Gender equity in fintech is still a ways off, Deloitte report finds.
The fintech industry has long been dominated by male founders. New research released Thursday highlights this ongoing gender disparity.
At the same time, the Deloitte report offers a glimmer of encouragement for women-run fintech start-ups—and suggestions for leveling the playing field.
The analysis shows that women-founded startups and those co-founded with men comprised 12.2% of the 3,017 fintechs in 2019, only slightly higher than the 10.9% (of 411 startups) recorded in 2010.
Why the disparity? “We are operating at the intersection of technology and finance, which are notably two industries woefully under-represented by women,” Alaina Sparks, Deloitte’s US fintech leader, tells Forbes. “The issue can be exacerbated by bias from those who have tremendous influence in providing the necessary capital to be successful—financial, social, and human capital,” she says.
Encouragingly, more dollars are being directed toward women-founded and co-founded fintechs, yet an imbalance still exists. Just 1.3% of the $40 billion funding raised in 2019 went to companies founded only by women, up from 0.6% (of $14 billion) in 2015. Meanwhile, fintech startups with at least one woman co-founder experienced a more notable boost, Deloitte says. Their share of the total investment pot rose by five percentage points over the last five years, to 11.2%. This improvement, however, still represents a comparatively small share of overall funding, the report notes.
Also telling is how women-led businesses have fared in the amount they raise per deal. Between 2015 and 2019, women-founded fintechs, on average, raised $8 million per deal in venture capital—50% less than fintech startups founded only by men. Founding teams with both men and women received $15.1 million per deal, on average, just 3% less than the $15.6 million per deal received by male-founded startups.
While the fintech industry has made some progress, it’s clear from the data there’s more work to be done. The Deloitte report calls on investors, women founders, and financial institutions to take actions to improve these outcomes.
“We need more women in influential roles across the fintech community broadly – investors, advisory firms, educational institutions, and financial institutions alike,” Sparks tells Forbes. “As seen more broadly, more women in the C-Suite results in more women across senior leadership teams, and more women making investment decisions results in more funding for women-founded startups,” she says.
What’s more, investors, and all decision-makers across the ecosystem, need to regularly ask themselves if they are being biased. For instance, are we asking men founders and women founders the same questions and probing around the same topics? Sparks says. Influencers and decision-makers also must make an effort to build and expand a more diverse network; specifically things such as leads, referrals, and introductions need to come from a broader community, she says.
Additionally, “we need to provide greater education and empowerment for women to take a chance in this space—to pursue answers and experiment with solutions,” she says.
It’ll be interesting to see where things go from here. The fintech industry blossomed after the 2008 financial crisis, and the same could be true in the wake of the pandemic, Deloitte opines.
Here’s why. It’s possible that the disruption could be a good opportunity to help level the playing field for female fintech leaders, whose resiliency and capability may become especially evident during times of crisis. Certainly, investors shouldn’t write these businesses off. To do so could mean missing out on important growth opportunities, the report notes.