Gender funding gap reveals complacency in the Nordics

Far less capital per funding round is achieved by female-only teams in the Nordics, compared with male-only or mixed-gender businesses, according to a study by Unconventional Ventures and Dealroom.

As a general statistic, the numbers make bleak reading, but for a region that prides itself on social development and equality, the gender diversity report has reinvigorated a much-needed topic of discussion.

Marie Mostad, special adviser and investor at Unconventional Ventures, started working the investment firm last year because she shared its passion for leveling the investment playing field for startups set up by men and women.

Mostad’s own company, inzpire.me, remains her priority as a successful entrepreneur, but she has been alarmed by the lack of progress in the Nordics following her return from Boston, US in 2016.

“I thought the world had developed more and certainly that it would have done in the Nordics,” she said.

In the US, Mostad had seen some of the brightest female entrepreneurs being asked whether their male co-founders would be joining them in investor meetings, but she did not expect the same in Norway. “I was definitely under the impression that we’d be further along with gender equality in my home country, and among its startup ecosystem,” she said.

Mostad conceded that Norway’s startup scene is quite nascent, but said it is still a concern how the journey is being initiated so clearly on the wrong foot.

“As it’s a burgeoning ecosystem, there’s not a lot of capital being invested, which means there is more competition among startups for investors,” she said. “This is the opposite of the US, where investors are fighting for startups.

“It leads to a situation where entrepreneurs have no position of power to be demanding about issues like diversity, or even to be choosy about who they are answerable to from an investment perspective. Already on the back foot, female entrepreneurs have such limited opportunities as a result.”

This lack of variety or choice informs a lot of the prejudices and inequalities highlighted in Unconventional Ventures’ report – and it’s certainly not an issue exclusive to Norway.

“We’re not worst in class as a country, but it’s certainly not a positive set of results for Norway or the region,” said Mostad. “What is most mind-blowing to me, though, is the opportunity being missed by investors.

“It has been proven that diversity will always outperform male-only teams. So, as an investor, even if you’re not interested in diversity – which would be bad enough – surely you’re still interested in making money?”

Despite this, the recurring experience echoed by numerous female entrepreneurs when pitching to investors is one of negativity, hesitance and, ultimately, “prevention”.

Maria Ljungberg, CEO of Propel Capital, the investment arm of Nordic incubator Sting, said: “As per the academic paper entitled We ask men to win and women not to lose, researchers have found that within the context of investor meetings, women tend to be asked prevention-focused questions, which create uncertainty, while men are asked promotion-focused questions, which focus on opportunity. This phenomenon contributes to men receiving more funding than women.”

Ingrid Sundqvist, founder and CEO of equestrian app Ridely (known in its native Sweden as Ztable), has experienced this situation first-hand. “I have been in lots of meetings where I am asked about risk instead of opportunity,” she said. “This tends to happen more often to female founders, and a risk-oriented conversation can lead to less funding.

“This, according to research, is a bias that investors are not aware of. The more we talk about this, the more awareness we can raise in order to chip away at the phenomenon.”