News of women’s health app Flo reaching a $1B valuation, and becoming the first European femtech unicorn, rang out last week. In response, the company was lauded for reaching such lofty heights and paving the way for femtech and improved women’s health. But amidst the frenzy, I couldn’t help but notice what too few were mentioning - that this female-focused app is run and founded by men. Out of the many femtech companies out there, why has this one succeeded?
Based on my experience in the startup landscape, I’ve drawn a few conclusions. Firstly, successful startups are now the result of well-backed technical founders, not domain knowledge experts. And secondly, the UK funding landscape is still not doing enough to uplift and support female founders.
I don’t want to detract from Flo’s success. This is a momentous occasion and the $200M raise is a step closer to closing the ‘gender health gap’. But the fact that men can reach a $1B valuation for a female-focused solution says a lot about the investment scene. Female-founded startups raised 1.8% of VC funding in 2023, and just six UK unicorns were founded by women, but that’s not because women lack profitable ideas.
Our society continues to reward privileged men and their businesses. That’s reflected in the broken UK ecosystem that offers little funding or growth opportunities for female founders, while 20 local authorities account for 58% of deals. Recent DEI criticism, both here and across the pond, has exposed gaping issues of inequality in our society. The defence of ‘meritocracy’, that the best win out, is flawed - it ignores societal inequity and the fact that the most privileged still enjoy the most benefits.
To understand where the inequity stems from, we need to examine our educational systems, not just geographic and socioeconomic factors. Privately educated men might be encouraged to pursue science in higher education; while the aptitude of state-educated women might go unrecognised. Tech startups often rely on STEM backgrounds, so from the offset women are at a disadvantage, making up just 26% of the STEM workforce.
When I started out as an entrepreneur, you really could raise money based on an idea. But the landscape has evolved since then, and early-stage funding has plateaued. Now, building a startup has become more about tech skills than ideas. The investment world over-indexes on technical ability, so if you don’t have those skills in your founding team, you must either buy them in or risk failing before you’ve even started.
As investors - only 14% of whom are women - look for entrepreneurial skills, they’re inherently bringing bias to the table. A well-delivered pitch is more likely to come from a founder with public speaking experience. Making a deck look outstanding requires time and money - both of which are the privileges of the dominant class. There’s no lack of ideas, innovation, or investment potential in the UK. But if investors value a specific presentation method, they’re not supporting and incubating female-led businesses. Enough of the talk, we need to be intentional about showing women the abundance of opportunity in this space and supporting them throughout the entrepreneurial journey.
Government initiatives in place to support diversity in the startup and VC landscape are undoubtedly helpful for increasing awareness, but they’re too focused on the present. It’s like VC funding - a quick, measurable return on investment is too short-sighted. To counter the problems ingrained in the ecosystem - and the world’s most pressing problems - we need a longer-term approach that gets serious about solving the lack of diversity, equity, and inclusion in business (and that puts serious money on the line). My opinion on how to solve this problem? We need to think deeply, start early, and support sustainably.
For depth, audit the reasons why founders receive investment, and use that data as a guideline for measurable actions. Having completed these audits myself, interviewing over 100 entrepreneurs, I’ve discovered that 90% of female founders are solo founders. Introducing female entrepreneurs to one another might sound trivial, but it could result in stronger female-led teams and more sustainable businesses. For earliness, we need to think about the next generation. Implementing programmes in schools and universities is crucial to instilling an entrepreneurial mindset and fostering resilient entrepreneurs for the future.
And for sustainability, we need to cultivate the existing pipeline. Supporting female founders at every stage and helping them build sustainable businesses is one strategy to tackle the investment problem. Upskilling female founders with workshops, programmes, networks, and confidence is vital to unlocking investment.
Flo’s raise is undoubtedly good news for women, but the bad news lurks in the background - it’s still much harder to be a female entrepreneur and will be until there’s meaningful change. When it comes to women in tech, we’ve talked the talk, but chatter won’t build female-founded unicorns.
Emma Obanye is CEO ofOneTech
