Could Auxxo lay the groundwork for a female PayPal mafia?

The Auxxo Female Catalyst Fund was founded by Dr. Gesa Miczaika (left) and Bettine Schmitz (right).

Two of Germany’s prominent angel investors have launched the Auxxo Female Catalyst Fund, a co-investment VC fund targeting companies with at least one female founder. The vision of the fund is to drive equitable representation of women as founders and investors in venture capital.

Launched in Germany by Dr. Gesa Miczaika and Bettine Schmitz, the Auxxo Female Catalyst Fund is a €15m pre-seed and seed co-investment VC fund. The aim is to cultivate a portfolio of the strongest female founders in Europe by investing in companies with at least one woman who holds a minimum of 20% of the founder’s shares.

The launch comes at a time when investment committees of most funds are still largely made up of men. Yet, there is a growing appetite for greater gender diversity from female founders and their investors.

According to co-founder Dr. Gesa Miczaika, one reason for this is that diverse teams have proven to be more successful; shareholder circles can be considered teams. “It is always good to have someone on board that one can relate to on a different level as well,” she said.

However, earlier this month, a study by Findexable found that only 1.5% of over 1,000 FinTech companies are founded solely by women, and those companies receive just 1% of total venture funding. In Europe, a mere 2% of companies were reported to have been founded solely by women.

The Auxxo founders have observed that on the one hand, established funds complain about not being approached by female founders. On the other hand, female founders complain about experiencing difficulty in accessing capital – and especially networks. This, Auxxo said, is despite the statistically proven above-average performance of female founders.

Whether this above average performance is due to female founders feeling the need to go above and beyond in a male-dominated industry, or if they perhaps bring a unique set of characteristics or skills that lend themselves to success, is unclear.

Miczaika commented that it may well be a mixture of both. Regardless of performance, there is still a disproportionate amount of funding going to female-founded firms. She said, “let’s assume the performance is the same as the performance of male founders: Then the share of VC money going to female founders should approximately correspond to the share of female founders out there. But female founders are getting far less investments than that. This is the opportunity that we see for the Auxxo Female Catalyst Fund.”

Auxxo wants to give the male-dominated venture capital industry a jump-start in achieving gender parity. The small fund size makes it a complementary partner to established funds, rather than a competitor.

Co-founder Bettine Schmitz said the company sees itself as a bridge between the traditional VC world and female founders, “We are the tag team for the female founders and support them in finding their way in the VC and start-up arena,” she said.

Gender disparities are ubiquitous in the FinTech industry. Not only is there a low number of women in the venture capital space, but also in the retail investing scene. This inspired Emma Due Bitz, Camilla Falkenberg, and Anna-Sophie Hartvigsen to launch the EdTech platform Female Invest in 2019, which aims to tackle the gender investment and savings gap.

The company, which recently raised £3.3m in its latest funding round, is providing a space in which women can acquire the skills necessary to control their own capital.

Co-founder Hartvigsen, explains, “Women are falling financially behind in every single country in the world. They are earning less, saving less and then – with what money they have – they are investing less. Our job at Female Invest is to close that gap as quickly and helpfully as possible.”

With regard to the venture capital scene, Miczaika said that greater gender diversity would benefit everyone. Her call to action for men in the VC business is this, “If you are an LP, then make sure that the decision makers in the funds you invest into are gender diverse. If you are a GP in a male-only GP-team at a venture capital fund, then try to bring in a female GP. If you are a male founder: Make sure that you also have female representation in your cap table.”

Miczaika hopes that by creating role models at Auxxo, it will encourage more female founders, “Just like with the ‘Paypal mafia’, we want the founders in our portfolios to become very successful,” she said. “These founders and their key employees can then benefit from exits and support or build new companies which will then further boost the ecosystem.”

More than 60% of the fund’s investors are women, including many well-known female entrepreneurs and managers such as Verena Pausder, Tina Müller, Emma Tracey or Simone Menne.

“It was important for us to attract many women as investors. Only once there are more female investors in the VC business will female founders also get enough capital,” said Miczaika.

Copyright © 2021 FinTech Global

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