The Financial Technology sector, better known as FinTech has been developing over the last few years with clear evidence emerging of the role diversity plays in creating successful companies. In early May 2019, the latest study to highlight the impact of diversity for FinTech startups was published by the investment company, KPMG and showed the role of female founders is more important than ever. The findings of this latest study backed up earlier evidence that has proven startups with a diverse range of founders have a better chance of raising higher levels of funding and proving a long-term success for the future.
The Latest Research
KPMG studied 91 FinTech startups which had passed through its programs and received funding to identify areas which could prove a success in the future. Shockingly, only nine of the U.K.-based companies surveyed included a female as a founder but these companies showed a higher level of success than their counterparts which included only men on their list of founders. This is just the latest in a long line of studies and research which have shown the importance of a diverse range of founders for FinTech companies which have shown similar results.
Female-Founded Startups Perform Better
The KPMG-backed research backs up the claims of the MassChallenge accelerator and the Boston Consulting group which showed the average return on funding for female-founded FinTech companies was 112 percent. This compared favorably to a 48 percent return for the companies established solely by males. In almost every category, the work completed by companies established by at least one woman was more successful than those companies lacking a gender diverse group of founders. When looked at in dollar terms, the return on investment for those companies investing in gender diverse companies is also higher than male-only FinTech option. The return on investment per dollar stands at 78 cents per dollar against the return of just a 31 cent return offered by male-founded companies in the same sector.
Problems Facing Those Looking for Diverse Investments
The disparity between the success rate of female-founded FinTech companies and the application process for investment was another area the KPMG research highlighted. Female FinTech founders have been outperforming their male counterparts for a number of years and the latest studies show their success rate can be measured as a factor of 2.33 above their male peers. Despite the success which has obviously been achieved, the process of receiving funding is seen as being far more difficult for those groups including women in their group of founders.
Alongside the issue of female-backed FinTech startups being more likely to succeed than those developed by males, the issue of the role of large corporate investors is also becoming an obstacle to diversity. Almost 40 percent of all FinTech funding has been sourced by major corporate groups who have long been accused of failing to include a diverse range of executives at boardroom level.