Less than 2% of venture capital investments went to all female-led teams in 2021. Plus, Virgin Money’s new fund to support UK farmers, and EIB announces solidarity financing fund to support Africa’s rural microfinance institutions
A new report commissioned by Women in VCs, a European initiative of senior female venture capital (VC) professionals, has found that despite record breaking growth in 2021 in which Europe’s startups raised more than €100bn in VC investment, only 1.8% of capital went to all female-led teams and 9.3% to mixed gender-led teams.
Since 2018, all female-led teams in Europe have received on average 2.7% of startup investment each year, with year-on-year progress either flat or reversing. This is despite numerous studies which highlight the strong positive correlation between diverse and female-led teams and financial returns.
The report also found that only 15% of general partners at VCs are female and manage only 9% of total AUM, with typically less access to the larger VCs in Europe.
The report points to the gender correlation between female investors and investment in female-led businesses and calls for an increase in the number of female GPs as well as greater access to the larger funds if women are ‘to exert real firepower’.
Mariya Gabriel, commissioner for innovation, research, culture, education and youth at the European Commission, who authored the report’s preface highlighted the preponderance of female investors to adopt an outcomes based approach to investing and take a longer term view. She said: “Their [women’s] investments are often driven by social impact and sustainability. Such ventures and acquisitions are essential to set the EU on a swift and sustainable recovery path following the COVID-19 crisis.”
Virgin Money launches £200m fund to support UK farmers with green loans
Virgin Money, the UK based online bank, has launched the £200m (€233m) Agri E Fund to help farmers in the UK to transition to net zero by offering lower cost loans to invest in activities that will reduce on-farm carbon emissions.
The fund will offer loans with 0% arrangement fees when a farmer completes a carbon audit and borrows more than £50,000 to invest in emission reducing initiatives, such as renewable energy, energy efficiency or farming activities that reduce greenhouse gases.
Virgin Money says that as well as offering the potential to reduce carbon emissions from farming, the loans can be used to exploit the significant land resource within agriculture to capture and store carbon over and above the sector’s level of emissions.
According to the National Farmers Union (NFU), the largest farmers organisation in England and Wales, farming contributes approximately 10% of the UK’s greenhouse gas emissions. The NFU has pledged to reach net zero greenhouse gas emissions across the sector in England and Wales by 2040.
New European solidarity financing fund launches in Africa
The European Investment Bank (EIB) has announced the launch of the FEFISOL II fund to finance African rural microfinance institutions and agricultural entities sourcing from smallholder farmers in Africa.
With a first closing of €22.5m, and a technical support envelope of €1 million, the fund is being structured by social investors SIDI (Solidarité Internationale pour le Développement et l’Investissement) and Alterfin, who are contributing €4.8m and €2m respectively.
This latest fund builds on the work of FEFISOL I, which closed in July 2021, and will continue to finance and support the implementation of socially and environmentally sustainable practices to improve the living standards of vulnerable populations in rural Africa, reduce inequalities and promote sustainable agricultural development.
According to the EIB, the penetration rate of microfinance in rural areas in Africa remains very low with less than 5% of the loans disbursed by traditional financial institutions intended for the agricultural sector and less than 10% of farmers with access to formal sources of credit. This is despite the agricultural sector accounting for 23% of the continent’s GDP and 55% of employment. Although urbanization is increasing, almost 60% of the population of sub-Saharan Africa, still lives in rural areas.
FEFISOL II will be implemented in more than 28 African countries and should eventually support 110 microfinance institutions or agricultural companies and cooperatives sourcing from smallholders, most of which will be Fair Trade or organic certified.
The European Investment Bank, Proparco via FISEA+, the Belgian investment company BIO, the Alternative Swiss Bank, Crédit Coopératif, Banca Etica and SOS Faim Luxembourg have recently signed up for a stake in the fund.