Global Observer

In Madrid, a new meaning for female tech support

Posting in Finance

Female-founded startups are 16 percent more likely to succeed. But few try. Why? Madrid networking group Ellas 2.0 is working to change that.

MADRID--Female-founded start-ups are 16 percent more likely to succeed, and, yet, so few try. Why?

That's the question the women of Ellas 2.0 are working to eliminate. This group aims to support, to encourage, and, most importantly, to connect female entrepreneurs in the technological and Internet industries.

Ellas 2.0 is a group of "emprendedoras y tecnologia"--female entrepreneurs in technology--that meets the first Friday of each month in Barcelona and Madrid to network and to share experiences, ideas and innovation. Ellas 2.0 describes itself as a "connector" of women to the industry and women to investors.

Last Friday, about 70 people met at the Utopic_Us co-working center in Madrid, each one of them waving their smartphones around, desperate from the lack of signal. This week's event was hosted by three mothers who also ran their own successful start-ups. They were María Gómez del Pozuelo, the co-founder of Womenalia.es, the Spanish women's professional networking site; Miren Echave, the co-founder of Valioo, a products and services review site that provides donations to non-profits; and Carolina Tejuca, co-founder of Emprende Capital, which offers financing to qualified small businesses. Five to ten minute presentations were followed by a couple hours of networking over bottled beers.

"The goal is to increase the number of female founders running ventures," that appeal to global markets and have the high-growth potential to create jobs, says Ellas 2.0 co-founder Patricia Araque. "Not the typical business that women start here in Spain--that is small business, sometimes focusing on commerce, small shops, small entrepreneurship."

"We are talking about companies (like) Facebook or Twitter or Google, companies that of course have changed the course of history and change the way we work," Araque says. Ellas 2.0 calls it the "Billion Dollar Club," of companies like those already mentioned, along with LinkedIn and Zinga, who have made a huge impact on society.

They have made an impact, but none of these companies are headed by women. "In the end, we (women) are users only, we are not creating these companies," Araque says. She says that Facebook, Twitter, LinkedIn and Zinga all have more female than male users.

The goal of Ellas 2.0 and their sister American organization Women 2.0 is not to have women take over the world. It "is a project where we really believe that diversity is key," Araque says. "The perfect company is one founded by a man and a woman. Diversity is the secret to success."

Araque quoted statistics from the Kauffman Foundation, which gathers information on start-ups. "Data that says that companies that are founded by females are more efficient (with) capital." Evidently, female-founded and female co-founded companies are proven to be 16 percent more efficient and are able to pay back their loans quicker.

In Spain, Ellas 2.0 is the only organization which focuses on supporting women in technological start-ups, which are probably the most likely to succeed here in this moment. There are other groups focused on female entrepreneurs, but on a much smaller scale, supporting them in creating smaller and more traditional service-based businesses, like stores that aren't online.

Ellas 2.0 is mainly focused on Internet start-ups, which are "not expensive, (and don't have) a lot of risks in the beginning," Araque says. "You can test your idea without too much risk because, if you want to scale your businesses and for your businesses to get traction, you need to get a lot of money from angel investors and venture capitalists because the banks in Spain still do not invest in these things." The traditional Spanish banking system is much more likely to allocate a loan to a small shop or a bar than an Internet company. Ellas 2.0 argues that this is a mistake because with Internet companies "you can go global and wherever you want to go. You don't have limits. The world is your market."

Araque also cited the latest report from the Global Entrepreneurship Monitor on the state of entrepreneurship in Spain. Spain has "more female founders, but the quality of the entrepreneurship is worse because they start a company because they need to do it not because they want to," she says. There's no denying that this organization began right in the midst of the economic crisis in 2009. Now, the Spanish unemployment rate is staggering at 24 percent, with women averaging at least a percentage point higher than men. Araque says that many Spanish women are now starting small businesses simply because they don't have jobs. "They are not companies that that generate employees, work or health for society. Sometimes (these start-ups) only provide a job for the founder and after two years disappear because these aren't sustainable." She says that "I think the most important part of a start-up is the entrepreneur. In the end, people are the most important part of the project. Investors invest in your project because of you, not because of your idea."

Araque isn't negating that traditional sectors, like shops, but thinks they must evolve. "We say, at least try with e-commerce. If you want a store, try first on the Internet." There's a much lower start-up cost because you don't need to rent a space and you have the ability to sell anywhere. Opening an actual store in Spain right now is not ideal as consumption is at a low.

However, she does admit that one of the major problems is that it is absurdly expensive to ship inside Spain and over the borders. EU tariffs make this even worse for shipping to or from countries in the Americas. "I think shipping is one of the problems here in spain that we have to solve. It's cheaper to buy things from Amazon UK than Amazon Spain." She says that the Spanish are accustomed to booking travel and entertainment tickets online because they don't need to ship. "Europe is ahead of us in things like this."

From starting in 2009, their organization has grown by leaps and bounds. There's no way to know an exact number, since there are no official memberships or fees, but they have about 10,000 followers through Twitter and Facebook. Starting this January, the American Women 2.0--with meetings in Silicon Valley, L.A., San Francisco and New York--and the Madrid- and Barcelona-based groups are joining forces. Araque is now an official part if Women 2.0 as well, which is spreading part of the strategy to Spanish-speaking countries, starting with the rapidly-growing Argentina, Chile, and Mexico.

Now we will see if "he" or "she" develops the next Facebook.

Photo: Ellas 2.0

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Jennifer Riggins

Correspondent (Barcelona)

Jennifer Riggins is the content manager and community builder for two SaaS Quote Roller and PandaDoc, as well as she teaches sales, English, and public speaking for Spanish small business. She holds a degree from William Paterson University. She is based in Spain. Follow her on Twitter. Disclosure