Venture Capital/Analysis/

Surprise, surprise: Female founders are still underrepresented in German tech

The share of female founders is just 20% in one of Europe's largest ecosystems

By Miriam Partington in Berlin

We all know the drill by now: European tech has an abysmal track record when it comes to gender diversity in startup teams. 

And now we have more data to remind us that — despite some small gains — things are still really not great in one of the region’s biggest ecosystems.

In Germany, the share of female founders in the startup ecosystem is just 20.3% — though this figure has been steadily rising since 2018, according to the 2022 Female Founders Monitor report by the German Startup Association and recruitment platform Stepstone. The report surveyed 1,976 startups in Germany. 

Female founders are significantly underrepresented in Europe thanks to factors including investor bias, poor childcare support and, in some countries, fewer women taking business or tech-related degrees.

Perhaps more encouragingly, there’s also been an increase in the diversity of founding teams in Germany: in 2021, 31% of founding teams included at least one woman, which increased to 37% this year. The report did not mention founders who identify as non-binary. 

But what barriers still remain for female founders in Germany? Here are our key takeaways from the report. 

Family responsibilities fall heavier on women than men

Women are still handling the majority of the childcare in heterosexual relationships, which affects the number of hours they are able to work on building a business, says the report. 

The pandemic highlighted the negative impact a lack of childcare support can have on women’s careers: in 2020, a quarter of women globally were considering stepping down a rung or two in their careers or leaving the workforce altogether due to caregiving responsibilities. 

Female founders with children in Germany work on average 47.4 hours per week, while their male counterparts work 55.8 hours, the report found. 

That women are disproportionately affected by childcare duties is perhaps reflected in their choice of workplace: 48.9% of women prefer to work from home, compared with 40.8% of men.

It’s no surprise that 81% of female founders say that more parental support — to enable people to better balance family and entrepreneurship — is key to strengthening the startup ecosystem as a whole. 49% of male founders agreed. 

Unsurprisingly, funding remains a challenge for female founders

The lack of funding for female founding teams is a well-known global problem; a slim number of firms investing exclusively in women founders have popped up in Europe as an antidote. 

The gap in financing is not for want of ambition on the female founders’ side. 65% of female teams in Germany plan to raise external capital, compared with 70% of male teams. 

Female teams are just as likely to raise funding as men too, according to 1,976 startups surveyed by the report; 62% of female founders receive funding in Germany against 64% of male founders — but in significantly lower amounts. 

In 2022, male teams raised €9.7m in funding, while female-only teams raised €1.1m — that’s nine times more capital for male teams. 

The picture isn’t much better Europe wide: in 2021, just 1% of total VC funding was invested in female teams.

Access to angels is difficult for female founders

The graph below shows that there’s a huge gap when it comes to support from business angels — female founders typically ask for more capital from angels yet receive less. 

Six out of ten startups with female founding teams would like to receive angel funding, but so far only 31% of female-founded companies have received it. This gap is significantly smaller for male teams. 

Angel investors have a big role to play in closing the gender funding gap, particularly at the early stage, concludes the report, but gaining access to angels remains a challenge for female founders.

Germany needs more female business angels

Only 6% of female founders are business angels in Germany, compared to 15.6% male founders. It’s a similar story in the UK, where just 14% of angels are women. 

This imbalance makes it more difficult for women in raising investment, according to the report. 

Anecdotally, female-founded startups are much more likely to get funded if they have a woman on their cap table. 

Angels who have founded businesses are also important influences for up and coming female business owners: they can share their experiences and make introductions in an industry where having the right network is often key to success in fundraising.

Miriam Partington is Sifted’s DACH correspondent. She also covers future of work, coauthors Sifted’s Startup Life newsletter and tweets from @mparts_

Join the conversation

avatar
  Subscribe  
Notify of