Women entrepreneurs have long been overlooked by technology-focused venture capitalists. That may be changing in the Netherlands, whose largest city — Amsterdam — is seen as one of Europe’s central VC and tech centers.
A collection of 25 Dutch venture capitalists and TechLeap.NL, a trade organization focused on Netherlands entrepreneurship, vow to address the funding gender gap with a new initiative called #Fund Right. The group promises that management teams of their “current and future portfolio companies” will have more than one-third women employees. The groups also said that “a significant percentage of the companies” in which they invest will have at least one woman co-founder.
“The world (clients and all other stakeholders) is diverse and a monoculture risks not picking up different signals and needs from customers,” Constantijn Van Oranje-Nassau, special envoy for TechLeap.NL told Karma in emailed remarks. “Monoculture is likely to re-enforce the echo chambers that most of us but especially executives live in.”
#FundRight’s launch stems from a 2018 report — front page news in leading Nethelands business publication — that said VC firms operating in the Netherlands invested a minuscule 1.6% of their capital in ventures with female founders. The report, called Fixing the Funding Gap, also found only 6.8% of companies had mixed gender teams.
The totals fell below paltry sums the same year worldwide, where VCs sank 2.2% of their funding in all women-led enterprises and 19% in those with at least one female founder, the authors found.
One of the study’s co-authors, Janneke Niessen, serial entrepreneur and partner at CapitalT, said the funding gap reflects the VC industry’s entrenched comfort with male business founders.
“People invest in what they know,” Niessen told Karma. “When men get almost all the investments, they become the stereotype of a successful entrepreneur. They seem more bankable than people who don’t look like them.”
She added: “Women, people of color, it’s more difficult because they don’t look the stereotype.”
Female-led ventures often outperform male-driven companies. In a 2018 analysis, Boston Consulting Group and the U.S.-based business accelerator MassChallenge found that startups with at least one woman founder generated $730,000 over a five-year period compared to $662,000 for those of male counterparts — a 10% difference. The study found that for every invested dollar the women-founded firms generated 78 cents, more than double male-led startups.
Women compose a little more than half the population in the Netherlands, but the overwhelming majority of VC partners are male — similar to the U.S. and other countries. Fewer than 10% of decision-makers are female, according to a survey of 280 venture firms by the news website Axios.
Some skeptics say that organizations may resent the imposition of quotas. A 2011 Harvard Business School Journal article said that “quotas don’t necessarily increase the right kind of diversity.”
However, Alexander Ribbink, a general partner at Keen Venture Partners, which signed on to the #FundRight declaration, said in the TechLeap release that “VCs and startups that embrace diversity make themselves more versatile, resilient and stronger.” He added: “With FundRight, we want to create awareness and change in the venture capital industry, contributing to a strong startup ecosystem.
#FundRight will publish an annual update on gender diversity among Dutch VC investors and their portfolio companies. The update will help the group track progress and fill a reporting gap. To produce her study, Niessen had to collect data on VC funding in the country from different sources.