While funding in the fintech space has skyrocketed over the past several years, many women in the space are still struggling to find a seat at the table, a trend seen throughout the startup landscape.

U.S. venture capital (VC) funding overall has surged in recent years, reaching a record-breaking $130.9 billion invested across almost 9,000 deals in 2018, according to PitchBook . In 2017, VCs shelled out a comparatively low $83 billion.

Fintech companies alone raised a record high of almost $12 billion in the U.S. in 2018, according to data from CB Insights.

Sadly, funding for women-led startups across all industries hasn't grown at the same pace. Last year, startups founded solely by women only captured 2.3% of total capital invested by VC funds in the U.S., PitchBook data shows. Startups co-founded by men and women got 10.7% of total capital invested. The remainder went to startups founded by men.

Looking on the bright side, in the first two months of 2019 alone, women-led companies had already garnered 1.4% of total VC capital invested. If the momentum keeps up, 2019 might very well surpass 2018 levels.

Studies show that VC investors would benefit from investing in companies founded by women. First Round Capital, a seed-stage VC firm, found that companies with a female founder performed 63% better than its investments with all-male founding teams.

But women-led startups are still getting just a miniscule portion of the pie.

Some say that the trend of male-led VCs investing in male-led startups is mostly explained by the tendency of individuals to associate and bond with people who are similar to them. This could mean that if there were more women in VC funds, there would be more funding made available to female-led startups.

Therein lies another challenge. According to data from various industry sources, only between 3% and 11% of VC investors in the U.S. are female.

Lately, more and more women are founding their own VC shops. Examples include Female Founders Fund, Chloe Capital, Women's Start Up Lab and Pipeline Angels. This will hopefully drive investments into women-led startups, including those within the fintech ecosystem, but much remains to be done to increase the representation of women in the VC space.

So what is keeping women away from becoming VC investors?

It could be that female investors tend to get a smaller piece of the profits made from the investments they've managed. A PitchBook study done in partnership with compensation data firm J. Thelander Consulting that explored how carried interest differs between male and female VC investment professionals showed a clear trend: Women often receive significantly less in carried interest.

Carried interest is the share of any profits that the general partners of venture capital, private equity or hedge funds receive as compensation.

The study found that female managing general partners got less than 10% in carried interest, while men got 20%.

Studies have also shown that male VC firm founders tend to hire male peers. Since men make up the vast majority of VC firm founders, this may be a factor hindering women from getting hired at these firms.

The CrunchBase Women in Venture study found that at 29 VC firms founded by at least one female co-founder, fully half of the investing partners were women. But at the time the study was conducted, in 2016, only 7% of VC firm partners were women, in line with current trends.

Then there is the issue of board representation. The 2020 Women on Boards Gender Diversity Index shows that the average number of corporate board seats held by women on the 2018 Russell 3000 Index rose to 17.7% from 16% in 2017. While the trend is moving in the right direction, half of the companies included in the Russell 3000 Index have one or no women on their boards.

The best way to accelerate the trend is through education, access and action. Dozens, if not more, organizations have sprung up, focused on educating and mentoring female entrepreneurs and investors, with the fintech industry being a major area of focus. Some examples are Barclays' Rise, a community of fintech entrepreneurs; Quesnay's Female Founders in Fintech and Golden Seeds, which invests in women-owned businesses.

Not only do they work towards encouraging women to become fintech entrepreneurs, they also foster relationships between these entrepreneurs and potential investors, both on the financial and corporate side, creating a virtuous circle of increasing gender diversity in the industry.

Michelle Tran is the founder of NYC Fintech Women and Head of Business Development for Harness Wealth.

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