Funding Female Founders Makes Dollars and Sense

Female founders are proving to be top performers in the startup world time and time again.

Black-Women-in-Tech

Andre Spivey

Andre has over 10 years of experience in Tech and Start-ups ranging from the advanced tech in the US Air Force to building his own educational software company Live 2 Learn Differently. His is a proud graduate of Morris Brown College and Cornell University.

Getting a startup off the ground is hard. You have to secure investors, raise capital and build a business with obstacles at every turn. More than 50 percent of startups don’t survive past the first five years for a reason.

How can it get even harder? Be a woman in a field dominated by men.

But women are killing the game.

Despite an uphill battle in a historically male-dominated industry, women are taking the startup world by storm (see female-founded companies TheSkimm, Goodr.co and Blavity to name a few). Investors are just starting to catch wind of the real value of entrepreneurial women. But there’s still a long way to go.

What The Numbers Show

Recently, the Female Founders Fund released a surprising report: the overall number of Series A rounds in the U.S. went up, but Silicon Valley saw a decrease.  

What does this mean? Startup investors are branching out to other cities. A diversity of cities means a diversity in the people behind these companies. And that’s a good thing, especially since Silicon Valley and tech industries are infamous for gender imbalance.

In 2013-2014, female-founded companies led about 13% of all Series A-funded startups. And that percentage jumped to 20% just last year.  

But why doesn’t the amount of female co-founders even come close to the consumer-base?

Nielsen Holdings PLC estimates that women account for over 70% of retail spending, make up the largest viewers of online-streamed videos, and comprise a bigger chunk of the video game industry than teenage boys. From an investor’s perspective, one thing is clear: female consumers and female-backed companies can no longer be ignored.

Quality Over Quantity

Despite being underfunded and underestimated, female founders are proving to be top performers in the startup world time and time again. Although most investors continue to fund all-male teams, companies with at least one female founder tend to outperform their less diverse counterparts.

Funding is low across the board—White and Asian men are funded first, and everyone else is funded last, if at all. But by recognizing the problems and working toward real solutions, women can take charge of this rapidly growing market–and investors can see the payoffs.

Conclusions:

Reasons For Lack of Funding in Women-Led Startups

  • Lack of investors’ faith in female-founded companies
  • Low percentage of female venture capitalists
  • Low numbers of women pursuing STEM fields, resulting in low numbers of female tech teams
  • Female venture capitalists aren’t investing in the next generation of women entrepreneurs.

 

Why Female Founders Are Worth Our Investment:

  • Real Results– First Round Capital took data from 300 companies over the course of a decade and discovered that startups with at least one female founder outperformed all-male teams by 63%
  • Better Fundraisers– When gathering crowdfunding, female founders perform better and raise more money than males on every crowdfunding platform.
  • Greater Potential– Businesses with a female founder typically have 64% higher valuations during the early stages of funding.
  • More Bang For Your Buck-Women-owned companies are generating higher revenue with less capital than their male counterparts.
  • An Eye on The Future– Women in executive roles recognize emerging markets and make the most of their potential.

Smart investors do their research to fund companies they believe will succeed. My advice to investors: put your money where your mouth is. Even with the odds stacked against them, female-fronted companies are becoming the biggest success stories. And if you’re not a part of that movement, it’s not just a loss for women — it’s a loss for your wallet.



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