Intuition and investment: KPMG concludes women make best FinTech leaders
Ladies who lead UK FinTechs are producing 113% higher returns to their investors according to auditor
The disparaging jibe made in July 2017 by senior Google engineer James Damore which cost him his job has coined a phrase which this week has reared its head once again.
Mr Damore who wrote a derogatory remark on Google’s internal communication board “Ideological Echo Chamber”, commonly referred to as “Google memo” knocking the firm’s culture and diversity policy and offering his opinion on the differences between men and women at work, had attracted equal derision from the media once his complaint came to light, and earned the moniker ‘tech bro’.
Tech bro is now used widely across Silicon Valley to distinguish the ‘cool kids’, especially men, working in technology sectors such as that in the Bay Area, and has now spread across the pond to London.
Mr Damore was fired from his position for his remarks, however the phrase that became used to refer to him has lived on, and whilst it does appear to do something to quash the socially awkward image that us technologists and computer science enthusiasts endured throughout the late 1980s and early 1990s, is totally misguided, because if KPMG’s latest report is anything to go by, its the ladies that lead.
The report states that fintech startups founded by women are more likely to be successful when compared with the industry average. The study, which looked at 91 fintech companies across the UK, found those that were founded or co-founded by a female achieved 113% higher returns for investors.
That is an astonishing differential indeed. The report was conducted in conjunction with private investment company Clarus Investments, and was called the Fintech Focus report, which found that the median internal rate of return (IRR) were notably higher for fintechs with female founders.
Those who opted to invest early on in female-founded fintechs received a median IRR of 112%, while other business of a similar age only received a median IRR of 48%
“While the number of female founders or co-founders is low, the fact that they typically achieve a higher rate of return is a clear vote for more diversity,” said global co-head of KPMG Fintech, Anton Ruddenklau. The report also revealed that the median amount UK fintechs raised at the first round was £330,000, although 12 firms raised at least £2 million.
Those operating transaction or processing services are typically valued higher with larger early funding rounds than those providing other typical financial services activities to businesses or customers. Only six of the 91 are profitable or breaking even, while median losses after tax are increasing each year for the first five years.
The oldest fintechs continued to receive funding in later rounds at increased valuations, however, suggesting that there is still long-term growth and in confidence in the sector. “It’s really encouraging to see that investors are taking a longer-term view to investing in fintech firms. They expect losses in the early years as product development and scaling require significant capital,” Mr Ruddenklau added.
“In order to scale, there is going to be an increasing need for more institutional and patient capital to support investment. Matching these sources of capital to fintechs is something that the industry must focus on as it grows’ he concluded.
Our very own technological development sector has its share of female high fliers, including CFH Clearing’s Mehtap Onder, FX Street’s Valeria Bednarik, Dukascopy’s CEO Veronika Duka, and TRAction FinTech founder Sophie Gerber.
Time was that Natasha Lala ran technology-first retail FX and CFD firm OANDA Corporation’s Silicon Valley based R&D division, however since her departure the tech developments arising from the company have now aligned themselves with the other divisions.
Tier 1 banks have also gone down the route of attracting the leading ladies, as Alison Rose prepares to become the first female CEO of a Tier 1 bank.
Ms Rose, one of the most senior women in the City, is regarded as the frontrunner within Royal Bank of Scotland to succeed the chief executive, Ross McEwan, when he departs within the next 12 months.
The 49-year-old senior executive has kept a lower profile in recent years than other City high flyers such as Nicola Horlick and Dame Helena Morrissey, but is highly regarded in the banking industry and is expected to be charged with reviving this once powerful top level FX dealer’s market position and commercial strength as the non-bank market makers trounce the banks in the FX sector.
Already the most powerful woman in UK banking, Ms Rose would be the first woman to run a major UK bank, and this would place RBS as the only bank in the world with the two top positions held by women as the COO of the firm is also a lady.
All we have to do now is get Brexit done and concentrate on the City’s position as a global powerhouse. Where is Margaret Thatcher when she is needed?