Cleantech investors must put their financial faith in female founders to impact shocking gender disparity in the sector, argue women leaders.
Despite the progressive reputation of cleantech, male founders vastly outnumber their female counterparts. A 2016 report by the London Sustainability Development Commission found that 86% of cleantech businesses that won early-stage funding had exclusively male founders.
Yet a report by Crunchbase on investment in global startups, which showed that although just 3% of the total invested dollars globally went to female founders, diverse teams outperformed male-led start-ups.
The research proved that companies with at least one female founder generate 78 cents of revenue for every dollar of venture funding invested. In contrast, male-led startups generated approximately 31 cents to every dollar invested.
So, this International Women’s Day, we speak with three women leaders about the barriers faced by female founders and how investors are missing out on a better return by failing to invest in women…
“The investment community is missing a trick,” says Susannah McClintock, Investment Director at Sustainable Ventures. “We know that female businesses generate greater returns from a small capital investment.
“It already makes no sense that the solutions needed by the whole world will be designed and delivered by only half the population. By failing to invest in female founders, investors are not only excluding half the population, but the half that’s demonstrated to outperform.”
One of the challenges identified by Susannah and other women in cleantech is the lack of diversity in investment groups. They argue that while investment panels comprise primarily of white men then it’s going to be harder for female founders to secure early-stage funding.
“I think there should be a much bigger lobby by the Government and other organised bodies to insist on there being more women in investment organisations,” says Janice Hughes CBE, Chief Executive Officer of DriWay Technologies UK. “That needs to happen across the board, from the very biggest private equity firms to the smallest venture capital groups.
“It’s a big challenge to raise early capital and a huge hurdle for any founder, let alone women founders. Many investors probably aren’t even aware of their unconscious bias. It may be getting better than it was 20 years ago, but it’s still a huge hurdle.”
For start-up founder Maya Lingam, the lack of diversity in investment groups drove her to explore alternative funding routes when she launched her business, EcoSpot. Maya has spent an extended period bootstrapping her app, which engages children and their families with sustainability at school and at home, instead.
“I’m a sole founder and I had to ask myself if going to meet groups of largely all white, all male investors was the best use of my time when looking at the statistics of who gets funding,” explains Maya. “I’m a young, black woman working in cleantech, I don’t fit the mould of the traditional cleantech founder. It’s a daunting world and you can feel very shut out of it.”
Maya says that she fears the lack of diversity in investment, in the cleantech community and accelerators can put many off even trying. Representation matters, particularly when you are starting out and looking for inspiration from leaders in the sector.
“I decided to start my business the day I met a black female founder,” she explains. “It was the first time, during my three years in tech, that I’d met a black woman in a management position and it completely changed my view.
“You cannot underestimate the significance of seeing somebody who looks like you represented in the spaces you want to be in.”
Like Maya, Janice believes that representation and shared experience can help inspire those starting out to persevere.
Janice says that it’s vital to create opportunities for women to share their experiences. She wants to see more mentorship and support from leaders in the space to help empower younger women.
“It’s about sharing those experiences and being open about challenges,” says Janice. “It’s important to know that others are experiencing the same things you are and giving women confidence to keep going.
“I was very lucky in my career because I worked with some fantastic guys who helped me enormously and gave me responsibility. In doing that, they encourage you to step up. With good mentorship and visible role models, it’ll inspire younger women to keep going and succeed.”
Meanwhile, Susannah, who is a member of the LSDC’s Women In Cleantech steering group, says that more regulation around the reporting of diversity from investment groups will also help.
“We can’t mandate how firms behave, but we need to get funders to commit to reporting on their diversity efforts,” she explains. “The Treasury has launched it’s ‘Investing in Women Code’, where venture capital firms sign up to reporting and improving their investing in women.
“By reporting it, it’ll be scrutinised by somebody internally who’ll then make suggestions on how to improve. Investors need to actively decide to improve their diversity, and put more women in decision-making roles.”
As somebody who is about to go out to the investment community to secure early-stage funding, Maya says that more data on diversity in investment will be useful for female founders.
“Data is key to identifying the people you really want to align yourself with,” she explains. “As a female founder, I’m doing my due diligence when looking at investors to make sure they are the right fit for us and our values.
“If investors don’t improve their diversity, they are going to miss out on the change makers, the innovators and the future leaders. These are the people who are going to be critical to the survival of all of us.”
The climate emergency means that we need to move fast in finding solutions to protect and improve the planet. At DriWay, Janice and her team have developed a solution to invasive groundwater in buildings, preserving their integrity and reducing their carbon footprint. The technology reduces health hazards, maintenance costs and electricity consumption.
Janice says that it’s women in leadership positions who are quick to embrace change and value sustainability as highly as the impact on their bottom line.
“In my experience, women are lightyears ahead in terms of climate change and doing something about it,” she shares. “When I sent an email to Alannah Weston, Chair of the Selfridges Group, she responded immediately and we’re going ahead installing our technology in their buildings.
“With a lot of the CEO fellows I approached, it was more ‘No, I’m not really that interested in rising damp or green electricity savings.’ This is nothing new. Years ago, I wrote to Archie Norman Chairman of M&S to ask him if they really needed to wrap aubergines in plastic and he wrote back to me and said, ‘well, they last a little longer,’ so it was all about the bottom line.
“Meanwhile, I’ve invested in what we hope will be the greenest telecoms company in the UK building big fibre. We have a female CEO who comes to us with dozens of sustainability ideas, straight away.
“Instead of using traditional telegraph poles, we’re using recycled plastic poles and we plan to wrap them in bendy solar panels. It’ll costs more, but she’s like, ‘Let’s do it because it’s the right thing to do for the future’. You won’t have conversations like these with the majority of old school men.’
These exciting innovations embraced by female decision-makers aren’t the only reasons for hope and positivity. Susannah says that change is coming, albeit slowly.
“I’ve worked in this space for 20 years and this is the first year we are seeing mainstream financial organisations look towards impacting clean tech investing,” she explains. “Much of it is based around the UN’s Sustainable Development Goals, of which one is gender equality.
“I see that type of capital being really important in creating greater interest and accountability for gender, alongside the other things it’s doing.
“That’s really exciting and I think we’re at the start of some fairly significant change, but there’s a long way to go.”
This optimism is shared by Maya, who is working to deliver a climate education to children in school with EcoSpot. She wants to harness the ‘pester power’ of kids to impact their families, to inspire community action and help youngsters develop lifelong sustainability habits.
Maya says that she’s most optimistic thanks to the future leaders who are about to join the cleantech sector.
“I’m most excited about Gen Z women becoming founders or joining teams in tech,” she tells us. “I think Gen Z is particularly great at communicating the intersection of inequality, education and poverty, and how that underpins a lot of challenges in sustainability.
“Their ability to question thinking, to call out bias and the contradictions in the status quo blows me away. I think companies are going to be so much stronger as we continue to have more Gen Z talent joining our workforce and I’m excited to see how they tackle problems differently.”