RED Capital Partners explains at the ‘DLD Tel Aviv Innovation Festival’ why it makes sense to back female entrepreneurs

‘DLD Tel Aviv Innovation Festival’ is one of the world’s best-known events about innovation and technology. Founded in 2005 as an intimate gathering of friends, it has developed into an interdisciplinary, internationally connected platform for people eager to change the world – through creativity, research, business or personal involvement in a cause close to their heart.

The acronym DLD stands for Digital, Life, Design and explores how the digital age fundamentally changes our lives, society and business. Over the last decade DLD has become a hub to launch new concepts, connect disparate ideas or inspire through outstanding role models – bridging the gap between continents, business models and thought patterns.

The Tel Aviv edition of DLD hosts 110 delegations and more than 4,000 guests from around the world. It also gives the opportunity to over 100 start-ups to present their projects to investors. Luz Ramírez, managing partner at RED Capital Partners, was one of the speakers at the event, where she explained to a wide and expert audience how it makes financial sense to invest in diverse teams with at least one woman founder.

During her presentation, Luz Ramírez noted that Europe-based women-founded startups received only 11% of venture capital funding in 2017, according to PitchBook data. This is the result of a number of factors, including: (1) investor’s prejudice with women-led projects outside of traditionally feminine sectors, such as Cybertech, Agritech, etc. (2) women’s projections tend to be more conservative when they pitch their businesses to investors (3) women tend to ask for less funding, according to Wharton Business School’s study “Tracking venture capital with a gender lens”.

Despite their difficulty in accessing funding, there is an ever-growing number of women-founded start-ups. According to South Summit’s “Entrepreneurial Map”, 22% of the Spanish start-ups were founded by women in 2018, representing a significant increase from 18% in 2017. RED expects that more women will launch new startups as their access to funding improves.

Additionally, women-led startups failure rate is of 22%, while men-led projects stands at 52%, according to South Summit’s Entrepreneurial map. Despite receiving far less funding, startups with at least one female founder generate 10% more in cumulative revenue than only men-led ones, according to the “Why women-owned start-ups are a better bet” report, made by Boston Consulting Group in partnership with accelerator network MassChallenge.

Furthermore, privately held tech companies headed by women achieve a 35% higher return on investment and when venture backed bring in 12% higher revenue than male-owned tech companies, according to research by Vivek Wadhwa, of the Singularity University, and Lesa Mitchell, Vice President at the Kauffman Foundation.

Consequently, there exists a historic market opportunity to invest in a booming segment with lower risks and higher financial returns while promoting diversity and inclusion in the startup ecosystem. Luz Ramírez concluded her presentation noting that, besides generating outstanding financial returns, RED’s goal is to shift the technological companies’ paradigm by allowing female-led innovation to flourish.

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