Wednesday, November 16, 2011

Why Invest in Women in Biz, Tech and Startups?

I have recently been asked increasingly to speak to groups about my experience as a women in business and particularly in a technology startup seeking capital. While my personal story and experience is compelling, I am finding that the data is often staggering and irrefutable. In fact, it totally begs the question, not why invest in women in business, technology and startups, but rather why not? Below is some of the data for you data geeks...Happy Reading! ;) p

Women in Investing/Start Ups

· Women manage money differently, and had there been more women at the helm of investment decisions all along, the worst of the global financial meltdown might have been averted.


Women-owned funds are more stable and consistently outperform general funds with higher returns.

· Women—in charge of just 3% of hedge funds and 10% of mutual funds—are more patient and consistent with their investments, are less apt to take overconfident risks and more likely to integrate detailed and conflicting data into their decisions.

· Average return on funds from 2000 to 2009 was 9% for women-managed funds compared to 6% index average.

(National council for research on women, 2010)

· Less than 2% of retirement assets are managed by women- & minority fund managers, yet account for >40% of the top quartile of performing funds.

(Diversity best practices,

· Only 5 VC funds in the country with over 50% women ownership.

· 1 of 25 women CEOs who had successfully taken 1 (or more) companies from startup through exit and also been on the VC side.

· Women now represent just over 15 percent of angel investors, but just 5%-7% of partner-level high-tech venture capital investors in the U.S. Firms with women investment partners are 70 percent more likely to lead an investment in a woman entrepreneur than those with only male partners.

· In 2008 woman co-founded tech businesses gained less than 10% of venture investment while representing over 30% of the workforce.

· In 2010, women gained 11% of angel financing and made up 46% of the workforce.

(Cindy Padnos, Managing Director, Illuminate Ventures and

· The percentage of women among start up capital seekers grew to about 20 percent last year, up from 12.6 percent in 2000, according to New Hampshire's Center for Venture Research. Of those women, the number who received funding grew to 13 percent in 2010, up from 9.5 percent in 2008.

· Research suggests that women's access to, and use of, capital to fund their business dreams lag in comparison to men. Of the U.S.-based companies that received a round of venture capital financing in 2010, only 6 percent had a female CEO, 7 percent had a female founder and 10 percent had a female founder or CEO at some point, according to Dow Jones VentureSource.

· There were 265,400 angel investors in 2010, and they put $20.1 billion in 61,900 entrepreneurial ventures in the U.S., the Center for Venture Research said. Women represented about 13 percent of angel investors, and female entrepreneurs accounted for 21 percent of those seeking angel capital.

· Historically, venture capital has been a much-acclaimed boys' club," says Mark G. Heesen, president of the National Venture Capital Association. "That network is something women have to permeate. It's harder for women to break into that arena."


Women in Business

Women entrepreneurs are poised to lead the next wave of growth in global business.

· Companies most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers.

· The average venture-backed company run by a woman had achieved comparable early-year revenues, using an average of 1/3 less committed capital.

· Despite often being capital-constrained, women-owned businesses are more likely to survive transition from start-up to established company than traditional companies.

(Illuminate Ventures –

· A recent report called Women Matter 2010 found that companies with a higher proportion of women in their executive committees are also the companies that have the best performance.

· Women currently hold 2.8 percent of Fortune 500 CEO roles and 3.3 percent of Fortune 1000 CEO roles

(Gillibrand, Kirsten, Women’s Economic Empowerment, 2011)

Women in Technology

The internet is an inherently feminine entity—it is based on connecting, leveraging, networking, relationship building—all female characteristics. Yet, women’s leadership in technology firms continues to lag.

· According to research from Stanford GSB Project on Emerging Businesses, fewer than 10% of high-tech start-ups have a female CEO, Founder or President. Technology driven start-ups continue to be largely male dominated.


· Yet, high tech companies that women build are more capital-efficient than the norm.

· In the past 10 years more than 125 companies with over 200 women co-founders or officers have achieved IPOs or >$50M M&A exits in the U.S. high-tech sector alone.

(Illuminate, 2011)

· The low number of women founders in the high-tech industry could be related the lack of access to equity capital. Women-owned startup companies tend to start with less capital than their male-owned counterparts, according to a study released by the Ewing Marion Kauffman Foundation.

· Only a small percentage of women-owned firms attract venture capital, yet technology driven companies typically need millions. Generally speaking, women aren't comfortable raising venture capital in part because of a lack of education regarding the process. Plus, the venture capital world continues to be male dominated.


· Of the over 100 giving technology platforms, approximately 5% are women owned or led.

(Pilar Stella, 2011)

· This all while, women are the majority of users of social networking sites and spend 30% more time on these sites than men; mobile social network usage is 55% female according to Nielsen.

· Sheryl Sandberg, COO of Facebook, has talked about how women are not only the majority of its users, but drive 62% of activity in terms of messages, updates and comments, and 71% of the daily fan activity. Women have 8% more Facebook friends on average than men, and spend more time on the site.

· More women use Twitter, which has a reputation for being a techie insider’s (i.e., male) product. Women follow more people, tweet more, and have more followers on average than men, according to bloggers Dan Zarella and Darmesh Shaw’s analyses.


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