Brazilian tech startup ecosystem fails to advance gender equality

The proportion of female founders has been stagnant for ten years and women are largely overlooked by funds, study finds.

The vast majority of technology startups in Brazil is led by men and the amount of female founders has been mostly stagnant for ten years, according to a new report.

Businesses solely led by male entrepreneurs accounted for 90,2% of all Brazilian startups in 2020; the percentage was 92,1% in 2011. Tech startups founded by women in Brazil currently represent 4,7% of the total; in 2011, they accounted for 4,4% of all founders in 2011, when the Brazilian tech ecosystem was 18% smaller than it is today.

The findings were outlined in the Female Founders report published today (8), carried out by open innovation firm Distrito in partnership with global entrepreneurship network Endeavor and B2Mamy, an accelerator connecting businesses led by mothers to the innovation ecosystem.

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An additional 3,5% of all startups in Brazil have women and men represented in the founding team (in 2020, that configuration accounted for 5,1%). Female representation is slightly higher among the shareholders of Brazilian startups: 29.5% have women among their partners. Currently, the Brazilian startup ecosystem has approximately 13.000 companies of all sizes, according to numbers from Distrito's data intelligence arm.

Almost 65% of tech companies with female founders in Brazil have emerged over the last five years, according to the study. Of these, more than 50% of them are still in the product validation or in very early stages of business development - scaling the business was stated as the main challenge for 60% of the women participating in the survey.

When it comes to access to investment, startups solely led by women received a 0.04% share of the total of US$ 3.5 billion invested in the startup industry in Brazil in 2020. Of all the female founders surveyed, 68.2% did not seek capital, either because they still have their own resources or because they do not know exactly how to do this. Among those who tried to attract investors, 36.2% did not succeed and 72.4% said they were morally harassed during the process.

The difficulty in accessing capital was cited as one of the key challenges faced by female founders (38.8%), surpassed only by the the lack of good connections (44.6%) with investors, mentors and other entrepreneurs, and validation of the business model (56.4%).

According to the report, the difficulty in accessing capital is also related to the lack of females in funds: 74% of funds investing in Brazil have no women among their founders or boards. Around 3% of funds operating in Brazil were founded by women.

When it comes to startup segments with more female representation, more than 60% of Brazilian startups focused on fashion, the so-called fashiontechs, were founded by women. The second most popular segment is human resources and people management (26.7%), social business (24.1%) and food (22.7%). However, the study noted these sectors together represent only 3.5% of the startup ecosystem in Brazil.

The analyzed sample of the report consisted of 6.200 tech startups in Brazil. In addition, the study carried out qualitative interviews with over 400 female founders. The research also noted the community of female tech founders in Brazil lacks diversity: 76.5% of respondents are white, and 87.5% said they are heterosexual. Almost 50% do not have children.