The emergence of embedded finance has presented a unique opportunity for female entrepreneurs to break into the fintech industry, regardless of their background in Wall Street or Silicon Valley. Despite fintech’s potential to expand access to financial services to a broader audience, the industry still struggles with diversity, with women making up only 30% of the workforce and 12% of founders, as research from FT Partners shows. Moreover, PitchBook data reveals that all-female founding teams received only 1.9% of venture capital funding in 2022, a drop from 2.4% in the previous year.

To address this issue, venture capitalists need to broaden their search for startup founders to encompass a more diverse range of industries, while entrepreneurs should explore opportunities to innovate outdated sectors and break into the male-dominated world of finance technology.

Venture capitalists have traditionally favored male founders, perpetuating the cycle of the gender imbalance in the industry. Embedded finance has opened doors to a new cohort of founders with diverse backgrounds, creating more opportunities for women in fintech. Investment firm Anthemis Group has received numerous pitches from female founders with varied backgrounds, including sustainability, law, beauty, and mobility. In 2021, the firm raised over $700 million to invest in pre-seed through Series B embedded finance startups and early-stage fintechs.

The introduction of embedded finance to entrepreneurs from diverse industries widens the pool of potential startup founders and increases the likelihood of more capital being raised by women. Female-led startups tend to attract more female talent, with businesses founded by women building teams with 2.5 times more women, and companies with a female founder and executive hiring six times more women than those led by men.

By leveraging embedded finance, businesses can differentiate their offerings and tap into a broader customer base, with revenues from embedded finance in the United States reaching $20 billion in 2021 alone, according to McKinsey. To capitalize on this growth, companies must diversify their workforces, with research showing that male-founded startups have less diverse teams compared to those led by women.

In conclusion, misconceptions around fintech and biases within venture capital perpetuate cycles of exclusion for investors and female founders. To evolve, venture capitalists must look beyond traditional finance and technology and focus on investing in more women and diverse founders in adjacent industries. By exploring solutions to the financial services challenges in different sectors, female business leaders can help push the fintech industry forward. With adequate support, female entrepreneurs can become a formidable force in the fintech space.