Platform for Female Founders

Increasing numbers of women are founding start-ups in Germany and gender-diverse teams are delivering better returns, but there’s still a long way to go toward equality. We look at the challenges facing female entrepreneurs and the rewards of backing them.

April 2022

The figures look promising for women in business: The latest studies show that start-ups with female founders generate more revenue and have a higher return on investment than all-male teams. But female-led companies still only account for a minor percentage of start-ups and financing, whether that’s in Germany, Europe or the rest of the world. Equality is a tough nut to crack.

The German Startup Monitor found that the share of women setting up companies increased during the pandemic, from 15.9 percent in 2019 to 17.7 percent in 2021. While growth is headed in the right direction, the organization notes that the conditions for women, particularly women in tech, still could be better.

One excellent role model is Maraja Fistanic, who founded LegalTegrity in Frankfurt in 2019 together with her colleagues Thomas Altenbach and Pia Michel. The company offers a plug-and-play whistleblower service for medium-sized companies. LegalTegrity is addressing an urgent need: A whistleblower protection directive that came into effect in December 2021 requires EU firms employing more than 250 staff to offer employees a way to anonymously report violations of the law. But without a dedicated legal department, compliance presents a substantial challenge for SMEs. No surprise then that just one year after going live, LegalTegrity has 60 clients and counting.

The Bottom Line

The share of women founding start-ups in Germany has increased, but there’s still a big gap. More focus on female entrepreneurship in education and more women investors are needed to redress the balance.

Support for female entrepreneurs

Fistanic and her cofounder Michel took part in the Start-up Scale Program, funded by what was then the Ministry for Economic Affairs and Energy, which has made supporting female entrepreneurs a top priority. Under the umbrella of the Digital Hub Initiative, the program was set up in 2020 to address the start-up gender gap and offers personalized networking, market strategy and mentoring to five female-led companies.

“We found that the mentoring and the sessions we had were super-constructive and helpful,” says Fistanic. “We wanted to figure out where the quick wins are, and we found them.” She recognizes that there’s more support today for fledgling female entrepreneurs. “When I was finishing school and university, nobody was talking about founding a company, especially not women,” she says. “Now, there are a lot of programs connecting with universities to support that.”

The similarity bias

Bettine Schmitz is the managing director of Auxxo, Germany’s leading all-female venture capital (VC) fund. She believes encouraging more women investors is a big part of closing the gender funding gap. “We all have similarity biases – if you see someone like you, it’s easier for you to get into their head. If someone is different from you, from your gender or ethnic background, it can be harder,” says Schmitz. “In venture capital, it’s heightened. Venture is so much about believing in people.”

The statistics back up her theory: VC companies with female partners are more than twice as likely to invest in women-led enterprises. But women still only account for 10 percent of senior employees in Europe’s VC firms, reports the online journal Sifted. According to The State of European Tech 2020, out of the EUR 38.6 billion raised by European start-ups in 2020, 90.8 percent of the capital went to founding teams that were entirely male, 7.5 percent mixed and just 1.7 percent all female.

“Everyone believes mixed teams – viewpoints, experiences, genders – is something companies benefit from, especially when looking at sustainable growth models,” Schmitz says. “But mixed founding teams remain underfunded. All of VC is really high-risk, so seeking out diversity is extra de-risking of a high-risk investment.”

“Seeking out diversity is extra de-risking of a high-risk investment.”

Bettine Schmitz is managing director of Auxxo, Germany’s leading all-female venture capital fund, which invests in early-­stage European start-ups. She spoke with Markets Germany about finding and funding women-led start-ups.

How did you and your partners start Auxxo?

The three of us started doing angel investments when we all had small children. We wanted to play the long game rather than aim to cash out quickly, so we created the Female Catalyst Fund, a co-investment fund exclusively for companies with at least one female founder. We aren’t just looking at start-ups for women – we’re looking for hypergrowth.

Why focus on women?

Historically, there haven’t been many female investors at any level — few women work in venture capital or operate as business angels. Many women find it hard to reach partner level at established VC firms, so they’re setting up their own funds. Across the board, founders are trying to solve really big issues. And in Germany, incredible women who have worked in management at hypergrowth companies are now founding their own start-ups.

Are investors paying more attention to female-led companies?

When we started, focusing on female entrepreneurship felt like a token thing. But we’re not a charity. We’re not just investing in femtech. People are starting to understand that it’s about potential. We see things from a different angle and are very thorough.

What needs to happen next?

Investment funds have to keep working at hiring women for senior positions. And funds need to work harder to court successful women interested in VC investing. And female founders just need to put themselves out there and ask the question: What’s the biggest possible vision for what you’re building? Building a company with 10 people or 2,000 are two very different things. But if you want to go big, go for it!

Photo: Patrycia Luka

Growing interest in femtech

Investors saw an opportunity in a Berlin-based femtech start-up. Keleya, a platform to help pregnant and postpartum women access health and midwifery services, was able to raise EUR 3 million in its Series A round.

“Four years ago, it was much more difficult. Investors told me I seemed insecure. I’m not a shy person, but that made me think about giving up. I didn’t want to change my personality just to get funding,” says Keleya’s cofounder and CEO Victoria Engelhardt. “Four years later, it’s not totally better, but there is a bit more awareness of this bias.”

The Start-up Scale Program was a perfect fit for Keleya. “I really liked how they put me in contact with specialized experts based on the questions we had,” says the CEO. “We had questions around branding and market launch, and they put us in touch with experts who did deep-dive sessions with us.”

Keleya is now poised to launch telehealth consultations that are covered by public health insurance. Engelhardt encourages international investors curious about Germany’s start-up scene to come to Germany and meet with real female founders. “You can’t understand a market without talking to the players directly,” she says.

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