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startups run by women earn 151% more revenue - Start Up Gazzete
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startups run by women earn 151% more revenue

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In 2020, the proportion of hedge funds that went to female founders dropped to just 2.3%. In a world where having access to capital can make or break your business, that means that only two women for every 98 men have that opportunity. I am one of those two women.

This month, the company, Spekit, announced our $ 12 million Series A funding round to change the way employees learn in the workplace. It’s an achievement we could only dream of three years ago, when we were brainstorming product ideas in the elevator and over lunch. The road to Serie A was for us, as for all women, paved with obstacles. I did not attend an ivy league school. She was not a serial entrepreneur. And most of all, my co-founder and I are women.

Statistically, the cards were against us and will follow as our company scales. You’ve heard the stats, but let me share a few: When all-female teams have the opportunity to pitch, venture capitalists spend 30% less time on their fundraising request, 50% more than time to pull section and 24% more time on product slides. Basically, they put us under tougher and longer scrutiny, and in the end, we raise on average 30% less than male founding teams.

But the challenges we’ve had to overcome give us a platform to influence change. Reading the headlines from incredible founders like Whitney Wolfe Herd, the youngest CEO ever to go public with Bumble, reminds me that this funding is an opportunity to change the landscape.

Together, we can shape an entrepreneurial world that replaces bias with inclusion, convention with opportunity, and assumptions with logic. The first step in building this new future is to address several key areas.

Building a business requires capital

Forbes’ latest list of the 100 Most Innovative Leaders ranges from Jeff Bezos to Marc Benioff. A better title might have been ‘100 Most Innovative Men’, since there was exactly one woman who made the list. For its rankings, Forbes analyzed CEOs and rated them based on their media reputations for innovation, social connections and capital, a history of value creation, and investors’ expectations for value creation.

My favorite response came from Anand Giridharadas, editor-in-chief of TIME magazine, who wrote on Twitter: “There are twice as many men named Stanley as there are women by any name. And there are only two Stanleys. ”

The logic behind the Forbes selection process was flawed, which they eventually admitted. The entire episode exposed the broad nature of the bias that prevents women from raising funds or being nominated to run the world’s most iconic companies.

Less than 1% of startups that are in a seed round will achieve ‘unicorn’ status with a $ 1 billion valuation. Add this to 2.3% of women who receive venture funding and you will see that founders are more likely to win the lottery than to be on the ‘most innovative leaders’ list.

VCs can and should play a critical role in moving the balance. Instead of investing in someone who looks like those 99 men on the Forbes list, look for the founders who simply need the capital to get there.

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startups run by women

Use key performance metrics to drive investments
By looking only at the investment returns of companies founded by women, First Round Capital found that female entrepreneurs in which they invested performed 63% better than teams of male founders. Another Boston Consulting Group study found that for every investment dollar raised, startups led by women generated 151% more revenue than startups led by men. We are not talking about a few percentage points here. This equates to hundreds of millions in higher returns for a VC.

There is no doubt that diversity plays a key role in these metrics. A Harvard Business Review study is one of many that describe the statistically significant relationship between diversity and innovation. A survey of more than 1,700 companies around the world shows that companies with above-average diversity had 19% higher innovation revenue.

I can’t think of a clearer incentive for venture capitalists to re-evaluate their investment practices. Since women represent more than 40%

Of all the entrepreneurs in this country, the conduit is clearly there. It’s just a matter of finding it.

We recommend: How to become an Alpha Woman in business: when apart from being a collector you want to be an entrepreneur

Implement practices that prioritize diversity
No, the answer is not for VCs to run off and start investing in every business founded by women. It’s about changing these ingrained patterns, outdated customs, and prejudices that hold back progress.

Mallun Yen, founder and partner of Operator Collective, was intimately familiar with these statistics when she decided to invest in my company. The bottom line of her is 90% women and 40% people of color. In association with Leyla Seka, a former Salesforce vice president who led the company’s equal pay initiative, the fund was founded “because [they] believe that the power of venture capital is concentrated in a homogeneous group that does not represent where it is. [your] industry now or where it is going. ”

Fortunately, there are a few simple ways any VC can better represent where our industry currently stands and where it is headed:

Adopt a data-driven pitching process. Research by Harvard Business Review revealed a bias in the way women are questioned in the pitching process compared to their male counterparts, and even showed how male-voiced pitches far outperformed female-voiced pitches. By adopting a strictly data-driven pitching process, funds can remove bias from the equation and focus on opportunity quality.
Implement sourcing guidelines. Require your teams to find at least one company founded by women for every two companies founded by men. This will force them to step out of their comfort zone and get creative with the opportunities they bring to the table.
Establish benchmarks (benckmarks). Make your portfolio diversity a clearly defined initiative for your fund and set benchmarks to achieve it.
These three small changes can go a long way toward changing the status quo and giving female founders around the world a chance to be on Forbes’ next 100 Most Innovative Leaders list.

See also: In just one year, this cereal creator developed a multi-million dollar brand that is now available across the US

Author avatar
Joshua Smith
https://startupgazzete.com

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