Hunkering down in harsh times doesn’t necessarily mean we should batten down the hatches on female workforce participation as well. FinTech, just like crypto and other high-tech fields, is known to be the domain of men. While exceptional female FinTech initiatives are breaking through, male-dominated Venture Capitalists may prevent others in their wake.
Gender Disparity in the FinTech Ecosystem
When it comes to women in the workplace, one could often hear the sentiment that they should not seek special treatment if they want to earn the respect of their peers. Superficially, this may sound reasonable, but can you ever achieve a significant foothold in areas already dominated by others? After all, when men dominate a certain space, they unwittingly establish a set of rules and norms that are suitable for other men.
In light of this, we should strive to improve the state of women in FinTech, and especially in Venture Capital investments (VC). Case in point, Innovate Finance’s 2019 Venture Capital Investment Report accounts for only 17% of female founders in the FinTech sector and merely 3% in VC. Although women are rated highly in their leadership roles, according to Harvard Business Review, this could also be a double-edged sword.
No doubt, women who elevated themselves to the top echelons of their business sphere had to overcome ancient stereotypes, male-dominated rivalry, and other subtle challenges too numerous to count. However, if we were to deploy blanket incentives for the sake of numerical gender equality, would we, in fact, create a framework that makes women less happy and more resentful?
More importantly, should this be done anyway to level the playing field? Especially now, when even the few female positions in FinTech are threatened by coronavirus fallout?
Those women who rightfully established themselves in leading FinTech roles, like Dr. Ruth Wandhöfer of Gauss Ventures, portray a dire state of women involved with FinTech small businesses. She cites a LendIt survey that concludes women constitute 37% of the FinTech workforce, of which only 19% are holding C-suite positions: your chief executive officers (CEO), chief financial officers (CFO), chief operating officers (COO), and chief information officers (CIO).
As always, VC is the sector with the overall least women participation, at only 7%, according to All Raise report. As coronavirus fallout hits everyone across the board, Dr. Wandhöfer warns that this should be precisely the time to take steps in preserving the female initiative in FinTech:
“Female-led fintechs are already a rarity that needs protecting. This crisis shows that there is still no equality when it comes to treatment around financing and it is now more urgent than ever to ensure that entrepreneurs in general are treated equally.”
Another important point we should all consider is that women have a unique perspective on the challenges that face other women, which constitute half the population. Moreover, women are key household decision-consumers and tend to be more appreciative of the obstacles women face in striving to achieve a balance between family life and professional life.
Serving as an advisory partner at Concrete, UK’s VC company, Angelica Krystle Donati, frames such challenges succinctly:
“Women and minority-led firms are often smaller in size and therefore have less established banking relationships and are therefore less creditworthy. Women, who bear the brunt of childcare responsibilities, have had to compromise.”
Fortunately, women with an entrepreneurial spirit don’t wait to be given an opening. Instead, they seize the opportunity and meet the demand. One of them is Sallie Krawcheck, founder of Ellevest. The platform was specifically designed to bring finance to women, although both genders can use it to great effect thanks to its robo advisor algorithms.
Coronavirus Relief Reveals Business as Usual
Even within the framework of the UK’s Coronavirus Business Interruption Loan Scheme (CBILS), female-led FinTech has to take a back seat. Sylvia Carrasco, CEO and Founder of Goldex, explains why this is so:
“Established businesses generating revenues can get access to grants and loans. But what do you do with startups where revenues are not the main metric and they are generally still profit losers?”
Because the UK holds a record number of FinTech startups in 2019, eliminating them from the relief pool would take a huge long-term toll on countless initiatives and employment opportunities, with women hit the hardest. The Future Fund may help, but only those startups that were funded by VCs, which are notoriously male-dominated. Caroline Plump, the Founder and CEO of Fluidly, expressed this concern:
“So many of the support schemes – like the Future Fund – might well entrench this inequality as they use previous backing as eligibility criteria.”
To counter this problem of entrenchment, Liza Russell, CEO of Inbotiqa, argues that women should partake in strategic decisions that take place out of public’s sight, in well-secluded board rooms. By providing such a diverse perspective, tested by being at disadvantage, women could prove critical as their perspective aligns with demographics that go far beyond gender classification.
Many fear diversity quotas as a threat to meritocracy if we take a blanket approach. On the other hand, the argument for the many downsides of structural exclusion has merit as well. Can we achieve the balance between the two? We’d like to know what you think in the comments section below.