Despite some progress in the fintech industry in terms of gender equality, the vast majority of fintech founders are men, with women making up just 7% of the total pool.
Deloitte has released a new report entitled “Achieving gender equity in the fintech community”, working on enlisting key stakeholders to drive change. It studies formation and fundraising trends in the fintech Industry over the last ten years across three categories of start-ups: Women-founded, Men founded and co-founded (start-ups with male and female founders.) The report advises that if further progress is to be made, investors and the financial services industry will need to reconsider the effort they’ve made before a more financially and socially equitable future can be realised.
The report also analysed the impact of the Covid-19 pandemic on fintech funding activity across the three categories, finding that the gender gap in funding is particularly notable during times of uncertainty. This is because women founders appear to be resilient and capable of generating higher returns on investment. However, in many cases they aren’t provided with equal access to opportunity.
Other key findings of this report include:
- The number of fintech start-ups (“fintechs”) involving women founders has grown at a slow pace over the last decade. Our analysis shows that women-founded start-ups and those cofounded with men comprised 12.2% of the 3,017 fintechs in 2019, only slightly higher than the 10.9% (of 411 start-ups) recorded in 2010. Of this, women-founded fintechs accounted for 3.1% of the total pool in 2019.
- However, start-ups with women founders represent a growing share of investment funding. Cofounded start-ups raised 11.2% of the US$40 billion total funding in 2019, up from 6.2% (of US$14 billion) in 2015. During the period, the share of total funding directed toward fintechs founded only by women rose from 0.6% to 1.3%.
- Despite this increase, over the last five years, women-founded fintechs, on average, raised 50% less capital than start-ups founded only by men. Founding teams with both men and women received just 3% less funding.
- Collective effort among three key stakeholders—investors, founders, and financial institutions—can help improve diversity within the fintech founder community.
- Similar to how the fintech industry blossomed after the 2008 financial crisis, Covid-19 and its disruption to the business environment could help level the playing field and offer a host of new opportunities for women entrepreneurs.
For more information or to read the report in full, click here.