“In the good ol’ boys club, knowledge is shared on golf courses, at country clubs, and in locker rooms”: Stax CEO Suneera Madhani on the gender gap in fintech

What if I told you that 73% of a group that makes up 49.58% of the global population is dissatisfied with the financial services they receive? Perhaps instinctively, some might say that’s a problem fintech can solve, but the industry has little representation from the group. The group in question is the world’s women, and the fintech industry is still trailing in female representation.

Women's representation within fintech, which is otherwise touted as progressive, remains surprisingly low. To satisfy women consumers with services, it is integral that they’re made a key part of product development processes. The mismatch between services offered and demanded further intensifies for women of color.

While women comprise 52% of entry-level financial services jobs, the representation of women from entry-level to the C-suite in the industry falls by 80%. This is especially odd because women are increasingly playing a bigger role in wealth creation and control globally. In the US, for example, women control about a third of household financial assets, amounting to $35 trillion. Since Baby Boomers control about 70% of affluent-household investable assets, and women generally outlive men, that figure is only expected to increase.

I sat down with Suneera Madhani, CEO at Stax, to get an insider’s view of where things stand. Madhani, as a woman of color leading a fintech unicorn, is a rare example in the industry. She argues that women designing products and running firms is quite simply the need of the hour.

“We need more women joining the conversation when it comes to the fintech industry, specifically in building better products, services, and businesses,” Madhani told Tearsheet. “Women are more likely to be inclusive and build highly efficient high-performing teams.”

The Kauffman Foundation found that private tech companies led by women are more capital-efficient, and on average achieve a 35% higher return on investment. When venture-backed, these companies also bring in 12% higher revenue than male-owned tech companies. Additionally, companies with the greatest number of women in top positions had a 41% higher return on equity than the average — arguably making them a better investment for employers.

“There is infinite potential when you have a diversity of thought and experiences at the top level, and it has been proven time and again that women leaders bring about greater growth within the economy,” Madhani said.

It would thus make one think that venture capitalists would be welcoming of women leaders, eager to invest in firms led by women. However, needless to say, that is hardly the case.

In 2021, women leaders only managed to secure 2% of venture capital funding in the US, which is the smallest share they’ve had since 2016. In addition, it was the second year in a row that funding for women-led firms shrank. In 2019, 2.8% of funding went to women-led startups, while in 2020, that figure fell to 2.3%.

Speaking of the fintech industry in particular, just 7% of founders are women. Additionally, between 2016 and 2021, women-founded fintechs have received on average 50% less capital in their funding rounds than men-founded firms.

From the lens of racial minorities, Madhani said less than 1% of funding goes to minority-led startups, and for minority women, that figure recedes into decimals. Women in fintech need to be able to receive funding early on so that they can scale and grow their companies, she elaborated.

Madhani says the core of the problem is that finance and technology have traditionally been patriarchal industries, where women have been few and far between. So when it comes to being a woman leader in fintech, there is an abundance of gatekeeping pertaining to the spread of knowledge. “In the 'good ol’ boys club, knowledge is shared on golf courses, at country clubs, and in locker rooms. Women are not being exposed to the tools of the trade, and therefore there are fewer women in fintech to be examples for others,” she said.

It can also be more difficult for women to run business operations in light of specific life events, like pregnancies.

Speaking from her own experience, Madhani said that on two occasions she raised funds while pregnant. “This was incredibly frustrating in and of itself because men don't have to come to the table and talk about their pregnancy or talk about their families. But as a woman, you are immediately underestimated and have to prove yourself to get a seat at the table -- or you make your own,” she said.

In Madhani’s opinion, women also tend to be perfectionists and risk-averse, which means they might not start new companies simply because of the fear of failure. So, she says women also need to change their mindsets. “I didn't know that I could build a million-dollar business, let alone a billion-dollar business. We have to start talking about and sharing stories of women in fintech so that other women can see that it’s achievable,” she said.

The way forward, in her view, is to pave the way for a world where women can learn from the experiences of other women. Upon learning that less than 2% of female founders ever hit $1 million in revenue, Madhani set out on a mission to change that. She launched CEO School, a now top 100 podcast and community for entrepreneurs and rising female leaders to come together to grow and empower each other. Through this project, she has put together a community on a mission to break the glass ceiling in entrepreneurship and to fill the leadership gap that exists in corporations today. “2% is unacceptable, and I am determined to raise it by helping women get the capital they need, take risks, and get out of their own way,” she said.

Additionally, she argues the industry needs to systematically raise its standards. In practice, it means that VCs and big organizations should be held accountable to have women at the top. While diversity should permeate the entire organization, it is by having women in top positions that will promote confidence and comfort for other women to strive for higher.

“People are saying that there’s a rise in momentum for women in business, but the numbers still don't show it. I'm not asking for the number to be a hundred percent. But it shouldn't be 3%. Feminism is not a 'greater than' mentality, so women are not greater than men. That's wrong. It's women being equal to men. Equality. No one's asking to be treated better than anyone else. Everyone's just asking for equality. That's what has to change,” she said.

Other similar organizations that exist around the world are focused on connecting women in fintech to allow for the transfer of knowledge and experience, thus helping them to succeed in the industry. One such organization is a UK-based non-profit called Women of Fintech, which strives to solve gender imbalance in the industry by hosting events featuring powerful women in fintech.

Speaking to Tearsheet last year, Gemma Young, the founder of Women in Fintech, argued that the problem of gender imbalance is born within school walls. “I live between two schools. One has a sign saying, ‘Boys school specializing in science and maths’ — the other says ‘Girls school specializing in music and English’,” Young said. “This is so negative to the future diversity of all industries, to tell children from an early age that science and maths are for boys.”

To wrap all this up, here’s Madhani’s story, in her own words:

"My parents were immigrants who worked unbelievably hard to provide for our family. They owned multiple businesses, and this was an integral part of my upbringing. My brother Sal and I spent a good amount of time helping run these family businesses. Whether it was helping with payroll or cleaning, we were learning the ins and outs of running a business. The lessons I learned from my parents and their entrepreneurial journey taught me what it takes to be an entrepreneur and developed me into the leader and CEO I am today.

Having never had a seat at the table, I was always fighting/having to prove I belonged. Once I realized there wasn't a table for me to sit at, I decided I’d have to build my own. I have always been underestimated. I see it happen in every meeting with the banks, investors, and venture capitalists of the world. There is a bias that people have seeing someone who is young with vision, and they're just not used to seeing a woman in the driver’s seat. Representation matters, and when you see other people like you who are successful, breaking glass ceilings and changing industries, you’re bound to see more in the future."