Mexico's Women Founders Face Major Venture Capital Gap

According to research by Endeavor Women in Entrepreneurship, women lead 25% of technology startup in Mexico but they constitute only 8% of the founders among the 100 most well-capitalized scaleups of the country.

Although 25% share marks a considerable advancement when compared to the 5% regional participation rate in 2021, funding inequality is still hampering the expansion of women-led businesses. Female-only founding teams get only 4.5% of total venture capital invested in Mexico.

On the other hand, mixed-gender founding teams raise more capital on average, gaining US$269 million per company as against US$149 million for all-male teams. Notwithstanding this performance edge, Mexico's unicorn ecosystem has very few well-known female co-founders, such as Loreanne García of Kavak and Marlene Garayzar of Stori.

Research shows that the above inequalities are further intensified due to the lack of diversity within venture capital firms and angel investor networks. Executive positions of women constitute only 20% in the top 20 most active venture capital funds of Mexico, and none of these were led by female founders.

Key Highlight:

• Women lead 25% of Mexico's tech startups yet they get only 4.5% of the VC funding.
• Besides funding, lack of access to investors and mentorship, and low representation of women in the VC firms continue to be the main obstacles of women founders.
• Female entrepreneurs face funding issues along with being burdened with more household work which leads to slower growth of their businesses.

It is also worth mentioning that the gender gap exists in early stage financing as well. More than 50% of the all-male founding teams report that they have received angel investment while only 31% of the mixed-gender teams had received the same. "Investment and venture capital world is still the male-dominated environment, " García said pointing out that male founders usually have more advantage in terms of building relationships with the investors.

Clip CEO Adolfo Babatz said although 78% of male founders agree that gender diversity positively affects business performance, capital allocation hasn't changed yet to mirror this realization.

The research also highlighted an existing gap in perceptions related to structural obstacles. Whereas almost all females (97%) who run their own businesses think that the system of entrepreneurship is not very supportive of their success, this is the case only for a little over half (59%) of male entrepreneurs.

Mentoring is a further difficulty. Very few (43%) of the high-impact female founders acknowledge they have received mentoring compared to the majority (93%) who say they mentor other women. García pointed out that since there are very few women leaders, they not only get the burden of pushing for the inclusion of women in the whole industry but at the same time they have to find ways to build and expand a business. Hence, more than half of the female entrepreneurs (53%) said that they were given less operational opportunities than men.

Endeavor's results were released about a month after a different study by technology firm CONTPAQi revealed that nearly 60% of female business owners in Mexico rely solely on personal or family savings to fund their ventures.