Women Founders Achieve More, and Investors Miss Out By Richard Hartung
While only about six percent of startups in the United States have a female founder, and only about another 12% have a woman as a co-founder, according to PitchBook, startups founded by women outperform the market in terms of exit value increases and the time it takes to exit. Because businesses founded by women ultimately deliver more than twice as much revenue per dollar invested than those founded by men, consulting firm BCG observed, women-owned companies make better investments for financial backers. Reinforcing the results on a more anecdotal basis, a study by venture capital (VC) firm First Round, of 300 companies it invested in over the past ten years, showed that investments in companies
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with a female founder performed 63% better than investments with all-male founding teams. Despite the far better performance of startups led by women, investors are missing out. Indeed, only 2.3% of funding from VCs in the US go to startups led by women. More broadly, BCG found that investments in companies founded or co-founded by women averaged US$935,000, which is less than half the average of US$2.1 million invested in companies founded by men. In other countries as well, women face similar barriers. In India, for example, a 2020 report by Initiative for What Works to Advance
