The Need for Women in the Digital Age
The impact of diversity cannot be understated. Estimates from McKinsey found that if women were working to their full potential, the global GDP would increase by USD28 trillion by 2025.
But there is perhaps no bigger challenge to reaching equality this than in the startup space.
According to research from Crunchbase, only 12 of the unicorns born in 2018 had at least one female founder. The trend has continued into 2019 with ten female-founded companies becoming unicorns during the first half of the year. And while 2019 was the second-best year on record when it came to money invested in female-led startups, the playing field remains uneven for women entrepreneurs.
A study conducted by Boston Consulting Group in conjunction with MassChallenge, a US-based global network of accelerators, showed true discrepancy remains. Investments in companies founded or cofounded by women averaged USD 935,000. This was significantly less than the USD 2.1 million invested in companies founded by male entrepreneurs on average.
Despite the difference in
investment, women-founded startups were more successful on average. The same report found that the female-led startups collected ten percent more in cumulative revenue over a five-year period.
“Startups with women as founders are less likely to receive funding than male-founded companies, but they are equally as likely to generate revenue. That is amazing when you think about it.” Ms Charlene Liu, Co-Founder of Ladies Who Tech China and Women in Science, Technology, says. “There is no logical reason for female-founded startups to not receive equal funding. In fact, many investors are likely hurting their bottom line by not investing in female-led startups.”
According to Ms Liu, one reason for this is that men usually oversell their vision and projections, which can be enticing to potential investors. On the other hand, women are far less aggressive when it comes to their business outlook and in some cases are content to accept less than their male counterparts.
But this is only part of the story. Understanding why this remains a problem and finding a solution requires a much deeper look at the situation.
Women in the digital age
Ms Heidi Wiig, Professor in Innovation and Entrepreneurship at BINorwegian Business School, told the audience at the Norway-Asia Business Summit 2019 that Norway is gender equal, but this has not translated to an increase in female entrepreneurs. She added that China is much further down on the gender index and also suffers from a lack of female entrepreneurs.
And despite progress being made elsewhere, the challenge of the traditional gender gap is compounded with other issues as the world moves further into the digital age.
“We are seeing an increase in female education levels and women are participating more in science, technology, engineering and mathematics (STEM) disciplines. But women are still underrepresented in the digital sectors,” Ms Wiig explains. “This has created a digital gender gap that we must strive to reduce. If it is allowed to grow, women will find it more difficult to not only gain a foothold in both the
digital-first technology and startup space, but also other areas.”
She continues, “That is because the digital gender gap is laid over the traditional gender gap. We still see a lack of female CEOs and middle managers globally. The combination of the two gaps is making it harder for a transition to take place.”
Ms Wiig points out that most women who currently make it to the management level work in support management functions. Meanwhile, strategic management functions are male dominated. The story is very similar when you look towards entrepreneurs.
“We are seeing constraints that prevent women from even trying when it comes to being entrepreneurs and startup founders,” Ms Wiig states. “For example, getting finance for a femaleled startup is more difficult than for a male one. Additionally, women must fight stereotypes that remain pervasive. Progress is being made, but we must keep working towards equality.”
Ms Liu was upbeat about the fact gender diversity in STEM is increasing. But she warned that even when women enter these, or any other, workforces, they face challenges.
“The corporate ladder is more difficult for women to ascend. Even if women manage to climb the ladder, they are faced with a gender pay gap,” Ms Liu says. “But this doesn’t make sense, especially in STEM disciplines. Resources here are sorely lacking and there is a growing need for talent in these fields. This is just one of many obstacle we must remove.”
The digital age is offering female entrepreneurs new ways to overcome traditional challenges that have created the various gaps. This can help empower women with solutions that had been unavailable in the past.
“Despite the challenges, we are seeing a new wave of opportunities for female entrepreneurs. For example, businesses can be founded at a lower cost and with greater flexibility than in the past,” Ms Wiig says. “The ‘old boys’ way of networking and financing can be bypassed as women have greater access to new networks and markets. It is much easier to connect to business growth today than in previous years.”
As society moves further into the digital age and technology advances, new opportunities will emerge. This new wave of opportunities for female entrepreneurs must be cultivated to make sure gender isn’t a factor in determining who can act on them.
“Technology creates challenges and opportunities, some of which we know and some of which we won’t realise until later. That means the digital transformation will favour those who are best prepared to capture value. Capturing this value must be open to everyone, not just one group,” Ms Wiig notes.
Awareness with action
As work towards closing the digital gender gap, the traditional gender gap and the gender gap progresses, there remains a need to shine a brighter light on each one. Awareness is something many women don’t even realise until they are presented with professional challenges caused by one, or all, of the gaps.
“I didn’t really consider gender growing up in Norway. I could always do what I wanted. Even in law school, gender diversity wasn’t something I recognised. It didn’t hit me until I entered the workforce and saw a lack of gender diversity with my own eyes,” Ms Therese
Trulsen, Senior Lawyer and Chief Representative at Wikborg Rein China In Corporate Law, recalls. “I remember walking into a meeting with over 20 colleagues and being the only woman in the room. More than 50 percent of the law students in Norway are female, but it wasn’t accurately represented in corporate law.”
She cited the support she received at Wikborg Rein as well as the company’s gender equality targets as being important measures that ensured women were getting a fair shot.
“One of the key things businesses can do is set targets. Awareness is important, but it also needs to be actionable. It has to be more than just talk,” Ms Trulsen states. “Of course, we don’t want quotas to select candidates based on gender alone. You don’t want to be hired because you’re female, you want to be hired because you are the best candidate for the position. This isn’t a question of being male or being female, it is an equality issue. Right now women don’t always have equal opportunities in business. We must find ways to ensure everyone has a level playing field.”
As Ms Liu notes, women have a rich history when it comes to inventing, business, technology or anything else when provided a level playing field. This includes being successful entrepreneurs when given the chance. Women can also bring a much-needed perspective that can provide needed insights for businesses.
“We need diversity. We need diversity in thinking and in doing. At the end of the day, we need diversity because it affects everyone,” Ms Liu proclaims. “These efforts start at home. They then need to continue into schools. This is a time when awareness can be built. The movement must carry over into the workplace. And finally they will be seen in society. This is something everyone can contribute to and something we can all make actionable.”
Above left: Ms Heidi Wiig believes more progress is need to close the digital gender gap. Above: According to Ms Charlene Liu, investors hurt their bottom line by not investing in female-led startups