Why We Should Start Supporting Women in the Startup Industry

In the hectic and ever changing world of startups, the thought of becoming the next Steve Jobs seems slightly more attainable. In a recent meeting, the conversation of the next version of an app build was at the center of discussion. A more experienced tech advisor brought up the point in relation to developers, he stated the capabilities of the modern day tech development are light years ahead in comparison to not even five years ago. The journey from having an idea and turning it into a tangible product has curtailed. It is almost too easy to accomplish, and with a small amount of capital nearly anyone could have an app developed in very little time. However, the chances of a SaaS product to redirect into a profitable business is not as effortless. There are extensive factors playing into what could make a startup successful that span over multiple categories. One thing that I am absolutely certain on however, is a founder’s gender should not be a contributing factor in the probability of success.


While it is true the industry is becoming more diverse, with more and more people of all backgrounds breaking into the startup ecosystem, there is still a long way to go. According to the U.S. Department of Labor, women account for 36% of majority owners of small business. While this fact is discouraging to hear considering women make up half of the population, it is even more disheartening to learn that female founders account for only 9% of VC backing, out of the $678 billion it invested in 2019. It begs the question of why seeking private investment is a more challenging endeavor for one group over another? What is the reasoning behind the blatant lack of support for female founded business from the PE industry? Even if one were to assume the average female business ideas were less lucrative than male generated concepts, the percentage of investment should still far surpass a measly 9%. 


In an attempt towards an explanation for this occurrence, there is a data-based explanation, and it suddenly becomes very clear why many VC partners pass on investment. Female founded startups backed by VC financing under perform their male counterparts, nearly every single time. This is always the case. Always. 


There is only one exception to this information:

If there is a female GP backing investment within the firm, the performance gap disappears. With a female investor, the gender of the founder is no longer a factor in the likelihood of a startup’s success. 


The interesting dynamic of this information pushes towards the necessity of an increase in both female founders and investors. As a baseline for growth, there must be an overwhelming understanding that equal representation will lead to equal opportunity. The importance of recognizing the ambition and innovation of female leaders works to break down internal bias of incapability in the eyes of stakeholders. It is the responsibility of a consumer, first-backer, supporter, and investor to actively attempt to improve the climate of the startup ecosystem to reinstate the ability for anyone, of any background, to reach prosperity within their venture attempt.


The beauty of the startup industry, in my eyes, is the potential to change the world. Look back to certain companies responsible for completely redirecting the societal norm. It is the uniqueness of innovation allowing the once-believed impossible to become tangible, taking our environment from zero to one. True growth can only be achieved through extensive and overwhelming support. A sole contributor cannot change the world, it most certainly takes a village. I cannot contain my excitement at times envisioning the small unlikely ideas who will eventually transform the modern world. The PE industry can be a huge propeller to these ventures and uphold the responsibility of being an initial contributor. This is why I become especially frustrated when considering the missed opportunities because of internal bias, misunderstanding through communication, or lack of confidence in an idea or founder on the basis of gender. 


To move forward, no matter what role you may play in the unusual territory of startup ventures, anyone can make a difference. By supporting female founders we can work towards equality and true change. Of course, this can only happen one step at a time. This is one of the reasons I have been so grateful to work directly in the heart of this problem. I’ve witnessed first hand, many individuals wholeheartedly support Kikori due to this very reason. I attentively worked towards building the crowdfunding campaign, through Kickstarter, and feel very passionately support the startup as a whole because of my exposure to the people who created it. 


Sources: 

https://blog.dol.gov/2017/07/05/get-facts-women-business-owners#:~:text=Almost%20all%20(99.9%25)%20of,and%2015%20percent%20of%20employment.&text=As%20majority%20and%20joint%20business,generate%20%242.5%20trillion%20in%20sales.


https://www.prnewswire.com/news-releases/us-pe-fundraising-hit-record-highs-in-2019-despite-slight-dip-in-dealmaking-activity-300984750.html#:~:text=US%20PE%20investment%20activity%20totaled,record%20year%20for%20PE%20dealmaking.


https://www.babson.edu/about/news-events/babson-announcements/venture-capital-funding-women-entrepreneurs-study/


https://hbr.org/2016/07/research-the-gender-gap-in-startup-success-disappears-when-women-fund-women

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