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January 19, 2024
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Closing the Gender Financing Gap: GreenTech Leads the Way

Recent funding rounds in the sustainability space, particularly in climate tech or GreenTech, have sparked optimism about increased funding for women-led startups. European climate tech startups received $13.2 billion in investments in 2022, representing 13% of total venture capital funding, showing the potential for growth in the sector. However, women entrepreneurs are still heavily underrepresented, with just 2% of all capital allocated going to women-led startups across Europe. Investors admit that investor bias is the key hurdle to overcome to address this gender financing gap. Homophily, or attraction to similarity, is a significant cause of the imbalance at the fundraising level, as the majority of angel and venture capital investors are white men. A recent study found that investors tend to ask women-led startups more risk-related questions, leading to lower valuations compared to men-led startups. To address this gap, the investment process needs to be reviewed, with standard evaluation frameworks for all startups and alternative financing options such as grants, revenue-based financing, or crowdfunding campaigns. With the urgent need for technological solutions to address climate change, it is crucial to build support and investment communities that empower women in the GreenTech sector.

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