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Why is fundraising by women so much harder?

6 January 2021: “We need to do more to invest in companies that are founded and led by women,” says Armance Bordes, General Counsel at Sofinnova Partners. “There are many studies that point to the gender gap that persists in fundraising, making it so much harder for women to raise capital.”

With the ongoing pandemic, climate change and economic instability, the landscape is ripe for transformation and investing in companies led by women should clearly be on the agenda.

Armance Bordes is General Counsel at Sofinnova Partners, a leading European venture capital firm based in Paris, London, and Milan, which invests in early-stage life sciences companies. Her role has two main parts: the first is on the fundraising side with LPs and the second on the investment side with portfolio companies. She is responsible for all legal matters of the firm’s full spectrum of strategic transactions.

“There are no two same deals because we invest in many jurisdictions: France, Europe, the rest of the world – mainly the US for the moment,” she says. “I negotiate the terms of the investment and arrange the financing documentation with the portfolio companies in which we invest.”

Sofinnova Partners is one of the largest, most established venture capital firms in Europe. It has over €2bn under management with a relatively small team of fewer than 50 people. The investment teams at Sofinnova Partners are a diverse, multi-disciplinary group of professionals including scientists, medical doctors and transaction experts. 

The pandemic has, without a doubt, been a devastating global humanitarian crisis. But if there is a silver lining for the life sciences sector, it is the renewed interest from investors. Yes, there have been delays in clinical trials, restrictions on travel, and raising funds is more difficult but “investors are quite comfortable investing in life sciences at the moment,” she says.

“Our flagship fund, the Sofinnova Capital Fund, invests in early-stage companies that are at the proof-of-concept stage and have not yet run clinical trials,” she says. “But we also have a fund that is an in-house incubator in the medical devices sector, led by a team that has a wealth of operational experience in startups, enabling us to bring a hands-on approach to company creation. For example, it could be a researcher at a university that has made a discovery and the investment team helps build their company from scratch. No other VC firm in Europe offers this for medtechs. We also have a crossover fund that invests in more mature companies that are either pre-IPO or are already publicly listed. Therefore, we cover the entire value chain of life sciences investing.”

Given Bordes’ professional position at the crossroads of the legal, financial and scientific worlds, what is her perception of what happens to women’s careers in these sectors?

Although her experience has been positive, as a lawyer she noted how high the female presence was at law school and early on in her career, but how low that presence became at the partner level. Something happens in between those two stages,” she says.

Before joining Sofinnova Partners, she worked for 10 years in a private equity firm called Eurazeo where there was good gender balance. “There were, of course, a few more men than women,” she says. “But women were represented at every level. And there was no salary difference between men and women. Today, the firm is led by a woman,” she says. 

“At Sofinnova Partners, the parity is even more striking. There are more women than men at all levels of the organization. And in the Sofinnova Crossover portfolio, four of our 10 CEOs are women. The ratio is the same for the Sofinnova Capital 9 portfolio companies. If you look across the industry, this is an exceptional gender balance.”

She continues: “There are many studies that point to the gender gap that persists in fundraising, making it so much harder for women to raise capital. As an industry, we need to do more to invest in companies that are founded and led by women. More companies like Sofinnova Partners need to lead the way.”

So, does that mean that positive discrimination in favour of women is needed to turn this around? “When we introduced positive discrimination in France – in terms of boards comprising 40% women – for listed companies, it was very positive. It was a good thing because now, in France, all the major listed companies have women on boards.”

This pioneering French law has shown itself to be hugely beneficial and Bordes would now like to see it implemented at the management level.

“At the level of the company’s management, we have a real role to play within our portfolio companies,” she says. “We're not a typical private equity fund. We invest in very early-stage companies. It’s hard to require from our portfolio companies that they should have a certain level of women within the executive committee, but there is still some good governance that we can help put into place.” That is all part of the due diligence.

“We also have a role to play in the way we monitor the deal flow,” she says, adding that Sofinnova Partners reviews the number of companies in which it has invested in which the founder is a woman. “It’s a first step. It could support further change.”

But there is also a role to be played by investors. “At Sofinnova Partners we’re very good at gender parity but it's not the same for every investment firm. Investors investing in funds could require a certain level of gender balance within the management company and within the portfolio companies when investing.”

There is also work to be done at the EU level, suggests Bordes. “If the European Commission starts to invest in companies within a programme that promotes women, I think that’s a very good thing and it forces the financial world to adapt in exactly the same way as they have done in relation to ESG issues.”

Of course, there may be fewer women candidates, but this is a problem that could at least begin to be addressed through role models’ testimonials in school to promote the financial sector. “Then there is the issue of retention and this can be addressed through mentoring,” she suggests.

We also have to get past biases. There may be assumptions that women don’t want the same opportunities and recognition as men. Or that women in investment roles will only back women-led companies. These are some of the misconceptions that still pervade our industry, and we would all benefit from thinking more inclusively.

ICAEW’s Diversity and Inclusion hub brings together timely resources on regulation and equality, along with our latest insights into diversity in the profession.