Revealed: how female tech bosses win just 3pc of VC cash
Female-led tech startups get nothing like their male counterparts when it comes to venture capital funding. Tech Editor Adrian Weckler has crunched the numbers
Just 3pc of venture capital in Ireland goes to female-founded companies, research by the Irish Independent has found. Of €781m placed in 153 tech and biotech companies in Ireland last year, just €24m went to a firm with a woman at or near the helm.
The figures suggest scant progress on 2015 research which, using the same parameters, showed that just 2.6pc of venture capital went to companies with a female co-founder.
The new research also shows that when female-founded startups do land funding rounds, they get a fraction of the money allocated to their male peers.
The average funding round in Ireland for a tech firm with at least one woman founder is €1.1m, compared to €5.7m for a startup founded by a man.
The survey also shows that women have no chance of becoming CEO in an Irish VC-funded tech company unless they personally start the company.
Of 132 VC-funded Irish tech firms founded by men, all have a male CEO. By comparison, 12 of the 21 VC-funded Irish tech firms with a female co-founded have a woman as CEO.
One of the female founders who did raise funding for her firm last year said that looking outside Ireland is often required to secure private capital.
"I really struggled to get funded within Ireland," said Patricia Scanlon, founder and chief executive of Soapbox Labs, an artificial intelligence startup specialising in voice technology.
"It didn't seem to be a question of expertise as I have 20 years' experience and a PhD. I've also worked with some of the biggest tech companies in the field. What I found was that as soon as I went abroad, we had no problem raising money and then it just snowballed."
Scanlon, whose firm has grown to employ more than 10 people, raised €1.2m last year.
"I did find it a bit frustrating when looking for funding here. I was told more than once by potential investors in Ireland that their gut told them not to invest.
"I always wondered what that meant. If a man with 20 years' experience was in the same position, would they have got the same response?"
"To be fair, no-one ever directly said that they weren't investing because of my gender. But I do wonder whether there's a higher bar for us. What I would say to women in the same situation is not to hang around and be disappointed.
"Go to the UK, as there are lots of different options."
However, other female tech founders in Ireland have had a more pointed response from potential investors.
"I've been told more than once that I'd have a better chance of getting funding if I hire a male chief executive," said one female founder who did not want her name to be published, fearing that it might lead to fundraising difficulties in future.
"I'm told that it's to do with 'experience', to make investors feel more comfortable."
Irish venture capitalists say that while the situation is improving, there is still a structural imbalance in the numbers of female founders coming forward for funding.
"Within the life sciences field, there isn't historically a lot of senior female executives in companies in Ireland," said Peter Sandys, managing partner of Seroba Life Sciences, a venture capital firm in Dublin.
"We will back first-time chief executives, but it's easier to back people with experience."
Sandys said that turning someone away because of their gender would not make commercial sense.
"I haven't heard of companies being assessed based on whether they're led by a man or a woman," he said.
"But there is also the element of a numbers game, in that if you're only seeing a couple of female entrepreneurs coming forward, the odds may be lower."
Sandys said that he believes the numbers will improve in the coming years.
"There's definitely an evolution of women getting into senior management roles," he said.
"We're also seeing a whole pile of new companies coming through that are led by women. I think it won't be long until the industry invests more in companies which are female-led."
Sandys also backed an industry campaign called Level 20, which aims to get venture capital firms to have a minimum of 20pc female senior partners.
Raising the number of female general partners at venture finance firms is one of the factors considered important by female technology entrepreneurs.
"The only way to seriously address this lack of funding is more female general partners in VCs," said Scanlon.
"While we have a few great female investors, they are a very small minority of the Irish investment community."
Other indicators suggest that there may be signs of female-led firms starting to making funding progress.
While the tracker analysis conducted by this newspaper is based on the first nine months of 2017 (compared to the same period in 2015), the last three months of 2017 saw companies with female founders or co-founders land almost €50m of funding.
This is more than twice the amount raised by female-founded companies in the first nine months of the year and could see the overall slice that female tech firms get rise to around 5pc for 2017, once the year's full figures are collated.
One of the companies is Transfermate, a Kilkenny-based payments firm co-founded by Sinead Fitzmaurice, which raised €30m in November. Separately, Nuritas, a high tech food analytics firm founded by Dr Nora Khaldi, raised €16.5m in December.
The former Dublin Commissioner for startups, Niamh Bushnell, also said that figures she is tracking suggest an improving balance.
Ms Bushnell said that 'Tech Ireland' has tracked €580m in funds raised last year, of which €79m (13pc) was won by firms with a female founder.
She added that the overall figures tracked by Tech Ireland differed from sources such as the Irish Venture Capital Association (IVCA) as Tech Ireland's analysis does not include "service companies" and that it also measures State-sourced grants which may not be taken into account by sources such as the IVCA or Pitchbook.
The Irish Independent research is based on raw data from the Irish Venture Capital Association (IVCA). The management and founder structure of each of the 158 tech and biotech companies with funding allocations was scrutinised to analyse the gender of key positions. Five of the firms were discounted as being unrelated to technology.
The 153 firms remaining received €781m in venture funding, an average of €5.1m per company.
Of these, 132 firms had all male founders while 21 firms had at least one female co-founder.
However, the share of the funding was more lopsided, with €757m (96.9pc) of the €781m won by male-dominated firms, despite being just 86pc of the companies involved.
The figures also showed a skew in the amount won by tech firms with male founders compared to those with female founders.
Companies founded and run solely by men received an average of €5.7m compared to just €1.1m for companies with a female founder.
Prior to the large rounds won by Nuritas and Transfermate, the biggest recorded funding announcement in 2017 to a company with a female co-founder was Compact Imaging, which received €8m.
However, this is largely a US-based firm, with the California-based female co-founder, Carol Wilson, having little Irish interaction or personal background.
Other significant funding wins were recorded by Mary O'Brien's remote health startup, VideoDoc (€2.5m), Aisling Teillard's Tandem HR Solutions (€2m) and Tara Dalton's AltraTech.
Other significant fundraising rounds last year included Triona Mullane's mAdme (€1.4m), Nikki Lannen's gaming virtual reality startup WarDucks (€1.3m) and Lisa Ruttledge's FoodMarble (€1.45m).
International statistics suggest that levels of investment in female-led tech startups is not much better than Ireland's low rate.
Dell's entrepreneur in residence, Elizabeth Gore, recently said that under 3pc of venture capital goes to female entrepreneurs in the US and that only 2pc of women entrepreneurs have reached more than $1m in revenue.
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VideoDoc, an Irish telehealth startup that offers online video consultations with Irish doctors, raised €2.5m last year as it ramps up its offering. VideoDoc’s video consultations are divided between in-house clinicians at its Dublin offices and GPs working from its own premises.
The process also offers access to prescriptions, sick notes and referrals. In Ireland, it is integrated into Clanwilliam’s IT system, which has a 90pc market share among Irish GPs. Its chief executive and founder, Mary O’Brien, says that it is already planning a new ‘Series A’ funding round. However, to do this, it will pursue its funding outside Ireland, because of the “more mature venture climate” in Europe, the US and Asia. The company’s most recent round was led by a UK-based Asian investor.
Dublin-based Soapbox Labs, an artificial intelligence firm that specialises in children’s speech technology, raised €1.2m last year.
The company was founded by Patricia Scanlon, who is also the firm’s CEO.
Scanlon has extensive experience in her field, working with Bell Labs and IBM and also gaining a PhD. She is acknowledged as one of the experts in her field. The technology uses over 600,000 audio samples from 15,000 children in 125 countries, which helps certify the data’s ‘real world’ application.
This can then be used by other applications from companies such as publishers or gaming companies for their educational or commercial purposes.
The company employs more than 10 people in Dublin.
Digital marketing technology firm mAdme, owned and run by Triona Mullane, raised €1.4m last year from established venture firms ACT, Delta and others.
The company offers operators technology to help with mobile advertising, coupon redemption and other customer loyalty systems.
It’s not the first time the company has raised cash. Mullane, a former chief technology officer at Newbay, the Irish tech firm acquired by BlackBerry for €75m five years ago, has previously raised €1m for the firm from Delta Partners.
Mullane is also a non-executive director of Independent News & Media, which owns the Irish Independent.
Nuritas, the high-tech food analytics firm founded by Nora Khaldi, raised €16.5m in December. Nuritas uses data technology to find molecules in food and food by-products which are then placed into drugs to treat specific illnesses.
It’s just the latest fundraising round from the company, which has previously been financially backed by U2 band members Bono and The Edge. Salesforce CEO Marc Benioff is also an investor.
Khaldi is a Trinity College-trained mathematician who set about developing natural and scientifically proven ingredients to manage and improve health.
The company was launched in 2014 with the goal of using artificial intelligence in coming up with solutions for the pharmaceutical industry.