In my day job, developing Fintech partnerships at a big bank, I meet and connect with many Fintechs on an ongoing basis. However, I often notice that only a small proportion of the Fintechs we meet are female-founded.
If you are not part of the industry, you might be surprised to hear that a big portion of Fintech scouting is done via an individual’s network. A few new tools and marketplaces have come out recently, but, historically, Fintech relies heavily on community and introductions.
For that reason I believe that it is important that I ensure that my own network is diverse and inclusive. I took the action of joining different communities and conferences, connecting with VCs and accelerators to expand my reach. However, I must admit that has not been enough to change the paradigm and that I need to do more.
So, I went to a community of female-founders (women of Fintech community) and asked them a few questions to see what else could be done.
Some of the learnings:
Most founders when questioned about accelerator and incubators programmes mentioned that they do apply. In order to select the programmes they consider the sector and industry knowledge and networking/intro opportunities that the programme provides.
“In terms of accelerators, the issue here is making sure there is a good match between Fintechs and mentors or advisors.”, Lucy Watson Co-founder of Cyoda.com.
The key sentiment was that for accelerators and incubators to expand their reach, the programme team (including mentors and judges) needs to be diverse.
Meeting potential clients and VCs
“I use my network for either direct approaches or I try to get intros. The best is a strong intro”, Maria Philips, Founder of Bridgeregtech
The answer was unanimous, most connections are made via personal networks, accelerators and referrals. In pre-covid times this also included pitch days and events. This made me wonder if there was a network problem?
“There’s also a lot of talk about how women may not have access to the same level of networks. I believe this is an area where a lot is happening at the moment, and several VCs are making proactive efforts to reach out to female founders and giving them opportunities to expand their networks” Iris ten Teije, Co-founder of Koia.
Female-founding initiatives seem to work as a catalyst to expand some of the networks. However, the funding numbers talk from themselves (in 2020, only 2.3% of VC funding went to women-led startups, according to Crunchbase), so there is certainly more that can be done.
When asked what else could be done, three key topics came up:
“Access to both funding and driving commercial deals are the key factors”, Felicia Meyerowitz Singh, Co-Founder of Hive Founders.
Report diversity statistics
“It would be great to have the same transparency provided by FS firms on the number of female-founded firms that they are using “, Sonal Rattan, Co-founder of eXate.
“It’s really important to accentuate the positive news stories – think Bumble and Starling and support the lesser-known female-led startups “, Marie-Claire Frederick, Co-founder of Lemon Quarters.
From the founders’ insight, it is clear that for female-founded Fintechs to succeed, more needs to be done to open up the current Financial Services social network.
To demystify and understand why Financial Services are so focused on personal relationships and introductions, we need to go back to the 19th century, in which investment banking started from the transatlantic trading of commodities. Back then, there were no written contracts in many situations, so trust, reputation and personal relationships were crucial. To ensure they dealt with trustworthy people, bankers (primarily men) would reach out to their social circle (someone they grew up with, went to college with, family friends, etc.). That was the way things operated for more than 100 years.
Fast forward to 2021, Financial Services have a very different business model with technology enabling contracts, credentials and auditability. So we are at an exciting point in which technology may be enabling a more democratic way of doing business in finance.
The question is, how will we all leverage this opportunity to broaden our network and meet founders from different backgrounds, social and political environments?
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organisations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated.
Rita Martins drives Innovation and FinTech Partnerships for Finance and Risk, at HSBC. See her personal blog here.