Investing in female founders matters – and here’s why

I think most of us are aware of the shocking stats when it comes to investment (or lack thereof) in female-founded companies. But just to remind you, here are a couple:

Why is this an issue?

Well, for many reasons. But here are some for starters …

• Gender diversity is correlated with both profitability and value creation. Yes – the bottom line is that having more women on executive teams results in better financial performance.
• Female entrepreneurs often look to provide products and services that specifically address the needs of women – take a look at CrunchBase’s recent report, highlighting some really interesting female-founded companies such as Zum – a provider of highly vetted drivers for scheduled on-demand rides by parents for their children – and Glossier – a New York-based direct to consumer beauty company.
• There is increasing evidence that companies with women in leadership positions tend to prioritize environmental issues and are more likely to invest in renewable power, low-carbon products and energy efficiency.

So why is this happening?

While there is no single definitive answer on why the gender funding gap exists, explanations are emerging. In the venture capital world, female founders often point to the lack of female VCs – it’s pretty astounding when you think that, for the top 100 venture firms, only 8% of partners are women.

Other reasons point to the notion that women typically ‘ask for less’ than men and certainly the research indicates that women may tend to be judged on performance, with men more likely to be judged on potential (this helps when raising cash!).

How are we going to change this?

Solutions abound – from increasing the number of women working for VC firms to providing more government funding for female founders; from more mentoring schemes to getting the media to focus on female entrepreneurs’ businesses, not just their gender.

But one thing we know for sure, the landscape is changing. Most importantly, more and more women are stepping up to support female founders. Check out some of the fantastic organizations bringing female investors in to support women entrepreneurs – Female Founders Fund, Investing Women, Next Chapter and WAIN.

It’s time to get involved!

Yours responsibly,

Jessica Robinson
Founder