The Better Fund, Tallinn-based, early-stage VC fund, aims to bring gender-parity to startup funding by raising a female-focused €30M fund.
Sex-based funding isn’t sexy
Despite the economic havoc created by the pandemic, 2020 was another bonanza year for IPOs around the world. However, out of more than 400 companies that went public in the US, only 5 were founded and led by women, according to an analysis by Business Insider.
With respect to venture capital funding, the statistics around gender equality are even more staggering, with only 3 percent of venture capital going towards companies founded solely by women. The gender gap is counter intuitive as companies with at least one female founder generate 78 cents of revenue for every dollar of VC funding which is more than double what male-only companies generate.
Which begs the question: if female-led startups outperform their male-only counterparts, why is that they have access to less capital?
The BaltiNordic region is no stranger to this same gender disparity problem. For example, Estonia has the undesirable title of “Europe’s Worst Gender Pay Gap” at more than 17%, that’s right, women working similar roles and same hours get paid 17% less than men. Things are a little better when we look north, with Finland and Sweden sitting at 16% and 12%, respectively.
The unicorn breeding ground
The vision of the Better Fund is to provide access to capital for female founders in the BaltiNordic region, helping them expand internationally. We are here to fund the next female founded unicorns in the region.
In fact, Estonia has the highest number of unicorns per capita in the world. And the rest of the area is not far behind. Skype, Pipedrive, Spotify, Vinted, Rovio and Klarna all started out in the BaltiNordics and are all valued in excess of US$ 1 billion.
“Being based in Tallinn, Estonia puts The Better Fund in perfect crossroads of challenge and solution”, said Founding Partner, Liina Laas. “Giving us proprietary access to the type of investments our investors are actively seeking while also ensuring that we help solve gender disparity and reduce the gap between BaltiNordics and the rest of the EU.”
Some progress, but still a long way to go
While there’s certainly been some progress globally on gender disparity, with the number of female CEOs heading up Fortune 500 companies rising from a depressingly meagre 2 to a slightly less shocking 37 over the last 20 years.
Yes, that is progress. But things just don’t seem to be happening fast enough. Take France, for instance where, according to current statistics, if they keep working on their gender pay gap at the current rate it will reach parity within the next 1,000 years.
So, it’s clear that things are changing with grassroot initiatives in education and other areas but VCs hold the keys to capital and that’s where The Better Fund wants to drive change. The Better Fund aims to fund the next generation of female founders in the BaltiNordics that will become the role models for future generations.
Founding Partner Quotes
“I was motivated to act on this issue from my own experience. Walking into a funding pitch meeting and being condescendingly asked “Do you have the authority to be attending this meeting?” Speaking to my network, I know that a guy in the same situation would not have had to go through such an experience. By investing in women, we can both lower the gender pay gap as well as deliver higher returns for our investors as companies with gender balanced teams perform better statistically.”
“We see so much proof from both looking at the results and from our personal experience that companies with more diverse teams perform better. This makes sense; when you have people with different backgrounds and experiences you will have more than one way to solve a problem. Women belong in the boardroom and women make great leaders, but somehow the VC world is still stuck in the past and refuses to recognise this.”
“The Better Fund is focused on assessing companies by areas that are important to us: the idea, competence of the team, the technology, business model, sustainability, stability as well as diversity. We assess our potential investments from a commercial perspective with the objective of maximizing returns for our investors, but at the same time supporting highly qualified and capable female founders and ensuring that we evaluate opportunities without any negative gender biases creeping in. Honestly, this is only possible with the help of my colleagues and the fact that the Better Fund leadership team has majority women representation and this will continue to be the case in the foreseeable future.”