It’s Time Women Promoted Women-led Startups

It’s Time Women Promoted Women-led Startups

Jitesh Nair

A 2018 study by Boston Consulting Group (BCG) showed that women-led startups had 10% more revenue over a five-year period. They were also better at investments, creating 78 cents of revenue per dollar of funding while companies with all-male startup teams created 31 cents of revenue.

However, as per a study in Venture Capital (VC) Journal, Startups led by all-male teams were four times more likely to get funding as compared to women-led companies. In 2018, women-led startups received 17% of the total VC investments globally while it was just 2.2% in the US. In addition, the average capital raised for a women-led startup was less than half that of a male-led startup. A study by Crunchbase on more than 13,000 startups over five years (2013-18) found that even when capital was given to women-led start-ups, most of it was for firms catering to women customers.

It is high time to look at alternative models of investment for women entrepreneurs till the VCs come up with other approaches to reduce this gender bias.

One such initiative was ‘gender lens investing’ launched in 2017 by the Global Impact Investing Network (GIIN). It focused on (a) Investing in women-owned or led enterprises and enterprises that promote workplace equity; and (b) investing in enterprises that offer products or services that substantially improve the lives of women and girls. Another viable approach that could have a transformational impact viable is the idea of ‘women investing in women’. It is time to educate and empower self-identified women from different backgrounds, races, industries, life stages, cultures, and experiences to become Angel investors. This could help bring more parity to the structure of VC funding.

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