Success factors of female founders in the German startup scene.

Ladies, we need you!
When I wrote my bachelor thesis on "success factors of female founders in the German startup scene" back in 2018, I was pretty sure that the fundamental problem and phenomenon of the underrepresentation of German female founders would certainly no longer be relevant by the time I started my job. Almost unbelievable that the topic is hotter than ever.
Looking at the numbers presented by the Female Founders Monitor 2020, the percentage of female startup founders has once again only barely increased and currently stands at 15.7%. This imbalance means that there is a huge amount of untapped potential.
The question is where the existing founders gender gap derives from. In the wake of the current momentum and a (hopefully) emerging female founder identity in Germany and all over the world, I would like to share the main findings of my apparently not so vintage interviews with ten female founders in Germany and thus motivate even more women to become part ofthe German startup scene.
Proportion of startup founders by gender, in % (Female Founders Monitor, 2020)

The status quo: Why is the share of female founders so low?

As potential reasons for the low share of female founders in Germany, empirical studies have so far mainly analyzed female personality profiles, compared social networks of women and men, or shed light on influencing family factors. However, these approaches are often incoherent or only considered separately. To get a detailed overview of existing barriers, I categorized them into three overarching areas: societal, employment-related and personal barriers*.  

The first area deals with societal aspects, such as the typical distribution of roles in German society, the influence of the media on the image of women, and the extent to which the female network plays a role in the occurrence of barriers.

The second area focuses on conditions related to employment, for example how invisible structures affect the position of women as founders. Existing institutional problems, such as the gender pay gap or the glass ceiling, are included in the potential reasons for the underrepresentation of female founders in the German startup scene.

Finally, the third area deals with some of women's personality traits. The partly psychological aspects that emerge here take on an important role in the founding of a company. Above all, the personality of the founder represents a central factor in the survival of the enterprise.

One of my main assumptions was that success factors of existing female founders can be derived from overcoming these existing barriers. Accordingly, the qualitatively collected study focused mainly on the behavior of female founders in these three areas. If they themselves had not (yet) had any experience in these, the corresponding area was skipped.

After consolidation, five distinctive success factors emerged. Certainly, these success factors are not universally applicable, but they provide important impulses for prospective and existing female founders, as well as for all stakeholders who want to actively support female founders.

* It is important to emphasize that in most cases, no one area alone is responsible for underrepresentation, but rather a variety of factors within and outside of those areas.

Having a confident attitude

Especially when it comes to breaking down barriers in society and on the labor market, self-confidence can be identified as an important success factor.

The experience of the surveyed female founders indicated that women are generally less trusted to start a business. Therefore, it is particularly important to appear very professional and well prepared. In this way, a possible weak image can be prevented. Female founders who were still very young at the time of founding (mid-20s) overcame fears and weaknesses in part by overcompensating and behaving in a particularly self-confident manner. Although a woman with the same idea is more likely to be noticed than a male founder (which by the way can be a huge advantage in fundraising 😉), it is through a professional appearance and actions above all through that founders can actually convince.

My research indicated that female founders themselves feel that they lack the right sense of humor when compared to men. An approach with humor and fun (i.e., at investor presentations), without making a fool of oneself, is usually positively received everywhere and is gladly reciprocated. After all, founders are supposed to have the most fun when pitching their own business idea. Again, through authentic self-marketing, founders will always convince someone.

Finally, with regard to this success factor, it should be mentioned that although self-assessment is crucial to act more confidently, some of the female founders interviewed did not believe in themselves from the beginning. Nevertheless, by presenting themselves in the appropriate way and certainly by keeping their composure, they received positive feedback and thus a decisive momentum developed to strengthen their belief in themselves.

Utilizing networks

Networks can be diverse. One of the female founders interviewed, for example, was particularly encouraged by her co-founder to go step by step into self-employment. They were able to encourage each other and thus ensure a unified, self-confident appearance. This showed the enormous importance of networks - whether private or professional. Another founder developed the self-confidence she needed to put her idea into action by exchanging ideas with others and gathering a wide range of opinions on her business venture.

Many female founders also attach great importance to their private network. Especially partners and family can be very supportive. However, this does not mean that founders only ever get positive, encouraging feedback, but also that there is someone who brings them back down to earth when they overestimate themselves or presume too much. At the same time, when one suffers setbacks or disappointments, someone is there to build them up – giving up will not be an option.

Especially for the development of business relationships, a professional network is very important. For some founders, this came about through contacts from university, others have built it up themselves by attending founder events or joined networks designed for this purpose.  

For the majority of the female founders surveyed, the network and its use represent the most important success factor. Events are enormously valuable for exchanging information, especially in the early stages of a startup, and for getting initial reactions about the intended project.

For others, the personal network in the form of partners and family is more decisive. The team belonging to the startup is also an important part of this network; after all, founders spend more time with them than with any other contact in their environment.

Allowing changes

Being courageous and taking a risk goes hand in hand with not fixating rigidly on a single goal. This could lead to new opportunities being overlooked and going unused. In order to be successful, it is of great importance that founders do not claim to be able to perfectly plan everything around the foundation. Rather, entrepreneurs need to react to the feedback from, e.g. the direct, personal environment,  the market, potential investors and advisors in relevant industries.

If, after initial considerations and feedback, founders are not yet sufficiently clear about their own ability or the success of the implementation, it is also necessary to simply dare and try something out. If necessary, even the (business) plan must be adjusted again. Founders must accept a certain amount of risk that the decision to start up entails, and at the same time develop a serenity to allow and evaluate new perspectives.

A successful business model cannot be set up overnight, but requires constant development and adaptation. Founders cannot assume that they will be able to take the easiest path, which is why courage and allowing changes are very important in order to be successful in the long term.

Accepting opposition

In the startup scene and in business life in general, it is important to be aware that one can never please everyone. Therefore, founders should not be afraid to be unpleasant and loud sometimes. Just as there will always be someone to support, there will always be people (from the personal or professional network) encountering resistance.

The tolerance for rejection must be very high with regard to the founding decision in order to be successful.

One must learn to deal with rejections and disappointments and see them as opportunities. Reasoning and root cause analysis, at least in the case of business-based rejections, can allow potential for improvement and ensure steady personal and business development.

Shaping a new founder identity

The term "career woman" still has a rather negative connotation in German society, which means that, at least at a first glance, the incongruence between the female gender role and a leadership role, as described in literature, still exists. However, most of the surveyed founders stated that the term was a compliment for them personally, and some even believe that the term would now be interpreted rather positively.

According to the respondents, it is particularly important that it becomes more normal for women to start up and be successful. This topic should also not be too polarizing, as it was the case at the time of the study (and still is to some extent).

Clearly, the reasons for the underrepresentation of female founders in the German startup scene are complex and often deeply rooted in our culture.

However, there are also concrete obstacles that we need to address as soon as possible. Above all, it must become even more attractive to reconcile family life and starting a business. In addition, female founders are at a proven disadvantage when it comes to financing, especially when raising larger amounts of capital through business angels and VCs; the investor side must become active here and support female founders beyond the current measures.

Personally, I am actively involved in various networks (#femstory #techincolour) to help great women start businesses and try to give them the last missing spark of self-confidence or network.

Ladies, we need you!

For further questions about the empirical basis, research design, or general suggestions, feel free to reach out to me via mail or LinkedIn.