By Elizabeth McCluskey, Director of the Discovery Fund, TruStage Ventures
The conversations around supporting female-led companies shouldn’t stop after Women’s History Month. While the month serves as a strong reminder of the remarkable achievements of female leaders, it also highlights the ongoing struggles women face. Equal representation allows for more diverse perspectives, access to new ideas, as well as inclusive products and services. Supporting female founders demands the attention of our entire ecosystem: investors and credit unions alike.
Investors can provide female-led fintechs with the connections and funding to get their solutions into the hands of credit unions’ members. This might sound simple enough, but research proves otherwise. The recent US All In: Female Founders in the VC Ecosystem report optimistically reports 22.8% of venture capital going to companies with female founders or co-founders, a record high. However, a deeper dive reveals a stark reality – female founders without male counterparts received a mere 2% of VC capital in 2023.
The glaring imbalance underscores the biases and barriers to entry that women face in accessing funding dollars and support. Female-led companies that reach valuations of unicorn status do so faster, and their median time to exit consistently outperforms the U.S. average. Statistics consistently reinforce that female-led companies have a high potential for rapid growth and scalability, providing significant returns and capital.
For credit unions, partnering with female-led organizations can help provide more inclusive financial services. Members have a wide range of unique financial needs, and it’s impossible for credit unions to build technology that supports each circumstance in house. Female founders bring different perspectives and experiences to understand the challenges other females face and have built solutions to solve them. Take Debbie and Frich, for example, two companies that are part of TruStage Ventures’ Discovery Fund, which supports diverse leaders and has allocated 41% of its capital to women-led companies making a difference.
Debbie created the first app to offer cash rewards for positive financial behavior like paying off debt, savings, and paying on time. Women account for nearly 60% of its user base. One user refinanced $20,000 of debt (originally at 20% APR) with a 9.24% loan from a credit union, saving her over $5,000 in interest charges and bringing her monthly payment down. This reduction in her debt burden enabled her to launch her business faster, and she is giving back to the Debbie community as an ambassador to other users. Another user created an emergency fund of $1,000 in less than six months, having never saved before. Debbie is helping both men and women become wealth builders, an area of interest traditionally reserved for men.
Frich empowers GenZ users, and especially young women, with financial confidence. The company leverages community data and insights to equal the playing field around financial knowledge, where men report higher confidence levels than women. Frich fosters a supportive community where young women can anonymously compare their financial standing with peers, normalizing financial discussions and breaking the cultural taboo around finances. The company goes beyond traditional financial management, addressing the emotional and psychological aspects of money that resonate with women. Their end goal is to close gaps like the 30% less for retirement that women have saved.
Credit unions that take the time to understand member preferences and priorities improve satisfaction and build loyalty. Partnering with female-led organizations helps credit unions strengthen relationships with female members by meeting their needs with relevant offerings. With these fintechs, credit unions can help women achieve financial goals and gain confidence. Supporting female leaders also contributes to economic empowerment and community development, further fostering inclusion.
As an industry, we need to do a better job of supporting and empowering female leaders – not only talking about it or paying attention during Women’s History Month. Partnering with female-led companies and advocating for greater inclusivity in venture capital paves the way for a future where gender equality is a reality.
Women influence 85% of household spending decisions in the U.S., impacting $8 trillion in annual consumer spending, and hold 51% of personal wealth in the U.S. and growing. It’s time to provide relevant financial services to women! Investors and credit unions need a dedicated focus on this market to build a more inclusive ecosystem.
Elizabeth McCluskey is the director of TruStage Ventures’ Discovery Fund, which invests in underrepresented leaders building solutions for financial inclusion. Click here to learn more about the Discovery Fund and its investments.