Both male and female entrepreneurs in Latin America and the Caribbean (LAC) routinely lack funding sources to fuel their businesses, but the problem is clearly more acute for females, particularly in science, technology, engineering, and math.
Susana García-Robles is the CIO of IDB Lab and Co-Founder of WeXchange, the first networking platform and pitch competition in the region for women entrepreneurs in STEM. She talked with Nearshore Americas about the results of the “wX Insights 2020: The Rise of Women STEMpreneurs” report, where she highlighted the specific hurdles women face.
The purpose of the study was to identify the main characteristics of women entrepreneurs in STEM and compare them with their non-STEM peers across Latin America and the Caribbean. To do so, they collected 1,148 interviews with women entrepreneurs in the region, 405 of them from in STEM areas.
“Global studies show that only 0.4% of US$4 billion of VC money went to women-led founders from 2009-2017. Not surprisingly, 59% of women STEMpreneurs [STEM entrepreneurs] reported access to finance as their number one challenge, and 51% reported lack of appropriate network to access key investors,” said García-Robles.
“Another challenge is the work-life balance. We live in a world where family responsibilities still fall disproportionately on the shoulders of women. As 46% of the women STEMpreneuers have one or more dependents, juggling the two expected roles can be a major challenge,” she added.
Creating Networks for Female Entrepreneurs
The wX Insights report team interviewed 17 venture capital (VC) investors. The majority of these VC investors said that the biggest challenge to investing in women founders is the absence of women-led companies in the market. This situation creates a vicious circle that women entrepreneurs cannot surpass.
The interviewed VC investors also noted that women tend to have less personal and professional networks, which can make a significant difference in a heavily network-based industry like venture capital. “Not surprisingly, 51% of the STEMpreneuers in fundraising said that they lacked an appropriate network to access key investors,” García-Robles said.
“It is precisely because of this ‘starting point’ disadvantages that women face, that I believe that VC funds and accelerators should involve more women in their selection process, investment committees, panel composition for competitions,” she added.
Breaking this circle is vital to promote women’s participation and entrepreneurship in STEM, a field still dominated by male entrepreneurs. García-Robles says that some studies on the US have shown that women-led tech companies tend to hire two and half times more women, especially in job functionalities related to STEM. Also, companies with both a woman founder and a woman C-level executive will hire six times more women. However, no such studies exist for the LAC region.
“I cannot emphasize the importance of the ecosystem and accelerators in promoting women-led entrepreneurship. Accelerators, including university incubators, have ‘democratized’ the selection process of many early-stage startups regardless of their personal networks, which has given radically greater visibility to women founders in the game. Programs such as WISE encourage women in STEM to pursue a career in entrepreneurship,” García-Robles said.
“Educational programs should also provide as many regional role models as possible. We now have success cases of women STEMpreneuers from our region, such as Cecilia Retegui of Zolvers, Agustina Sartori of Glamst, Komal Dadlani of Lab4U, among many others. At WeXchange, we seek to celebrate and showcase these success cases while inspiring soon-to-be entrepreneurs,” she added.
Beyond Funding Quotas
Investors that wish to tackle the lack of diversity and funding for women may think of gender-based quotas as a solution. However, Susana García-Robles says this may lead to “questionable equity.”
“Pure gender-based selection quota reserves a specific number on a percentage of a portfolio for companies led by women. VC funds and accelerators are obliged to meet this number, even when there are not enough qualified deals led by women,” García-Robles said.
“However, a pure gender-blind “open selection” can create invisible barriers for women, as have many open calls for competition in the past. The pre-filter model takes the best of each approach. By opening up a ‘pre-competition’ space reserved for women, pre-filters can prevent the crowding out of women founders in the first stage,” she added.
In this proposed method, the final decision is made in a purely merit-based manner, as the pre-selected women founders must now compete against a gender-blind pool of entrepreneurs. This way, the final decision will always depend on the quality of the deal, not the gender composition of its team.
In this final stage, education is critical. Governments can strengthen women’s STEM talents by creating education programs for women, such as overseas scholarships, fellowships, or university exchange programs, as well as other opportunities.
Even though this new report shows hope, with 35% of the total of women entrepreneurs, including STEM components in their companies, the barriers are still there, with the work-life balance remaining a top concern for women and limiting company development.
“While government initiatives and ecosystem players like the accelerators have played a significant role in the growth of women-led STEMpreneuership, I would say that we’ve still got a long way ahead to achieve gender-neutral social roles for all,” García-Robles concluded.