The gaping gender gap in the European deep tech sector has cost it almost €200 billion over the past 10 years, new research has found. Women-led companies have had significantly less representation in both IPO and non-IPO exits, despite bringing in more value per exit than their male-led counterparts.
Women-led companies generate value but remain underrepresented
According to Europe’s first Gender and Diversity Index, developed by the GENDEX research initiative, women-led companies have accounted for over 11% of the total value raised at non-IPO exits in the past decade. However, they have made up only 0.6% of the total number of non-IPO exits completed in that period.
The Gender and Diversity Index was compiled using data from quantitative surveys and qualitative interviews to analyse diversity’s impact within the European innovation ecosystem. Funded by the European Innovation Council, the report aims to help investors to self-assess their portfolios against standardized benchmarks, encouraging them to rectify imbalances.
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Stakeholders’ biases are holding back women-led businesses
Women-led tech businesses face greater challenges in reaching key milestones due to the inherent biases from stakeholders. On average, it takes them six months longer to secure their first term sheet than male-fronted businesses, and they received 1.8 times less funding between 2014 and 2024. The index also found that once woman-led companies receive funding, they often secure less favourable terms compared to male-led teams.
One woman founder interviewed as part of the index shared her experience:
“I think men, when they see young women, especially in the mould of their daughters, who are so much younger than them… I think there’s a bias towards women being less capable or that they just see their daughters basically. A little bit of paternalism on their part.”
Women remain under-represented in STEM research and business
The Gender and Diversity index found that, while 42% of STEM graduates in Europe are women, their representation in key industry indicators remain significantly lower:
- 31% of employed researchers and scientists in Europe are women.
- 24% of patent applications in Europe include women as inventors.
- 22% of deep tech companies in Europe have been women-led over the last ten years.
- 1% of men-led companies have over half of their technical positions filled by women, while 29% of women-led companies achieve the same.
Recommendations: Investing in diversity for stronger outcomes
The GENDEX team recommends that European investors require gender diversity reporting before funding companies and increase investment in women-led teams, as they deliver stronger business outcomes. Additional legal and financial support is suggested to help women secure IP rights, and government co-investment should ensure gender-balanced portfolios.
“If investors and policymakers don’t act now, Europe will continue losing billions in untapped talent,” said Tanya Suarez, Chair at GENDEX, in a press release. “This data proves we need structural change. Not only is it needed to fairly represent women, but evidence shows a gender-balanced ecosystem delivers the best results.”
Europe is lagging behind in global innovation
According to a 2024 report from former European Central Bank President and economist Mario Draghi, Europe’s lack of innovation has led to the U.S. outpacing the EU’s GDP by $9 trillion in 2023. Despite Europe’s top three R&I investors being in tech, “we are failing to translate innovation into commercialisation,” he said, pushing entrepreneurs to relocate to the US.
Currently, only four of the world’s top 50 tech companies are European. A Google report published in October 2024 found that Europe spends only 2% of its GDP on tech research. By contrast, the US spends 3%, and South Korea and Israel spend over 5%.
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Europe lags in AI and tech innovation
Europe also lags significantly in AI innovation. The region only filed 2% of global AI patents in 2022, while China and the U.S., the top two largest producers, filed 61% and 21%, respectively. Both the Google and Draghi reports placed significant blame on E.U. legislation for the region’s struggles to innovate in advanced technologies.
“Since 2019, the EU has introduced over 100 pieces of legislation that impact the digital economy and society. It’s not just the sheer number of regulations that’s the challenge — it’s the complexity,” said Matt Brittin, president of Google EMEA, in a blog post.
EU regulations are deterring big tech and startups alike
Legislations, such as the EU’s AI Act and Digital Markets Act, can hinder large tech companies like Google just as they do start-ups, which has led them to be open with their criticism. While the bloc represents a massive market of 448 million people, regulatory hurdles have deterred tech giants from launching their latest AI products in the region.
President Donald Trump banned diversity initiatives in the U.S.
Despite its current dominance, the U.S. may soon face setbacks due to President Donald Trump’s efforts to dismantle diversity, equity, and inclusion initiatives across sectors, including tech.
Shortly after taking office, Trump issued executive orders aiming to eliminate so-called “dangerous, demeaning, and immoral race- and sex-based preferences” within federal agencies and revoke affirmative action requirements for federal contractors. As a result, many of Silicon Valley’s biggest players, which may also hold federal contracts, have revoked their DEI commitments, including Google, Amazon, and Meta.
Some have pushed back against the tide, like Apple, with Tim Cook telling shareholders that “our north star of dignity and respect for everyone and our work to that end will never waver.”
