Female start-ups: No country for female founders

It was a video on Instagram that made Julia Huhnholz a founder: “Looking for a comrade-in-arms” was the message that the then-unknown pharmacist Vivien Karl sent. The two women arranged to meet for lunch – “it was love at first sight,” Huhnholz remembers.

On this Berlin summer evening, the marketing manager looks on with enthusiastic faces. More than 100 women have come to a coworking space on Kurfürstendamm following an invitation from the Businettes network of female entrepreneurs.

Among them is a young beautician who has a certified vegan lipstick. An experienced manager from a drinks company makes water tasty with natural extracts and a minimum of sugar.

An agricultural engineer has developed an AI-controlled field robot with fellow students. They all want to network, inspire each other – and get started as founders.

This is urgently needed. Because women are still severely underrepresented, especially in high-growth start-ups. According to the German Start-up Monitor 2023, their share among all start-up founders was just 21 percent.

Women are particularly at a disadvantage when it comes to money, and are financed much less frequently by investors and with smaller sums. Networks such as Businettes or Encourageventures have set out to change this.

“I didn’t think twice about it, left my comfortable permanent job and set off on an adventure,” Huhnholz tells her listeners. That was two years ago.

Since then, the two founders have raised 1.5 million euros in investor money and hired eight employees. Their product: a cream to combat vaginal dryness for women in menopause. The cream, under the brand name Dr. Vivien Karl, is now available in all pharmacies in the country.

Platform Businettes supports female founders

“Female founders in Germany need role models like Julia Huhnholz and Vivien Karl,” Victoria Arnhold is convinced. She also founded a company together with a woman: together with her college friend Claire Siegert, she runs the Businettes network, which was invited to this evening. Her goal: “We want to encourage female founders.”

More than 1,000 women are now members of the Businettes platform. They can exchange ideas online and find guidelines and checklists for starting a business and for everyday business operations.

They also receive invitations to workshops and events such as the meeting in Berlin. “Help each other and above all: dare to think big,” Claire Siegert calls out to her guests from the stage that evening.

Start-ups are so relevant because they – unlike a kiosk or a hairdresser’s, for example – have a strong desire for growth and offer innovative products or services. However, according to figures from the German Start-up Association, which surveys almost 2,000 start-up companies every year in its Start-up Monitor, the proportion of women among founders has been stagnating for years.

It seems to be cemented at around 20 percent. “Especially in difficult times, progress in the area of ​​diversity seems to fall by the wayside,” the 2023 report recently said.

Given the stagnating economic growth and high number of insolvencies, there is no sign of any improvement any time soon. “Many women perceive that as a founder, I have to overcome hurdles that founders are not familiar with.” “In the current times of crisis, these hurdles are particularly high,” says Heike Hölzner, Professor of Entrepreneurship and SME Management at the HTW in Berlin. Things are still difficult for female founders when it comes to money.

The management consultancy EY recently documented a massive gender pay gap in start-up financing. According to the study, 237 women and 1,713 men received capital for their start-ups last year.

However, only five percent of all start-ups that received venture capital were founded entirely by women. They only received two percent of the capital. Another sobering pattern: the larger the financing rounds of start-ups became, the smaller the proportion of female founders became.

Hölzner will help to change that. She is a founding member and co-chair of the Encourageventures eV network, which has around 700 female investors and mentors. They support more than 1,100 start-ups with at least one female founder on the team.

Women struggle with investor reluctance

“We have no shortage of financially strong women in Germany, but there is a great deal of reluctance when it comes to investing money in start-up companies.” “The term venture capital alone gives many people the impression that this is a gamble,” says Hölzner. Her association will educate and encourage people. It organizes workshops and monthly pitch nights at which female founders present their ideas.

Anyone who doesn’t want to invest a five- or even six-figure sum in a company alone can join experienced investors and learn at Encourageventures how so-called club deals are made. The women ultimately invest privately. There are no official statistics on how many have actually done this so far.

Meanwhile, founder Huhnholz and her partner Vivien Karl are warming up for the next round of financing. Negotiations are set to begin next spring. Huhnholz has some tips for anyone who is just starting out and wants to convince their first investors: practice, practice, practice.

“The storyline has to be right before the first pitch,” says the founder. What is special about the business idea? What is the market for it? That should be answerable in a few sentences.

And if a woman asks herself whether now is the right time in her life to embark on a start-up adventure, Huhnholz, mother of a daughter, also has some advice: “Just do it!” It’s like having children, it’s always hard work and never the right time, but it’s still wonderful!”

Inga Michler is a business reporter at WELT and moderates major Economic Congress. The economist with a doctorate reports on economic transformation, artificial intelligence, Sustainability, Family business, Philanthropy and Guide.