Female founders are the fastest growing segment of entrepreneurs but receive only 2.7 per cent of venture funding, this needs to change.
2015 was another strong year for female entrepreneurs, in 2016 it’s time that funding catches up. According to Crunchbase, seven years ago about 9.5 per cent of start-ups had at least one woman founder, and that number had doubled to 18 per cent as of 2014. This exponential shift is exciting, though funding has not kept up.
Currently only 2.7 per cent of venture funding goes to women. This is a hard number to stomach. When I started my start-up a few years ago, a female angel invested £10,000 into my company. This helped give me the confidence and capital to go forward and later raise a venture round of funding, then sell the company two years after that initial angel investment.
After recently travelling across North America on an eight city speaking tour to connect with aspiring angels through my organisation Female Funders, I realised that we have a long way to go in educating investors about the merits investing in women-led businesses. But investment in women is not charity - it’s an incredible business opportunity and here are three reasons why.
1. Teams with a female founder outperform all-male teams
According to a study released by First Round Capital, companies in their portfolio with at least one female founder performed 63 per cent better than all-male teams. So next time you’re reviewing a deck, keep this piece of info top of mind!
2. Your investment is safer in a woman’s hands
In today’s society, women control up to 70 per cent of household income and $20 trillion in consumer spending worldwide. It’s widely known that women can handle the great responsibility of making the key money decisions, and this also translates into the business world. The Centre for Entrepreneurs shared that women are much more cautiously optimistic and honest when evaluating the track record of their business. Their study showed 62 per cent of men were more likely than women (at 42 per cent) to state that their business was prospering, despite the fact that the women they studied had higher profits.
3. Female entrepreneurs are incredibly ambitious
Women have come so far in the last 60 years to be viewed as thought leaders, and empire builders, yet we still feel like we have something to prove. A study by the Barclay’s research which surveyed over 500 C-suite executives and entrepreneurs (bringing in over £2 million), revealed that 80 per cent of the women who were surveyed were 'very' or 'extremely interested' in scaling their business.