Research shows that companies with female founders generate a 35% higher ROI than those who lack at least one woman at the helm. There has been speculation as to the cause ranging from the notion that women have more empathy, a greater propensity to have grace under pressure, and possibly are better at creating a culture where people feel supported. Despite mounting evidence that female founders improve growth, the number of companies with at least one female founder remains in the single digits. If these powerhouses are putting numbers on the board, why aren’t there more female founders?
Women Still Shoulder the Bulk of Childcare
Despite society’s purported move toward equality, women still shoulder the majority of the weight when it comes to childcare, running the home, and making decisions in terms of summer camps, after school programs, and the overall wellbeing of the family. These are all time consuming tasks. The pandemic shifted responsibilities for women as they took three times more unpaid leave to care for children than men did. Furthermore, working women worked on average 7 additional hours per day homeschooling children and running the household compared to less than 5 hours per day for men.
Women Do Not Necessarily Want Another Job
In the modern workforce women are leaving their jobs at record rates (insert blog) with a desire to be self-employed citing flexible schedules, not having to commute, and childcare as the number one reason. In 2020, McKinsey published findings that 1 out of 4 women was thinking of dropping out of the workforce. As women, if we do not want to go to an office everyday and have to choose between work and children then why would we want to start a company that would require them to work even longer hours than the job they dream of leaving?
Female Founders Get Less Funding
The odds are stacked against female founders when it comes to raising capital. Women receive less funding than our male counterparts. Shockingly, pitches by women to venture capitalists are funded only 2.5% of the time. With odds like this, why would a woman want to launch a startup when she has a 97.5% chance of her pitch being rejected? Women are being forced to explore nontraditional funding and actively seek out funds who have women in decision making roles.
Female Founders Are Not Seen Through The Same Lens As Male Founders
In this study, it was found that women were asked different questions during a pitch than men. Venture capitalists tended to ask women about protection versus asking men about growth. Inherently, the gender bias comes with a very specific lens on how women are viewed versus men. There seems to be a perception of women as nurturers and caregivers as opposed to titans of growth despite what the evidence illustrates.
Now The Good News for Female Founders
Despite the reasons why women are not starting companies at the same cadence as men, there is an uptake in the number of women willing to defy the odds. In the first three quarters of 2021, female-founded startups received $40.4 billion in funding which was a significant rise, shattering previous records. Female investors have risen from 12% in 2019 to 15.4% in 2021. That is a move in the right direction.
As a female tech co-founder and Co-CEO, I have experienced the frustration of being spoken over in meetings, having venture capitalists completely ignore me even though I was the one doing the pitching, and speak only to one of my male colleagues, and been infuriatingly discounted in terms of my views. I also have experienced being valued, have my opinions considered, and given tremendous grace. I am extremely fortunate to get to work with some incredible men who see me as an equal and not through the lens of my gender. In my opinion, the solution to having more women in the role of startup founder comes down to how we view the journey. There will be challenges however in my opinion, the people behind those challenges are challenging people and that is not necessarily due to their gender.
As women, it is going to be messy. We will have to juggle childcare and home obligations however we would have to do that with a job. We will face rejection and candidly, that happens whether we are pitching a VC or we are going for a promotion. We will lack confidence at times however that is always an opportunity for growth. Yes, we will encounter non supportive individuals however they can also come in the form of our female colleagues, sisters, mothers, and best girlfriends.
Ultimately, what we require is to be supportive of one another. You could start with dipping a toe in the water and investing in female-led startups on Wefunder or other platforms (I just invested in Ashley Black’s funding round as a big Fascia Blaster advocate). If you are an accredited investor you may wish to fund female-led startups as I did with my friend Lori Harder’s company, Lite Pink.
If you are a woman with an idea that you would like to turn into a tech company, I have started Fem Boss, an inclusive incubator where we come alongside you and help you take your idea to inception. You do not have to have any tech experience, just a great idea. We are taking applications for pitching now and would love to help you bring your idea to the world.
With the number of female funders rising and incubators such as Fem Boss, we are finally starting to shift the landscape to a friendly one for female founders. If you would like to read some statistics on the startup landscape, read 11 Startup Statistics for 2022.