Women-led Anthemis raises $700M for embedded finance startups while modeling diversity

The news: The UK-based, female-led investment platform Anthemis Group raised more than $700 million, bringing the firm’s total AUM to $1.2 billion. It will continue to invest in pre-seed through Series B embedded finance startups and also fund early stage fintechs.

Who is Anthemis? The investment firm heavily promotes its progressive values of diversity and inclusivity. Its vision statement includes building “one of the world’s leading diversified financial services companies, with a commitment to diversity, equity, and inclusion as a blueprint for the economy.”

To that end, the company is working to improve gender imbalances in financial services.

• Its first ESG-focused SPAC, Anthemis Digital Acquisitions—which debuted on Nasdaq in November, closing at $230 million—is led by Anthemis founder Amy Nauiokas and an all-women management team.
• In September, the firm expanded its Female Innovators Lab in partnership with Barclays into the UK and Europe.
• Nearly one-quarter (23%) of Anthemis’ portfolio companies are founded by women. (In the industry overall, companies with solely female founders raised just 2.2% of all venture funding this year.)
• Thirty-nine percent of Anthemis’ portfolio companies are led by women or executives who are Black, Indigenous, or people of color.

What are its investments? Anthemis has made more than 150 investments in fintechs including Betterment, eToro, Currency Cloud, The Climate Corporation, Carta, and Happy Money.

• Early stage investments include Pipe, a recurring revenue trading platform; Weavr, an embedded banking provider for digital innovators and fintechs; and Atomic, an investing API for fintechs and banks.
• Venture investments include Branch, which bundles home and auto insurance; Eigen, an intelligent document processing provider; and LocoNav, a telematics-based fleet management platform.

What problem is it solving? Fintech has a gender diversity problem. As Deloitte put it, “It starts to look like an industry founded for men, run by men, making products for men.”

• Too few women work in fintech companies. According to a 2018 LendIt survey, only 37% of fintech employees are female.
• Too few fintech companies have female founders, or even female leaders. Only 17% of senior fintech roles are held by women.
• Too few female-led fintechs get funding. A recent HBR study found that without diverse leadership, women are 20% less likely than straight white men to win endorsement for their ideas, which costs their companies crucial market opportunities. In 2019, companies with female CEOs represented 11% of all venture capital deals made globally. (This increases to 20% if a female founder is included.)
• Females are also under-represented among fintech users. A BIS global survey shows that while 29% of men use fintech products and services, only 21% of women do. Oliver Wyman estimates this unmet opportunity leads financial services firms to forego at least $700 billion in revenue each year.

Why it matters: Diverse thinking is critical to how fintechs understand unmet needs in underleveraged markets and how they innovate.

There’s strong evidence of the value women bring to businesses. The Credit Suisse Research Institute reports that companies with at least one woman on the board perform 26% better than those with male-only boards, while Forbes found female entrepreneurs generate 20% more revenues than their male counterparts, despite receiving 50% less venture capital funding.

More women are entering fintech, but biases persist, and systemic barriers hinder women’s advancement. Steps that financial services companies can take toward change include:

• Addressing the challenge of getting females into STEM-related studies—one common route to jobs in fintech.
• Promoting internal diversity by making each individual responsible for taking smaller actions that, collectively, will change their company’s culture.
• Innovating with customer needs in mind. Oliver Wyman recommends that companies review gender-disaggregated data and talk to customers to understand the unmet needs of women.