Why It Matters That Your Company is Female Founded
We’re here to celebrate women founders. Beginning a venture and growing it into a startup is no small task, for anyone. It takes a lot of determination and leadership. But there is a wide discrepancy in startups and companies founded by women.
There are a lot of factors that contribute to this lack of representation at the helm of so many companies. Women are traditionally paid less than their male counterparts in the same positions, with the income gap even wider for Latinx and Black women. Women are also more likely to be the caretakers in their families. Whether that’s of children or adult relatives, the responsibility typically is assumed by the women in the family. These are just high-level examples of why women tend to stay in mid-level positions and not advance into leadership roles.
But perhaps the overlooked reason for a lack of female founders is the investment gap. Women who lead startups do not see the same investments as men in equal positions. This gap averages out to about $1 million in loss of potential investments. That’s a big gap.
So when women are invested in and celebrated as the leaders of new ventures, it’s a big reason to celebrate. But celebrating isn’t the only reason to be proud of the women leading innovative companies, startups founded by women are the better bet, says Boston Consulting Group.
Data from MassChallenge, a national accelerator known for scaling startups, suggests that startups with predominantly women leaders tend to outperform their male counterparts, specifically in revenue. Even though they don’t receive the same level of funding from investors.
According to Women Business Enterprise National Council, or WBENC, women-owned companies thrive and bring innovative, diverse perspectives to the leadership table.
Women founders tend to lead companies that earn higher revenue, offer better company culture, and tend to prioritize corporate-social-responsibility (CSR).
Female-founded companies outperform males and earn higher revenue.
Even though female founders receive less money in initial funding rounds, they outperform men in generated revenue. MassChallenge found that women-led startups generated 78 cents to every invested dollar versus only 31 cents for male-led startups.
When a woman is at the helm of a startup it is more likely to generate higher revenue, and ironically women also tend to focus less on money. This is a great area of opportunity for investors. There is untapped potential. There is a myriad of reasons why women are underfunded during fundraising, but some suggest it’s because male investors have an unconscious bias when it comes to products and services led by female founders.
Female-Led Companies Have Better Company Culture
Although women leaders generate more revenue, they are more likely to focus on culture-building activities throughout the company than men. This creates empathetic, relational, and trusting work environments. When employees work in conditions where they feel valued, they tend to perform better, regardless of their age, gender, race, ethnicity, or identity.
Women who lead businesses are typically less inclined to start them for financial reasons alone. Forbes noted that just 2% of startups founded by women were created for purely financial reasons, compared to 15% of men-founded startups. Women are more likely to solve problems with their ventures —this puts the focus on the consumer and the solutions they need to make their lives and world better.
Women Who Lead Care About Corporate-Social-Responsibility
Corporate Social Responsibility isn’t just a “nice to have,” 87% of consumers say they’re willing to buy a product based on a company’s stance against a certain issue. That means that entrepreneurs can no longer create startups just to make money, consumers are now demanding ethical and socially responsible products. And according to research by Kellie McElhaney, the founder of the Center for Gender Equity & Leadership at the University of California at Berkeley’s Haas School of Business, women-led startups are prioritizing these above men.
Conclusion
VCs and investors have a unique opportunity to see the gap in funding for women-led businesses. Startups founded by women tend to outperform men, offer better work environments for their employees, and offer solutions to larger social and environmental challenges throughout the world.
Until there is equity among women leaders, we need to celebrate and highlight their contributions to the private sector. Helpr knows firsthand the importance of women founders and is proud to be a female-founded WBENC certified startup.
