More and more venture capital is being invested in the sector, which is great news. But these funds apparently aren’t serving all demographics equally. Some are left behind, most importantly women.
The report is from the United States but we can suspect the same scenario is happening in Canada.
According to Money Where Our Months Are, released a few days ago, some serious gaps exist between how well men are supported in new ventures compared to women. The report is the first investigation into funding disparities between female and male founders in the agri-food sector.
In 2018, only 16 per cent of all agri-tech ventures had at least one woman as co-founder and only seven per cent of funded projects were led by women founders. These percentages have barely changed in the last five years, according to the report.
Some may argue that projects led by men will outnumber those represented by female-only entrepreneurs, but this goes to the core of a very important issue. In most sectors, women find it challenging to find any financial support. But with food, stakes are much different. Food is cultural, emotional and the foundation of our communities. It involves us all, one way or another, many times a day.
With little or no diversity of thought in the system, food manufacturing has struggled to innovate for years. It’s only in the last few years that we’ve seen disruptors completely redefining our relationship with food. Whether it’s with proteins, the meaning of environmental stewardship in food, or simply how we connect with consumers through other distribution means, everything is changing.
Most of these changes have been spearheaded by leaders outside the normal spheres of the food sector. We’re seeing more high-quality ready-to-eat products, more e-commerce, the emergence of a very interesting plant-based portfolio, lab-produced foods and more.
Non-traditional agri-food investors have a different vision for the sector and how we should produce food, whether it’s to conform to our modern expectations related to animal welfare, the environment or nutrition.
And generally, women have a different take on food systems.
Women also manage risks differently than men and see the market more multi-dimensionally. And results usually follow.
According to the report, food businesses founded by women ultimately deliver higher revenue – in fact, more than twice as much per dollar invested. Women also tend to be more capital efficient, achieving 35 per cent higher returns on investment.
So the numbers build a case for women entrepreneurs in the food industry. But differences remain.
Over the last few years, female-founded startups raised larger deals at the seed stage but typically raised much less during subsequent rounds of funding.
Women tend to be more successful with meal kits, food service companies and home cooking companies. But when some farming and major scalable processing are involved, women are next to absent.
Investors, mostly men, will all be financially savvy and mostly driven by scalability. Women tend to appreciate the nuances food can provide and will understand imperceptible stories linked to the financial part of the business.
Women will often give more honest assessments of challenges and opportunities in a business. Teams led by women focus on long-term success, which is critical in the food industry. Here, patience is a virtue, unlike high-tech or other fast-forward industries.
The report also suggests women entrepreneurs in food will pay back their loans much faster than men. Women also tend to reinvest new-found wealth back into their communities, including families, health and education.
Venture capital is a very piecemeal, insular system, especially in the food sector. We may think investment decisions are rational but they’re not. It’s about who you know, full stop.
We need to get more women in front and foster inclusions during all cycles of funding.
Gender equity in food business and giving more opportunities to women is not just a feminist issue. It’s about making food innovation much more robust than we’ve seen in the last 30 years.
This report looked at gender but the same arguments can be made for ethic groups who can equally contribute to the growth of our food economy.
Embracing diversity isn’t just about having more underrepresented groups in schools, businesses and classes. It’s also about creating a world in which our mosaic society is reflected in the food at our dinner table every day.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.