According to a recent article by the Indianapolis Business Journal’s Jared Council, research shows that high-growth startups with women serving on their management teams tend to outperform startups whose management teams are all-male:
- In a 2014 report issued by Babson College’s Center for Women’s Entrepreneurial Leadership, about 15 percent of startups funded through venture capital between 2011 and 2013 had a woman on their executive team. And out of more than 6,500 venture-backed startups tracked by Babson researchers, only 2.7 percent had a female CEO.
- Despite such numbers, the women-led startups — on average — achieved 35 percent higher returns-on-investment and generated 12 percent higher revenues than did male-led companies. This finding comes from a 2013 presentation from the Kansas City, Mo.-based Kauffman Foundation titled “Women in Technology: Evolving, Ready to Save the World.”
- In addition, a 2010 white paper by San Francisco-based Illuminate Ventures stated that venture-backed companies led by women also are more efficient, using an average of one-third less committed capital.
If anyone has taken heed of such findings thus far, they tend to be concentrated along the East and West coasts. According to various researchers, this is where investments in companies with women serving on management teams tend to be clustered.
All of which comes as little surprise to Maggie Musgrave, an associate with the Innovate Indiana Fund, which offers seed money to startups with a significant connection to Indiana University. She told the IBJ that in the Midwest, the dearth of women-founded startups is particularly noticeable, due in part from lack of venture support.
“I don’t know why male venture capitalists in the Midwest tend to overlook or dismiss women-founded startups, but they do. That may be because we have fewer women venture capitalists in the industry or that may be because women don’t feel comfortable pitching to male venture capitalists.”
— Maggie Musgrave, associate, Innovate Indiana Fund
Additional reasons for the gender gap in venture-funded companies include low numbers of women employed in the venture capital industry. According to Babson researchers, firms with female partners are twice as likely to invest in companies with women in management. Yet in 2013, only 6 percent of partners were female.
For more insights into this phenomenon — and information on efforts to shift the tide — read the entire IBJ article here or view visit a section of Kauffman Center’s website devoted to women in entrepreneurship.