Key Takeaways
- • New research from IFC and the World Bank Group Gender Innovation Lab, conducted with Village Capital and We-Fi, finds that accelerators do not close the gender financing gap for start-ups in emerging markets; male-led start-ups raise 2.6 times as much additional equity post-acceleration as female-led start-ups.
- • Women lead half of the start-ups participating in accelerators, yet they continue to face markedly unequal access to capital after acceleration.
- • Acceleration effectively helps male-led start-ups raise equity but has little measurable impact on female founders, so the gap widens rather than narrows.
- • The study identifies perceived investor risk and investor bias as the most likely causes of the post-acceleration funding disparity.
Summary
Women entrepreneurs in emerging markets face a substantial gender finance gap as they attempt to grow their start-ups into mainstream businesses, according to new research from the International Finance Corporation (IFC). The study, titled "Venture Capital and the Gender Financing Gap: The Role of Accelerators," was developed by IFC and the World Bank Group Gender Innovation Lab in partnership with Village Capital and We-Fi.
Accelerators are programs designed to train and support start-ups so they become investment ready. Although women lead half of the start-ups that participate in these programs, they continue to have far less access to capital. The research examines the steep differential between financing for male- and female-led start-ups after acceleration and identifies perceived risk and investor bias as the most likely explanations.
The findings indicate that acceleration does not narrow the gap and may in fact widen it in equity fundraising. Acceleration is effective at helping male-led start-ups raise equity, but it has little impact on female founders. As a result, male-led start-ups increase the amount of equity they raise after acceleration by 2.6 times as much as start-ups with a female founder.
The analysis points to the need for investors and accelerator operators to address perceived risk and bias in venture capital decision-making if women-led start-ups in emerging markets are to access growth capital on comparable terms.
Accelerators are programs designed to train and support start-ups so they become investment ready. Although women lead half of the start-ups that participate in these programs, they continue to have far less access to capital. The research examines the steep differential between financing for male- and female-led start-ups after acceleration and identifies perceived risk and investor bias as the most likely explanations.
The findings indicate that acceleration does not narrow the gap and may in fact widen it in equity fundraising. Acceleration is effective at helping male-led start-ups raise equity, but it has little impact on female founders. As a result, male-led start-ups increase the amount of equity they raise after acceleration by 2.6 times as much as start-ups with a female founder.
The analysis points to the need for investors and accelerator operators to address perceived risk and bias in venture capital decision-making if women-led start-ups in emerging markets are to access growth capital on comparable terms.
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