Corporate investors hold the key to fostering inclusive entrepreneurship

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Ram Jambunathan, SVP and Managing Director, SAP and SAP.iO & Aytug Goksu, Project Lead, Digital Europe, World Economic Forum


  • Corporations need to activate their venturing funds, as well as accelerator, incubation and procurement programs.
  • In doing so they will drive the changes required to support women entrepreneurs.
  • Focussing on women entrepreneurship and diverse leadership will pay off in terms of global GDP and greater yields.

Alarming headlines about women leaving the workforce during the pandemic abound. A quick Google on the topic will yield results including “How COVID-19 Sent Women’s Workforce Progress Backward”, “Women’s COVID-Fueled Exodus from the Workplace Hurts Us All”, “Why COVID-19 Could Force Millions of Women to Quit Work – and How to Support Them” from American Progress, Time and the Forum, respectively.

A side story which is not being so widely reported is how the pandemic reverse the meager gains women entrepreneurs have made in recent years.

In the US, it’s already happening. Pitchbook reports that in Q3 2020, quarterly venture capital funding for women founders dropped to a three-year low, even though overall venture capital activity was on a par with previous years. Between Q2 and Q3 last year, investment in women founders dropped 48%.

These losses make already dismal numbers worse. Women founder teams received only 4.3% of all venture capital deals in Q1 2020 – a drop from 7.1% in Q1 2019.

So far, investment levels in Europe are holding low but steady at 1.8% of venture capital going to all-women founder teams and 12.8% going to mixed-gender teams up until the end of October. But the threat of slippage in Europe – and globally – looms.

While COVID-specific dynamics have exacerbated the venture capital investment picture, women’s low representation on investment teams was already fueling the chronic opportunity gap. In 2019, just 3.4%of assets under management were held by women-founded VC firms, and only 3.8%were held by diverse-owned firms.

Rethinking and resetting the status quo on underrepresented entrepreneurs

The Forum’s Great Reset challenges us to rethink our economic, social and technological systems for a better world – to steer the market toward fairer outcomes, ensure that investments advance shared equality and sustainability, and harness the innovations of the Fourth Industrial Revolution to support the public good.

In such a context, corporations can activate their venturing funds, as well as accelerator, incubation and procurement programs to drive the changes required for the Great Reset, fostering inclusive entrepreneurship by:

  • Increasing the percentage of women and underrepresented groups on their investment teams
  • Increasing the percentage of investment (financial and non-financial) that goes to women and underrepresented entrepreneurs
  • Activating additional business levers to fuel scaling of businesses led by diverse teams

Focussing on women has multiple benefits

Investing in women pays huge dividends for everyone. In COVID-19 and Gender Equality: Countering the Regressive Effects, McKinsey estimated that acting now to advance gender equality could add $13 trillion to global GDP in 2030.

It also returns greater yields than less targeted investments. Over a five-year period, for every dollar venture capital invested, women-led or women co-founded startups generated 78 cents of revenue while male-led startups only generated 31 cents (Why Women-Owned Startups Are a Better Bet). What’s more, on average, companies with more diverse leadership teams report almost 20% higher revenue from innovation. (How Diverse Leadership Teams Boost Innovation).

We should therefore view investment in women entrepreneurs as a powerful catalyst for economic recovery.

Addressing the gap for women is only one step toward generating more equitable outcomes for all. We expect that most levers that help women can also contribute to wider diversity efforts. Further studies investigating variations in impact between underrepresented groups would be welcomed.

Most conversations about improving venture capital’s diversity metrics don’t mention corporate investment at all.—Ram Jambunathan

Corporate investment an untapped gem

Corporate venture capital teams control 25% of venture capital activity (CBInsights CVC Report 2019) and accelerate hundreds of startups a year. It follows that they can drive significant change – both by investing more in women entrepreneurs and by growing the ranks of women on investment teams.

But their potential is largely untapped. Most conversations about improving venture capital’s diversity metrics don’t mention corporate investment at all; instead, they focus on public sector measures or generic steps any investor could take, such as adopting standardised pitch questions.

This is a missed opportunity, since corporations offer unique advantages to entrepreneurs. Their global networks of customers, partners and salespeople can rapidly increase demand for a startup’s product, especially when coupled with the corporation’s own purchasing power.

Tying these efforts to diverse procurement pledges can further boost returns for women entrepreneurs. At the same time, corporations can leverage their human resources diversity initiatives to grow women investment talent internally, and to recruit from outside.

SAP and the Forum’s Digital Europe community are developing an “actionable idea” to address the issue of diversity in European tech by providing a series of quick-win and longer-term actions that corporations can take to diversify their teams, their accelerator programs and their investment portfolio.

We are seeking corporate investment team members, diversity and inclusion experts, and women entrepreneurs to help us explore this opportunity via a survey and a design thinking workshop. If you would like to get involved, please contact DigitalEurope@weforum.org.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

What does reimagining our energy system look like?

France pushes UK to stay and Germany to pay

Sudan: European Union provides €30 million in humanitarian assistance

Want a Sustainable Earth? Bring on the Fourth Industrial Revolution

Climate Change : An Already Health Emergency

Mergers: Commission clears E.ON’s acquisition of Innogy, subject to conditions

Governments, businesses ‘walk the talk’ for investment in sustainable development: UN forum

EU-U.S. Privacy Shield: Second review shows improvements but a permanent Ombudsperson should be nominated by 28 February 2019

Humanitarian aid: €7 million for disaster preparedness in Southern Africa and Indian Ocean region

As Yemen relief operations face funding gap, timing of surge in violence ‘couldn’t be worse’

Paid paternity leave should be the norm in the US

#UNGA NEWS ROUNDUP: Funding plea for UNRWA, Burkina Faso and CAR updates, Guterres praises climate change ‘pioneer’ Chirac

EU Border and Coast Guard: new corps of 10 000 border and coast guards by 2027

‘The clock is ticking’ on meeting the Sustainable Development Goals, says UN deputy chief

Robot inventors are on the rise. But are they welcomed by the patent system?

Why India can show us how to achieve growth with purpose

GSMA Announces New Keynote Speakers, Event Updates for 2019 “MWC Los Angeles, in Partnership with CTIA”

Back to the basics for the EU: Investment equals Growth

More electric cars on EU roads by 2030

10 ways central banks are experimenting with blockchain

Here’s a reason to feel cheerful – the world is full of Good Samaritans

Sassoli to EU governments: Rise to the challenge. Find new shared ways to finance our recovery

‘I don’t like to give up’: veteran UN envoy reveals how two decades of quiet diplomacy gave birth to North Macedonia

UN food agency appeals for access to key storage facility amid fight for Hudaydah

We lack a global framework for saving our environment. Here’s how we change that

Politics needs to “Youth UP” in order the ensure the future of our democracies

How cities, not states, can solve the world’s biggest problems

Why tourism policy needs to use more imagination

This new form of currency could transform the way we see money

This brand is recycling underwear – here’s why

FROM THE FIELD: Turning waste into a business in the slums of Yaoundé, Cameroon

Drought in Europe: Member States agree on support measures proposed by the Commission

WEF Davos 2016 LIVE: “Chinese economy has great potential, resilience and ample space for policy adjustment”, China’s Vice President Li Yuanchao reassures from Davos

EU ready to relinquish its internal tax havens

A Sting Exclusive: “Youth voice must be heard in climate change negotiations!”, Bérénice Jond Board Member of European Youth Forum demands from Brussels

The financial future of Eurozone on the agenda of Friday’s ECOFIN council

As children in Ebola-affected areas of DR Congo head back to school, UNICEF ramps up support

Ebola emergency chief decries new attacks on frontline staff, after DR Congo worker death

Azerbaijan chooses Greek corridor for its natural gas flow to EU

Donald Trump’s victory is a great opening for global EU leadership on the sustainability agenda

Coal addiction ‘must be overcome’ to ease climate change, UN chief says in Bangkok

Erasmus+ 2021-2027: more people to experience learning exchanges in Europe

COVID-19 vaccines: MEPs quiz top officials on authorisation and contracts

‘Uphold human dignity’, dismantle ‘specious notion of racial superiority’ urges UN chief

Parliament sets up plan to fight the 3,600 criminal rings of EU

FROM THE FIELD: Children in warzones denied right to education

LGBT community in Chechnya faces ‘new wave of persecution’: UN human rights experts

European Commission: Does Apple, Starbucks and Fiat really pay their taxes?

From zero to one: a realist’s guide to overcoming hopelessness

Colombia: ‘Terrible trend’ of rights defenders killed, harassed; UN calls for ‘significant effort’ to tackle impunity

Gender disparity in salary and promotion in medicine: still a long way to go

A Sting Exclusive: “Doing ourselves a favour”, Vice President Dombrovskis underscores that this time growth has to come from within the EU

Cyclone Fani hits India, UN moves to protect vulnerable refugees in Bangladesh

The business of media in 2021

Mergers: Commission approves acquisition of joint control over Prosegur Alarmas by Telefónica and Prosegur

DPRK reports ‘little progress’ since historic June 2018 summit with US

Emotional control and introspectivity in times of pandemic

A revolution, an ecosystem, an ocean: 5G is just the beginning

New Eurobarometer survey shows: The majority of Europeans think the EU should propose additional measures to address air quality problems

UN Mission, community leaders, condemn South Sudan violence which left two dead at camp

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s