What to measure when we're measuring gender?

Last year we called out specifically data about the gender mix of founding teams. This year, we did that again, but added an appendix report focusing exclusively on the topic of founding team gender mixes. These reports have sparked numerous discussions on the topic, covering a broad array of topics ranging from the lack of quality data on the subject to philosophical debates about whether and if so, what specifically to track and analyse.

We have our opinion, and wanted to share that, as a structured input into the discussion. As always, feedback, comments and thoughts are welcomed.

With structured data, we can put numbers and objective views behind anecdotes and judgments about the state of the ecosystem. The Icelandic ecosystem has since we started covering it always had various, repeated “truths” that are regularly mentioned on and off the record. “There’s a lack of this type of funding” – “This is very important for the ecosystem” – “There’s too much / too little money flowing from these players into these kinds of projects.” Many of these “truths” bear the resemblance of opinions spoken as truths, because they usually lack any kind of backing by actual data. The fact that a company can’t raise pre-seed, seed, Series A, or growth funding doesn’t necessarily mean that there’s lack of that type of capital. There might be a bunch of capital around, but the company might not be ready (now, or ever) for that type of capital.

In startups and venture capital, just as in many other facets of the business world, the topic of gender equality is important and current. Stories of people experiencing discrimination are regular news. The value of having data to play a part in discussions of the current state, desired state, and policy, is in our mind obvious.

What to track, is however, not as obvious. What are we trying to measure? What outcomes are we trying to understand? To us, there are several questions or topics that are relevant, like whether the gender mix of founding teams impacts fundraising options; how equal the upside or value created by startups is shared; whether we’re showcasing a broad and diverse range of founders to up and coming entrepreneurs. There are several ways we could measure this:

• By looking at the gender mix of equity holders. This would be the most objective way as its fairly easy to look up in Icelandic companies, and it’s a clear number. It gives the clearest picture of the value share between the genders. If tracked in isolation, however, overlooks any gender dynamics and prejudices that might be in play. Holding equity, doesn’t require being active in operations or fundraising. A married couple may share ownership of a company (and in essence, always does), even if only one of the partners is working on the startup.
• By looking at the gender mix of C-level / VP’s / Directors. This would give a good indication of the management of the companies that are receiving funding, and indicators for how gender-mix in the management team might impact funding. However, equity – and therefore share in value created – is not clear, and collecting this data is extremely hard.
• By looking at the gender mix of the founding team. This would give an indication of both equity and stake in value created – very few companies would speak of someone as a founder that doesn’t also hold equity – as well as interface with investors.

The best option is of course to collect all the data. But time and resources are limited, and based on that, capturing the gender mix of the founding team is to us the best proxy for the discussions we want to have. By understanding where funding flows based on the gender mix of the founding team, we can understand, generally, where value creation flows, the gender mix of teams that are pitching and negotiating with investors, and the gender mix that is representing startups to the broader ecosystem and society.