In an era where diversity and inclusion are increasingly becoming the cornerstones of successful businesses, the role of women in the technology sector is gaining significant attention. A recent report by Dealroom and the European Institute of Innovation & Technology provides an enlightening perspective on this subject. The report, titled The Landscape of Women-founded Scaleups and Investors in Europe, offers a comprehensive analysis of women-led scaleups in Europe and their impact on venture capital (VC) investment and growth.
Value creation
The report estimates that as of April 2023, Europe is home to more than 600 scaleups (co-)founded by women, amassing a combined enterprise value of €70 billion, a remarkable 6.5-fold increase over a span of five years, outpacing the average of 5.5 times. The average age of these companies is 7 years. With a median team size of 88 people, they have collectively contributed to the global employment sector by creating 74,000 jobs.
While women-founded scaleups represent 8% of the total value of all European scaleups, they are growing at a rate 1.2 times faster compared to the rest. However, the distribution of this value creation is not evenly spread across Europe. A significant portion (73%) of the value generated by women-led scaleups is concentrated in three countries: the UK, France, and Germany. Nevertheless, these businesses account for just around 12% of the overall scaleup value creation. This indicates that despite the substantial contributions of women-founded scaleups, their representation within the broader scaleup ecosystem in these countries remains limited. Other European ecosystems like Finland, Italy, and Portugal show slightly more diversity in terms of the share of value concentrated as a total of the country's scaleup value creation. It suggests that while the larger economies dominate in absolute terms, smaller countries are making strides in fostering a more diverse scaleup ecosystem.
Funding pathway and sector highlights
The funding pathway for women-founded scaleups presents unique challenges and opportunities. The report indicates that these companies might face challenges when starting out, as the gap in median round size is more pronounced at the seed stage, implying that women entrepreneurs may encounter more difficulty in securing initial funding compared to their male counterparts. However, the report also uncovers a promising trend. Seed-funded women-led scaleups convert to series A at a higher success rate than the overall European benchmark, which means that once they overcome the initial funding hurdle, they demonstrate a strong capacity for growth and success.
The report provides an insightful analysis of the industries where scaleups led by women are gaining prominence. Even though sectors like enterprise software, fintech, and health are witnessing increased investment and value creation, the representation of women-founded teams remains significantly low. Teams led by women constitute less than 15% of the total scaleups. On the other hand, impact and deep tech sectors, which are poised to shape the future of technology and society, have a significant representation of women-founded scaleups, accounting for 19% and 21% of the total number of companies respectively. Scaleups founded by women demonstrate a notable emphasis on impact compared to other European companies. In 2022, over 30% of venture capital activity was raised by impact-oriented or “tech for good” scaleups. Today, impact scale-ups constitute 26% of the total value of scaleups led by women, marking an 18-fold increase in value since 2017. Concurrently, venture capital investment in these businesses has grown 13.5 times over the same period.
Diversity data gap
The report's methodology is based on publicly available data sourced from news feeds, professional social media, and the wider community. However, the authors acknowledge a significant challenge, which is the scarcity of data on gender and diversity in the tech sector. This research, while comprehensive, does not fully capture the role and contribution of women in Europe's tech scene.
Nevertheless, it offers a valuable perspective on the role of women in Europe's tech scene. It highlights the achievements of women-led scaleups, underscores the challenges they face, and emphasises the need for more comprehensive data on gender and diversity. As we move forward, it is clear that female entrepreneurs will continue to play a crucial role in driving the next wave of disruption and innovation in the European tech industry. By understanding the current landscape, we can identify opportunities for growth and areas that need more focus. In the end, the success of women-founded scaleups is not just a win for women in tech, but a win for the entire industry.
