Accessing Capital for Women Led Businesses
February 27, 2018
Recent business growth analysis continues to show discrepancies in the equality of funding between men and women-led businesses. It has been widely noted that while women-led business are more likely to exceed expectations across an array of industries, they, on average, have to make do with only half the start-up capital that entrepreneurial men garner in the same fields.
But things are beginning to change, and it seems the change is driven by performance, rather than long overdo institutional awakening. It is now widely believed that businesses with a greater number of women in leadership roles outperform their peers time and again. An early study conducted by Catalyst, showed that Fortune 500 companies with the highest representation of women among senior management teams had a 35% higher return on equity, and a 34% higher total return to shareholders over the least female inclusive companies.
A more recent study by Quantopian, a Boston-based trading platform, looked at Fortune 1000 companies that had women CEOs between 2002-2014, and found that they produced equity returns 226% higher that the S&P 500 during the same 12-year period. And after examining a decade’s worth of data from 300 portfolio companies, First Round Capital found that startup teams with at least on female founder performed 63% better than all male teams. Other studies by Cornell, McKinsey & Co., and Stanford only reinforce the growing awareness of what female leadership can mean for a business.
Across the board, attributes ascribed to female leadership have been shown to bring a greater likelihood of establishing employee satisfaction, engagement, and innovation to a business environment. Women also tend to instill a more pronounced importance on cohesion, cooperative learning, and open communication into organizational dynamics—leading to better performance for teams across business structures.
So why the lag in available capital acquisition, and what to do about it? We have begun to cross the threshold where investment firms are waking up to the reality that women are a worthwhile investment. More women are moving into positions as angel investors or as members of venture capital firms as well, and the women-supporting-women movement is just getting started. Doing your research to seek out firms that specialize in women-led funding or with a women friendly track record is a good place to start. Building relationships with other successful women entrepreneurs and executives is also critical. We must be willing to actively help other women leaders so we can all get a fair shot at success.
Above all, what I’ve learned over the years as a woman executive, and now as CEO of my own company, is that, though I respect and admire Sheryl Sandberg’s notion of “leaning in,” I don’t think women should be trying to emulate or compete with our male counterparts. No two women are the same, but we bring a style, attitude, and know-how all our own to the companies that are lucky enough to engage us. And according to a growing mass of data and proven results, we bring an operational efficiency and likelihood for success that our male counterparts don’t always have. I say don’t lean in, stand tall and rally the business around you where you are.
Whether we’re starting our own business, stepping into a leadership position, or searching for financial backing for the next step in our careers, it’s time for women to proudly own and proclaim our identities as change makers and innovators across the business landscape. Things are not yet equal, but our contributions can no longer be denied.