The business case to fund women-led and gender diverse companies is driven by a number of facts, surveys, and studies.
- Women entrepreneurs have 21st leadership skills like learning agility. According to the Korn Ferry Institute, women entrepreneurs score higher in “agile learning” and other key leadership attributes than either male or female executives holding C-level and VP positions.
- Women-led companies are more capital efficient. According to Illuminate Ventures, the average venture-backed company run by a woman had achieved comparable early-year revenues using an average of one-third less committed capital
- Inclusive organizations deliver higher returns. Again according to Illuminate Ventures, organizations that are the most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers.
- A company’s odds for success (versus unsuccess) increases with more female executives at the VP and director levels. According to Dow Jones’ report “Women at the Wheel” on the effect of women leaders on start-up success.
- Female representation in top management brings informational and social diversity benefits to the top management team. According to research in the Strategic Management Journal, which argues that these benefits enrich the behaviors exhibited by managers throughout the firm and motivate women in middle management.
- Funding is disproportionately allocated to companies run by men, creating a gap that is waiting to be filled. According to the 2014 Diana Project, from 2011–2013 just 985 of the 6,793 venture capital–funded companies (15% of all businesses receiving seed, early-state, and later-stage venture capital funding) had a woman on the executive team. Only 2.7% of these companies (183 of 6,517) had a woman CEO. Click here for the original Diana Project report in 2004.
- Women entrepreneurs still cite access to funding as a primary challenge, making this funding gap an opportunity to differentiate. According to this survey conducted by the Kauffman Foundation in November 2014 and also supported by this research conducted by Sarah Thébaud in December 2014.
- Unintended bias influences investment decisions and “distort perceptions of the viability and investment-worthiness of an innovative idea.” Gender influences VC evaluations most when the person, rather than the venture, is the target of evaluation, according to this research supported by the Michelle R. Clayman Institute for Gender Research at Stanford University and the National Center for Women and Information Technology, and this research by Sarah Thébaud.
For the smart early stage investor, be it VC or angel, that disparity should spell just one word — opportunity. — Adam Quinton, Lucas Point Ventures
Other Articles & Studies
- The first comprehensive study on women in venture capital and their impact on female founders via TechCrunch
- Is Change In The Wind For Women Entrepreneurs Raising Capital? by Geri Stengel on Forbes
- The next new thing: Women VCs via TechCrunch