Business

Female entrepreneurs lead less than 10% of startups in Brazil, says Distrito

For comparison, in traditional entrepreneurship, 46% of companies are founded by women, which shows how innovation entrepreneurship is still a hostile environment for women

MAYA Capital's co-founders Lara Lemann and Mônica Saggioro. Photo: Courtesy/MAYA Capital
  • The number of male-only founded startups is almost 20-fold greater than those founded by women;
  • 65% of companies led by women were created in the last five years and more than half of them are still early stage;
  • Investments in female-founded startups are almost nonexistent: only 0.04% from the $ 3.5 billion invested in the market in 2020 was earmarked for startups led by them.

The leadership of women in the startup and venture capital ecosystem in Brazil has been practically stagnant for ten years: if in 2011 they founded only 7.9% of the companies in the tech ecosystem, ten years later they account for only 9.8% (being that in 5.1% women share the co-foundation with men). For comparison, in traditional entrepreneurship, 46% of companies are founded by women. The information is contained in the Female Founders Report by the innovation platform Distrito in partnership with Endeavor and B2Mamy.

The figure illustrates well how, despite the explosive growth of the tech ecosystem, innovation entrepreneurship is still a hostile environment for women and there is a long way to go before achieving greater gender diversity.

According to the report, 65% of companies led by women were created in the last five years and more than half of them are still early stage in product validation or at the beginning of their operations. In this context, 60% of the female entrepreneurs interviewed for the survey said that scaling the business is the main challenge.

READ ALSO: Women in leadership roles: 6 high executives on what it is like to be a female leader in LatAm

Other obstacles pointed out by the entrepreneurs were the difficulty to access investors, mentors, and entrepreneur partners (44.6%) and the difficulty to raise investments (38.8%). Investments in female-founded startups are almost nonexistent: only 0.04% from the $ 3.5 billion invested in the market in 2020 was earmarked for startups led by them.

This huge disparity was even the subject of an article by LABS, which shows that funding for female-only founded startups (including seed, venture, and corporate venture) went from $14 million in 2019 to zero in 2020.

Lara Lemman and Monica Saggioro are co-founders at Maya Capital, a venture capital fund that appears as the fund that invests most in female-founders proportionally, with 29% of its investments directed to them. They affirm that one of the reasons for this investment percentage for female founders being so small is the process of selecting startups.

“It was observed that in the investment analysis process there is a predominance of questioning in interviews with a more negative bias for women than men. While for men, aspects about earnings expectations are questioned, for example, for women, expectations of losses and actions to reduce risks are questioned”, they said in an article written for the report.

READ ALSO: $41 million VC fund MAYA Capital wants to bridge the investment gap for Latin American startups

Access to fundraising mechanisms itself is more difficult for female entrepreneurs: 72.4% of women who went through fundraising dynamics stated that they had suffered moral harassment due to gender during their interviews.

One of the changes in the venture capital market pointed as a solution by Distrito’s report is the inclusion of more women in this market, since 74% of the funds do not have women among their founders or on their boards.

Female entrepreneurs are the majority in fashiontechs

In the analysis by areas, the report shows that women are the majority in Fashiontechs leadership (more than 60% of fashion startups were founded by women); then there are the startups focused on Human Resources & People Management (26.7%), Social Business (24.1%) and Food (22.7%). Together, however, these sectors represent only 3.5% of the Brazilian startup ecosystem.

READ ALSO: A product targeting women, made and invested by women: Meet Brazil’s femtech Theia

About the Female Founders Report

Currently, the Brazilian startup ecosystem has about 13,000 startups, according to Distrito Data miner, the market intelligence arm of the Distrito.

For the report, a sample of 6,200 startups was evaluated and 400 female entrepreneurs were also interviewed. The report also showed that there is little diversity among women who lead startups: 76.5% of them are white, and 87.5% say they are heterosexual. Almost half of them say they do not have children.

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