Round Capital also highlights that companies with a female founder performed 63% better than their investments with all-male teams. So why does the disconnect persist?
Theme One: Investor Bias – The “Pattern Matching” Problem
One of the main culprits is what the venture capital world calls “pattern matching.”
VCs tend to invest in founders who fit a pattern they’ve seen succeed before — the familiar is often white, male, and from prestigious institutions. It’s a kind of unconscious bias that acts as an invisible gatekeeper, keeping female founders at bay. Investors, like everyone else, can get caught in a cycle of risk aversion, looking for comfortable markers of success rather than embracing diverse leadership, even when the data proves they should.
It’s not just about gender either — women are more likely to be pigeonholed into sectors like fashion or beauty, while fintech, AI, and deep tech are seen as the realm of their male counterparts. This not only limits women’s access to capital but perpetuates a narrow view of what female entrepreneurs can achieve.
Theme Two: The Confidence Gap – A Self-fulfilling Prophecy?
Another possible factor is the so-called “confidence gap.”
Some studies suggest that women tend to be more conservative in their financial projections when pitching to investors. They may understate their potential, whereas men, in general, are more likely to overstate theirs. As a result, female founders may not project the “big vision” that VCs often look for. This can lead to a self-fulfilling prophecy where women are less likely to receive funding, not because they are less capable, but because they aren’t playing into the same game of exaggerated expectations.
Theme Three: The Networking Gap – Fewer Opportunities to Connect
In the VC world, who you know is often just as important as what you know.
Men dominate investor networks, and this has a huge impact on female founders. While male founders might find themselves invited to a casual round of golf or an impromptu drinks meeting with potential investors, female founders are often left outside the circle. This means fewer opportunities to build rapport with the right people, leading to less investment. Women face an uphill battle trying to break into these informal yet highly influential networks.
Theme Four: The Reluctance to Invest in “Non-traditional” Leaders
A final theme that may explain the gap is a reluctance to invest in leaders who don’t fit the traditional mould of what a ‘fintech founder’ looks like.
Many female founders challenge the status quo not just by their gender, but also in the way they approach leadership, company culture, and product development. They may emphasise collaboration over competition or focus on solving societal problems that don’t always scream “high returns” to the average investor. However, these “non-traditional” approaches often lead to more sustainable business models, better employee retention, and ultimately, higher long-term returns.
Missed Opportunities – When VCs Overlook Female Founders
There are several cautionary tales of investors passing on female founders who then went on to achieve massive success.
One prime example is Sara Blakely, the founder of Spanx. In its early days, she struggled to get any VC interest at all. Fast forward to today, and Spanx is a billion-dollar business, with Blakely now sitting pretty as one of the world’s youngest female billionaires.
Then there’s Whitney Wolfe Herd, the founder of Bumble. Originally rejected by male investors who didn’t believe in a female-focused dating app, she’s now the youngest self-made female billionaire and the CEO of a publicly listed company.
The Winds of Change – VCs Who Get It
Not all is lost, though. Some investors are beginning to see the light.
Firms like Backstage Capital, led by Arlan Hamilton, are making waves by focusing on underrepresented founders, including women. Hamilton’s firm has invested millions in diverse founders and is showing that inclusive investment strategies are not only good for society but also great for business.
BBG Ventures, co-founded by Susan Lyne, is another example, focusing on startups led by women and underrepresented groups. These firms are part of a growing movement proving that diverse teams create stronger, more innovative companies.
So Let’s Change the Narrative
The numbers don’t lie: female founders and gender-diverse teams outperform their male peers. Still not convinced? Let’s flip the script.
Call to Action #1: If you’re a female founder in FinTech, Capital Markets, DeFi, or Web3 — or thinking of jumping in — don’t wait for the world to catch up! Drop us a line at Kaimeta or contact me directly. We’re here to extend our network and help you build that unicorn. After all, the future needs more of you.
Call to Action #2: Starting a company but missing a female co-founder? Time to rethink your roster! Why not expand your horizons and search for talented women? Or better yet, reach out to us — we might just know the perfect female co-founder or advisor to help turn your startup into the next big thing.
Call to Action #3: If you’re an experienced woman in FinTech, Capital Markets, DeFi, or Web3 and ready to shake things up as an advisor, let’s talk. Kaimeta is building a future where your expertise isn’t just welcomed — it’s essential. Introduce yourself, and let’s make waves together.
Call to Action #4: Investors and VCs, time to put your money where the future is—female founders. If your portfolio isn’t exactly brimming with diversity, maybe it’s time for a change. The pattern-matching game isn’t just outdated; it’s holding back your returns. Why settle for less when the real disruptors are right in front of you? Let’s chat about how we can help you assess your portfolio or startup with a fresh perspective.
And while you’re at it, take a hard look at your current investments. How many women are leading the charge? If the answer isn’t impressive, maybe it’s time to diversify to female founders. Not only are they best placed to redefine fintech… your portfolio’s bottom line will thank you too. Please contact me to discuss how we can help identify, assess or support your portfolio or individual companies with a different lens.
Final Word
Diversity really ISN’T a buzzword. It’s a proven strategy for success. The next billion-dollar startup might be led by someone very different from what you’re used to: if they don’t fit the traditional mould, they might just be the Unicorn you’re looking for.
Contact us to discuss how Kaimeta can collaborate with you or your project.