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Despite timid advances in female-led technology-based companies with more success stories hitting the headlines, macroeconomic conditions do not make the emergence of new scale-ups, unicorns or decacorns particularly easy. However, experts feel that Brazil may be on the verge of an acceleration in the number of high-growth startups led by women.

Overall, the environment for women’s survival and work in the post-pandemic world is hostile. Amidst all the losses of Covid-19 is the disproportionate impact for women, who have found themselves more likely to lose their jobs and suffer a reduction in income. This is a problem defined by the CEO at the Institute for Women’s Policy Research, C Nicole Mason as “shecession.” A similar trend is illustrated in statistics from organizations such as Brazil’s Institute for Applied Economic Research (Ipea), which suggests that while the occupation rate stood at 58.1% for Brazilian men in the second quarter of 2020, while the rate reached 39.7% for women.

Amongst women in charge of their own businesses, the current situation is equally bleak. According to a survey by Brazil’s small and medium business service Sebrae, the pandemic has reduced the number of female entrepreneurs. The numbers suggest a reduction of 1.3 million businesses led by women between 2019 and 2020. Another survey, from Goldman Sachs, has found that the revenue of small businesses owned by female entrepreneurs fell by 66% between 2020 and 2021, because of factors such as double work journeys and a greater burden of household chores.

The Goldman Sachs research also points to negative gender bias, which imposes barriers in access to capital, as one of the biggest obstacles faced by female entrepreneurs. When it comes to the Brazilian startup universe, the point of scarcity of capital for women is corroborated by the Female Founders survey, published last year by innovation hub Distrito, Endeavor, and accelerator focused on mothers B2Mamy, which suggests that women received only 0.04% of the more than $3.5 billion invested in the market in 2020.

On the other hand, 2021 was also a landmark year for women-led companies that managed to “get there” despite the challenges by going public with their businesses on the stock exchange. Flagship global examples include Whitney Wolfe Herd who became the youngest woman to do an IPO when she took Bumble public in February, raising $2.2 billion. Also, Vimeo chief executive Anjali Sud was the first Asian woman leading a Nasdaq offering in May. And of course, Cristina Junqueira, pregnant with her third daughter, held Nubank’s NYSE IPO in December.

A developing ecosystem

Given Nubank’s precedent, one would have thought that Brazil would have had time to generate more companies of comparable size led by women. According to Maria Fernanda Musa, business acceleration director at Endeavor, the shortage of female entrepreneurs leading other market giants bothers the organization, which focuses on fostering high-growth companies.

“The number of unicorns led by women globally [12%, according to PitchBook data] is not good, except that it is still better than in Brazil, where we only have one unicorn led by a woman. But when we compare the North American and Brazilian innovation and entrepreneurship scenario, there is a big difference, because our ecosystem is still very recent,” says Musa, in an interview with Startups, recalling the first Brazilian unicorn, mobility firm 99, which reached that status in January 2018.

Analyzing the evolution of the ecosystem in relation to women over the last four years, Musa says that the pool of scale-ups and startups founded only by women in this period suggests Brazil is an ecosystem in development. Citing data from the Female Founders study, the Endeavor executive says that two thirds of Brazilian scale-ups led by women emerged in the last five years.

“We still haven’t had time to have more women on the unicorn list, but that should happen in the next few years. If we consider Nubank, which is close to reaching its 10th birthday and was considered a unicorn about three years ago, I imagine that we are close to seeing a more diverse list,” she points out.

To support female founders who may eventually become unicorn creators, Endeavor has sought to attract more startups with female leaders to its accelerator program. The organization already sees some results stemming from its actions: the percentage of female founders in the program was 12% in 2020 and is currently at 30%.

“We are actively working in terms of going after these women, understanding that they often haven’t had the same access to capital and connections that male founders have had. We have the same selection criteria such as growth potential and market, but we are reaching to these companies a little earlier than usual because we understand that [acceleration] can be critical at this stage [of less maturity],” says the Endeavor director.

Future unicorns led by women

When the subject is future unicorn candidates that are led by women, Musa’s bets include companies such as HRtech Gupy, which raised 500 million Brazilian reais ($XXX million) in a round led by SoftBank earlier this year and soon after, bought Kenoby, its main competitor. “[Gupy] is one of the most prominent companies in our portfolio,” Musa says.

Other possible candidates to reach the valuation of over $1 billion include digital cosmetics firm Sallve, which raised 100 million Brazilian reais ($20,5 million) in a Series B led by Atlantico last year. The company has Daniel Wjuniski as chief executive, and was co-founded by digital influencer and chief creative officer Julia Petit and Marcia Netto, who is chief digital officer of the startup. Upcoming unicorns with female leadership may also include Arquivei, a tax document management firm that raised $48 million in funding in a round led by Riverwood in 2021. Until earlier this year, the company was led by co-founder Cristian de Cico, and since last month has co-founder Isis Abbud serving as co-CEO.

About why many of the most promising companies in the ecosystem still have men at the helm, with women in roles other than that of CEO, Musa notes that there are fewer women at top roles due to a matter of complementarity. “I think that this is due to a question of [the entrepreneur’s] skills,” she points out, citing Gupy as an example, where women hold the top roles, with male partners in the “backstage”.

Greater female representation in senior positions at successful startups also means that more women will also be empowered to create their own unicorns in future. Equipped with the experience of how to scale businesses, validate products, and with access to connections and capital, these female entrepreneurs will have already made considerable progress in overcoming some of the biggest obstacles imposed on female founders. “From the moment women break this initial barrier, the potential for future growth is gigantic,” Musa points out.

To raise more women to leadership positions, Endeavor has also intensified awareness actions among its portfolio companies and awarded startups that advance in the diversity and inclusion agenda – according to Musa, Gupy is among the companies in Endeavor’s portfolio that has stood out the most on that front. The startup has set the goal of having women in 50% of all hierarchical levels, including its top leadership, byJuly 2024. About 30% of these women should belong to the other diversity groups of race/color, sexual orientation, gender identity, and people with disabilities.

The Endeavor director warns that the understanding among startups around needing to accelerate their efforts around gender diversity in an intersectional manner (i.e., it is not enough just to hire cis, white women) will make a difference to the financial result, considering the current focus on environmental, social and governance (ESG).

“We strongly believe that there will be no time for entrepreneurs who are not looking at this. People are concerned about how your products are made, who works in your team, if you care about this debate, if you are ethical,” says Musa. “I think that’s a path of no return: and it’s awesome that that’s the case.”

(translation by Fabiana Rolfini)


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