Insurance is not known for its diverse leadership. Despite accounting for more than half of the insurance workforce, women comprise only 18% of the C-suite, according to McKinsey. The insurtech space feels even more male-dominated.
The odds are stacked against all startups. But for female-founded ones, the uphill battle is even steeper. Particularly when it comes to funding. McKinsey research shows a direct correlation between gender diversity and increased profitability—companies in the top quartile for gender diversity on their executive teams are 21% more likely to outperform—women-led startups don't receive the same level of financial backing as male-led ones.
Only 2.2% of venture capital funding went to female-founded businesses in 2018, according to PitchBook. And when women do receive funding, they receive more than $1 million less, on average, than their male counterparts.
The Boston Consulting Group studied five years' worth of startup investment data and found investments in companies founded or co-founded by women averaged $935,000. That's less than half of the $2.1 million invested in companies founded by male entrepreneurs.
One reason for the disparity, experts say, is the lack of female venture capitalists. According to media and information firm Axios, only 9% of decision-makers at U.S. venture capital firms are women.
The gender funding gap not only affects the way women raise capital (hint: they get creative), but experts say it also affects the types of businesses they start. And it's not the only issue female founders in insurtech must overcome. From a shortage of mentors to unintentional bias, women entrepreneurs face additional obstacles in getting their companies off the ground and getting a seat at the table.
Funding is an issue for every startup, regardless of gender. “No one just hands you a stack of money,” said Hearsay's Shih, who has raised capital from venture capitalists Sequoia and New Enterprise Associates. But with a funding gap that puts them at a disadvantage, women entrepreneurs have found alternative ways to raise capital. Rather than rely on venture capital dollars, female founders are found to reply more on crowd-funding, angel investors, friends and family, and industry executives as sources of capital.
According to BCG, companies founded or co-founded by women perform better financially, generating 10% more revenue over a five-year period than male-founded businesses. They also generate 78 cents for every dollar of funding, compared to 31 cents generated by male-founded startups. Profitability is one surefire way for female founders to quickly build trust and earn a spot at the table.
So, why is the FLITe series needed? The lack of gender parity in InsurTech is clear. The opportunities and benefits women can bring into InsurTech is clear. With the launch of our events series for women in insurtech in 2022 we hope to provide a platform for women in the industry and hope to facilitate their growth and progression.