International Women’s Day: climate tech sector needs female founders
Despite growing evidence that male-led companies are less ethical and offer lower return on investment, 98% of all UK venture capital funding is still claimed by men at the top.
The data from British Business Bank has been released at the same time as a study by The Alison Rose Review of Female Entrepreneurship which found that female-led businesses are more profitable for investors.
Both analyses challenge dominant corporate cultural bias, which continues to see firms set up and governed by men take the vast majority of capital investment. In the UK, these companies account for 98% of all money generated through funding rounds. A key differentiator is diversity, which tends to be significantly higher in workplaces where women occupy the more senior roles.
Last year, the National Girls Collaborative Project looked at corporations trading on the S&P 500, and identified female executives outperformed their male counterparts in profitability, market share and overall returns. Nevertheless, 468 CEOs were male, with just 32 women in comparable roles. The latter produced 384% return on investment against 261% for the latter.
According to the assessment, increasing diversity within the workplace leads to better results thanks to a broader blend of ideas informed by more varied life experience. Stereotyping and prejudice was reduced, leading to more merit-based decisions on actions such as promotions, product approval and research areas.
This is backed by by a paper written by Lu Hong and Scott Page at the University if Michigan, which showed ‘problem solvers’ are more effective when they represent different backgrounds, education and specialisms. Other US universities — including Northwestern and MIT — have come to similar conclusions.
Sian Fussell is CTO of Albotherm, a startup currently developing a new class of adaptive materials which could transform global agriculture and the built environment alike. Two industries which currently have a huge environmental footprint and pose the greatest ongoing challenges in terms of decarbonisation, mitigating and reducing detrimental impacts on habitat and biodiversity loss.
‘If I had to prioritise one thing for first-time female founders, it would be building your support structure early,’ she says. ‘Deep tech and materials innovation are complex journeys, and having experienced and a diverse range of advisors including women, non- executive directors, and early team members drives innovation through diverse perspectives. Their perspective helps you anticipate challenges rather than simply react to them.
‘A strong and mixed network that involves women isn’t just about introductions. It offers perspective, constructive challenge, and confidence,’ Fussell adds. ‘Over time, that shared experience, and understanding of your target audience meaningfully shortens the learning curve for the whole team.’
Albotherm is one of several firms which has received investment through Sustainable Ventures. Across the growth partner’s portfolio, which is focused on climate tech and environmental responsibility, 60% of companies are led, were founded or co-founded by women. Almost one-quarter of all investments made since the fund launched have also gone to these firms, while 65% were ploughed into startups set up by women or people from underrepresented demographics.
‘Our investment strategy is built on backing businesses with the strongest commercial potential, and time and again, we see that diversity is a key driver of success,’ explains Stuart Ferguson, Investor Director at Sustainable Ventures. ‘In climate tech especially, we are seeing talented women leading businesses that are tackling urgent sustainability challenges with commercially scalable solutions. The numbers speak for themselves – diversity is good business.’
‘For me, structural changes that could actually move the needle include better access to financing, honest statistics and a reaction to those statistics to level the playing field,’ adds Dr Mary Ellis, founder of PheroSyn, another Sustainable Ventures firm which focuses on pheromone-based insect monitoring and solutions. ‘One structural change that could help is to encourage more women to become decision makers in VC funds. Society does need to realise that this funding gap represents a massive missed economic opportunity estimated at over $5 trillion globally. The good news is that subsectors like climate tech are showing encouraging growth in female representation, and among founders this has increased from 15.2% to 21.7% since 2021.’
Image: Suhyeon Choi / Unsplash
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