Startups with female founders raise more venture capital

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In earlier rounds, mixed-gender teams do just as well as those without women, but the advantage grows in the later stages of fundraising. In the third- and fourth-rounds, companies with at least one female get on average $23 million investment, compared with $18 million on average for all-male teams

Startups with at least one female founder raised 21% more in venture capital funding than companies with all male teams, according to a study released Thursday by the Kauffman Fellows Research Center, a two-year training program for senior venture capitalists.

In earlier rounds, mixed-gender teams do just as well as those without women, but the advantage grows in the later stages of fund raising. In the third- and fourth-round raises, companies with at least one female founder get on average $23 million in VC investment, compared with $18 million on average for all-male teams. The analysis used data provided by the market researcher Crunchbase of more than 90,000 U.S. venture-backed companies from 2001 through 2018.

Women still face hurdles. Only around 22% of all startups are founded by at least one women, the survey found. And teams made up of just women have the hardest time raising money — especially if they run what are considered “gender-neutral” businesses. Research from PitchBook found that of the $130 billion in venture funding invested in startups last year, only 2.2% went to those run by all-female teams.

“Very few women in the past have been given the opportunity to showcase the track record of success,” said Collin West, co-founding partner of the Kauffman Fellows Fund and one of the authors of the report. “Thus those women continue to get passed over. So we’re in this vicious cycle.”

Related Article  GE Healthcare launches start-up collaboration project

The study adds to growing evidence that diversity at a company, in leadership, and in staffing, leads to better financial results, West said. A team with more diverse members will consider a wider range of ideas and with the small size of most startups, even one woman has a significant ability to influence the company, he said.

“Boom, suddenly you go from zero to one voice in the room,” West said. “Hopefully when people start looking at this data, they start saying, ‘Well shoot, me and my two buddies from Stanford should maybe go and do some outreach and make sure that we bring someone on that has a unique point of view, because we don’t.’”

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.xtechalpha.com.)

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Startups with female founders raise more venture capital

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