Drop in Funding to Women-led Startups
2 min read · February 25, 2021
Ashley Bittner and Brigette Lau, Harvard Business Review
Summary
A growing body of evidence proves that investments in women entrepreneurs give an equal return on investment, and startups led by women are more likely to succeed as female leadership can impact business performance and overall growth. A Boston Consulting Group analysis found that women "ultimately deliver higher revenue — more than twice as much per dollar invested," yet as this article highlights, there is a gap in funding directed towards women entrepreneurs versus men.
Key Findings
Only 12.4% of U.S. venture capital firms' decision-makers are women, and most firms still do not have a single female partner.
According to Crunchbase figures, in 2019, 2.8% of funding went to women-led startups; that fell to 2.3% in 2020.
Fields heavily populated by women have experienced more significant layoffs; women's jobs are 1.8 times more vulnerable during the coronavirus pandemic than men's jobs.
Takeaways
The author suggests that the lack of gender equality in funding startups leads to further problems, and it exponentially affects the overall job picture for women. It is likely to slow economic recovery and efforts to tackle inequality. The research uncovered that women-led businesses are more concentrated on making a social contribution and building good relationships with employees. The solution is not for VCs to start supporting startups simply because women founders lead them, but instead, it is to identify and weed out the institutional patterns and thinking that prevent VC firms from recognizing the great potential among ideas presented to them by women.
Read the full article here.
References
Bittner, A., & Lau, B. (2021, February 25). Women-led startups received just 2.3% of VC funding in 2020. Harvard Business Review.
