Allyson Kapin writing in a Forbes article, highlights some key data about women lead startups. Investors might want to take notice. The data about women-led startups demonstrates they often have a better ROI than startups managed by males.
Yet in 2018 funding for female founders received only 2.2% of venture capital dollars, a total of less than $3 billion. according to data from PitchBook and All Raise, the organization supporting women in venture capital and startups.
For investors this is an opportunity to invest in the most innovative ventures, which just happen to be led by women, and make potentially better returns than investing that same money in male-run companies.
Why is this you might ask? According to Allyson Kapin, “Women tech leaders understand how to solve a specific problem facing this world by leveraging tech. She knows that diverse and inclusive team are needed to build the product and implement solutions.”
Tina Dao, recently the Chief of Staff at Fit Bit discusses the
value of diverse and inclusive teams in start-ups in this
Podcast with Saunders and Cash.
Plus a women tech CEO is likely to be experienced entrepreneur who knows how to operate without the startup capital her male counterpart receives.
Venture Capital firms have for the last several years invested 97% of their capital in startups led by men. But that is likely to change going forward as they start paying attention to the data and investing in women led startups because they see the strong ROI of investing in startups run by women.
Need more data? Check out these data points:
Tech startups led by women, achieve a 35% higher ROI, and, when venture-backed, 12% higher revenue than startups run by men, according to the Kauffman Foundation.
According to “The 2018 State of Women-Owned Businesses Report,” commissioned by American Express:
Women-owned businesses, between 2007 to 2018 grew by 58% in the number of firms and 46% in revenue,
Women were starting additional businesses at a rate of more than 1,800 (net) per day,
Total employment by women-owned businesses rose 21%, while for all businesses it declined 0.8%.
There were 1,821 net new women-owned business added per day between 2017 and 2018.
A study by Mass Challenge and BCG of over 350 startups determined that businesses founded by women deliver higher revenue—more than 2 times as much per dollar invested—than those founded by men.
Startups founded by women actually performed better over time, generating 10% more in cumulative revenue over a five-year period, according to BCG.
Companies in the MSCI World Index with strong women leadership generated a Return on Equity of 10.1% per year versus 7.4% for male lead companies, according to MSCI ESG Research.
There is a strong and statistically significant correlation between the diversity of management teams and overall innovation. Companies that reported above-average diversity on their management teams also have innovation based revenue 19 points higher than companies with below-average leadership diversity—45% of total revenue versus just 26%.
Women of color are starting, businesses at a much faster rate. The number of firms owned by African-American women has grown by 164% since 2007, or 20% of all women owned businesses.
Latinx women-owned businesses saw more than 87% growth between 2007 and 2012, according to Project Diane.