Did you know that only 21 companies founded and led by women have ever gone public? This crazy fact isn’t commonly known, and it really is quite shocking. Whilst the IPO world may be dominated by men, it’s important that we make room for the female talent that diversifies our companies. We need to see more women getting VC investment in the future.
In fact, the stats around this topic will probably surprise you. Take for example the 2020 fact that WeWork received more VC funding alone than ALL female founded companies put together. Consider also that these had been an improvement on years prior, with funding for female founders increasing in 2019—but only to 2.7%.
Clearly, when you look at the stats, you can see that there is a bias against women in Venture Capital. There is no clear reason why 97% of investment goes to companies founded and run by men, however we can say for sure that men are often the decision makers.
Women make up only 11 percent of Venture Capital partners in the U.S., according to a report published recently by industry organisation NVCA and Deloitte. This could be heavily influencing how decisions are made. Perhaps there is underlying sexism in VC, or perhaps it is the case that men tend to form longer term business relationships with men.
Historically it has been the case that relationships have been the basis of VC decisions, which is perhaps why strong relationships between male VC deciders and male entrepreneurs have worked against women.
Another reason women may be getting less funding is that when there are no female VCs in the room, the female entrepreneur will have a hard time explaining a female product, from a female perspective to men. This is just a simple fact, that men won’t understand a female-aimed product as well as a woman would. Products and services may not resonate with them as they might with a woman in the room.
However, with 49.6% of the population being female, it’s crucial that female voices, opinions and first hand understanding is represented in VC conversations. We need more women leading conversations around investment, and choosing companies to invest in.
This is a difficult question to answer, because it really depends on a culture shift within VC teams at present. We must make the fact that VC investment is at an all time low for women more obvious, so that VC funds and partners are encouraged to consider female pitches more seriously.
On top of this, we must urge diversity within VC teams so that women get a seat at the table. Investment funds should look at their leadership team and ensure it is diverse – if not, they are not only doing female founders a disservice but they may also miss opportunities to invest in amazing female-lead companies.
Alongside shifting the current model of investment to include more female decision makers, we must also create more funds that are solely run by women.
BorderlessMind and ISHIR founder, Rishi, recently participated in a call with Bumble founder – Whitney Wolfe Herd. On the chat she discussed the incredible progress of Bumble and the Bumble Fund which supports female entrepreneurs.
Whitney is an inspirational woman in business, and this week became the world’s youngest female billionaire – wow. Despite having amazing business success for herself, arguably one of her biggest achievements is championing other women’s success in business.
Whitney is also founder of Bumble Fund – a fund dedicated to celebrating female business ideas and companies. As the website states, when Whitney Wolfe Herd founded Bumble in 2014, it was with one central motivation: to help advance gender equality by allowing women to make the first move.
By creating this fund, Bumble is supporting females in the pursuit of venture capital. The aim of the fund is to build a bigger table for early-stage businesses, focusing primarily on businesses founded and led by women of color and those from underrepresented groups.
These kinds of amazing ideas will go a long way in changing how we invest in female companies, and in the general attitude to female-founded companies too. We love this initiative and are so delighted that Whitney Wolfe Herd has just become the youngest self-made female billionaire!