A significant gender investment gap continues to hamper economic growth across Europe, with only around 20% of tech companies founded between 2020 and 2025 having at least one woman founder. This disparity isn’t just about representation; European data reveals that companies led by women also receive less funding than their male-led counterparts. The European Commission’s recent report highlights a systemic issue impacting innovation and potential GDP growth across the continent, demanding increased attention to equity in funding.
The problem extends beyond startups. Even when controlling for factors like age, size, and industry, female-owned small and medium-sized enterprises experience approximately 5 percentage points lower approval rates for bank loans in Europe, according to the European Investment Bank. This limited access to capital impacts not only business creation but also broader economic participation and wealth accumulation for women.
The Scale of the Gender Investment Gap and Economic Impact
The European Commission’s report estimates that equal participation by women entrepreneurs could boost EU Gross Domestic Product by roughly €600 billion by 2040. Specific countries stand to benefit considerably, with Poland projected to see a 1.6% increase and the Netherlands potentially gaining up to 5.5% in economic growth during that timeframe. These numbers emphasize the significant economic opportunities lost due to the underrepresentation of women in entrepreneurship and investment.
Estimates also indicate a substantial untapped reservoir of private investment held by women. Currently, women control around €5.7 trillion in retail investments across Europe, a figure expected to rise to €9.8 trillion by 2030. However, if women invested at the same rate as men, an additional €2 to €3 trillion could be mobilized, further stimulating economic activity.
This underinvestment negatively impacts broader economic goals. According to the Commission, the gap represents an annual economic shortfall, hindering progress in areas such as innovation, job creation, and the green and digital transitions.
What’s Driving the Disparity?
Several factors contribute to the persistent gender investment gap. Differences in risk appetite between men and women, shaped by societal expectations and varying levels of financial education, are frequently cited. However, it’s a far more complex issue than simple individual preferences.
Historically, the worlds of entrepreneurship and venture capital have functioned as male-dominated spaces, often prioritizing traits traditionally associated with masculinity, like aggressive risk-taking and assertive leadership. This cultural bias can make it harder for female founders to be perceived as viable investment opportunities.
The makeup of investment decision-making bodies further exacerbates the issue. Venture capital and private equity firms predominantly feature male leadership, which can reinforce existing investment patterns and unconsciously favor male-led startups.
Additionally, societal pressures related to caregiving responsibilities and work-life balance often disproportionately affect women, potentially limiting their access to crucial entrepreneurial networks and funding sources. Even in countries with strong reputations for gender equality, the report highlights that a false sense of achievement can mask underlying structural bias.
Geographical Disparities Add to the Challenge
The problem of limited funding isn’t evenly distributed across Europe. Women entrepreneurs face a “double exclusion” based on both gender and geographic location. Venture capital funding is heavily concentrated in established hubs like London, Paris, Berlin, and Stockholm, leaving founders in Central, Eastern, and Southern Europe at a significant disadvantage.
Data reveals substantial differences in female founder participation rates across nations. Latvia, Italy, and Portugal currently lead with approximately 27%, 25.9%, and 25.2% of new companies having at least one female founder. Meanwhile, the Czech Republic (9%) and Hungary (14.4%) lag considerably behind the European average of 19.3%.
Addressing the gender investment gap requires a multi-faceted approach, including promoting financial literacy for women, challenging gender stereotypes in entrepreneurship, and ensuring equitable access to networks and capital. Policy interventions focused on supporting female-led businesses and fostering more diverse investment teams are also crucial. Monitoring the progress of these initiatives and continued data collection will be key to closing the gap and unlocking Europe’s full economic potential.
