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The 1pc club: how female-led startups in Ireland are left looking for venture capital

Women continue to receive a tiny fraction of the venture capital on offer for tech and biotech startups in Ireland. While new statistics paint a stark picture, a number of industry figures say there is some progress being made. Adrian Weckler looks at the figures and talks to some of the key financiers


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UNDER 1pc of available venture capital in Ireland went to female-founded comp-anies in the first financial quarter.

Of €310m placed in 22 tech and biotech companies in Ireland between January and March, just €2.3m went to a firm with at least one woman as co-founder.

The figures show that where female-founded startups do land funding rounds from venture capital firms, it is typically for a fraction of the money that male peers attract.

While the average male-founded firm received €16m in venture funding, companies founded by women attracted an average of €0.8m.

The figures were skewed by two huge rounds, €100m each for Limerick-based vehicle software firm AMCS and for Dublin software company Intercom. Excluding the two big deals, the average sum attracted by male-founded startups was €5.7m, eight times the average figure by the female startup founders.

It comes after a year when companies started by women appeared to be making solid progress in attracting venture capital in Ireland.

In 2017, there was €958m of venture capital placed in 190 tech and biotech companies in Ireland. Of this, €72m went to a firm founded or co-founded by a woman. This equates to 7.5pc of venture money during the year.

Despite the low percentage compared to male-founded firms, 2017 was actually a high point for venture cash in female-founded companies in Ireland.

Previous years have seen female-founded firms here stuck at between 2pc and 3pc of available venture capital.

In 2017, there was a spike with two sizeable deals for startups founded by women. The first was a €30m investment in Transfermate, the Kilkenny based payments firm co-founded by Terry Clune, Barry Dowling and Sinead Fitzmaurice. The other substantial deal was a €16.8m sum invested in the biotech startup Nuritas, founded by Dr Nora Khaldi and which has Emmet Browne as its chief executive.

"There is clearly a problem," said Elaine Coughlan, a co-founder and partner of Atlantic Bridge, one of the country's biggest venture capital firms. "To some extent, there is a supply issue. There's still a problem with the numbers of girls graduating in engineering, computer science and software. On the life sciences side, it's much better with many classes now 50pc female.

"But there are also other problems, including in the VC industry, where you typically see just single-digit percentages when it comes to senior female executives."

Ms Coughlan says there is a mismatch between the growing well of female business expertise and small firms that get funded by the venture industry. "We have great women in business in Ireland, just look at all the women leading multinationals such as Microsoft and Google and Apple in Ireland. But we don't yet see many of those women spinning out [into startups] or joining university-backed teams.

"People sometimes say that there's a perception women are more risk-averse, but when you look at the lack of supports we have, in general, from childcare to other issues, it can be a tough choice to go for a startup instead of a different corporate path."

She said 50pc of the investment executives at Atlantic Bridge are female and a quarter of its university fund investments are going to female-led startups.

The Irish Independent research is based on raw data from the Irish Venture Capital Association's (IVCA) cyclical 'Venture Pulse' survey in association with William Fry.

As such, it does not include grants or subsidies garnered through State bodies.

Enterprise Ireland says it gave out some €10m to female-led startups last year, amounting to a third of start-up grants given out by the body in 2017.

The management and founder structure of each of the 22 tech and biotech companies with funding allocations in the first three months of the year was scrutinised to analyse the gender of key positions.

Of these, 19 firms had all-male founders while three firms had at least one female co-founder. However, the share of the funding was more lopsided, with €308m (99.2pc) of the €310m disclosed 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 €0.8m for companies with a female founder.

Despite rising numbers of female tech founders in Ireland, the figures indicate a lack of female participation in other top executive roles. Around half of the tech companies founded or co-founded by women last year also chose a male chief executive to run the business.

Just one male-founded company listed in this year's figures - The Travel Department - has a female chief executive.

The issue has prompted one Irish venture capital firm to design a course aimed at other venture partners to improve female representation.

"We actually kicked it off in London and have had 22 partners from other firms at it," says William McQuillan, a partner at Frontline, who organised the course.

"We're finalising a date for a similar Dublin course now. It deals with everything from how to recruit people to deal flow to decision-making and unconscious bias."

Mr McQuillan says the venture capital industry has not been a friendly one for female entrepreneurs.

"I don't really buy the argument that there isn't good enough deal flow from women. There are fantastic female entrepreneurs out there but the investing world has been a little hostile to them over the last decade. That's one reason why there haven't been more exits. I do think that's going to change in future years."

He says 20pc of the companies his firm has dealt with in the past 12 months have a female founder. He also says a quarter of the company's investments have involved a female entrepreneur.

Prior to the large rounds won by Nuritas and Transfermate in late 2017, the biggest recorded funding announcement last year 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 levels of investment in female-led tech startups are not much better than Ireland's rate in some countries.

Dell's entrepreneur in residence Elizabeth Gore recently said under 3pc of venture capital goes to female entrepreneurs in the US and only 2pc of female entrepreneurs have reached more than $1m (€860,000) in revenue.

However, recent figures from industry aggregator Pitchbook suggest 9.9pc of venture capital in the UK went to female-founded firms in 2017.

The gender skew in tech finance issues also comes at a time of record-breaking sums being invested through venture funds into tech and biotech firms here.

Records show annual venture capital funding exceeded €1bn in Ireland for the first time in a 12-month period.

€1.08bn was raised here for tech and life science firms between April 2017 and April 2018, marking a new level of cash being distributed around the Irish tech industry.

The financial haul for tech firms, which lifts Ireland into a higher venture funding tier occupied by countries such as Sweden, was buttressed by a handful of record-breaking individual Irish funding deals.

In addition to the €100m rounds raised by AMCS and Intercom, €40m was raised by Fire 1, the medical technology company operating out of Nexus UCD.

The first three months of 2018 saw a 34pc rise in venture capital compared to the same period in 2017, partly because of large individual rounds.

However, the figures also show a sharp fall in the number of deals recorded during the quarter, down to 22 compared to 48 investment deals recorded during the same period a year ago.

And they indicate a growing imbalance between marquee investment deals and 'seed' investments, which typically help startups more.

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