Women Drive Wealth. So Why Is Equity Still Inequitable?
New York Stock Exchange, Wall street, Manhattan, New York, USA Credit - Matteo Colombo-Getty Images
I spend every day working with leaders trying to close the gender gap. As a founder myself, we’re up against it. What gets headlines is the fact that only 2% of all VC funding goes to women, and less than 1% to women of color.
While the math doesn’t lie, we’re focused on the wrong stat. We can’t allow this to be the accepted reality because this number is a reflection of today’s make-up of venture investors. It’s time to change the equation. This isn’t just a gender equality issue; it’s also a business imperative.
The key fact is that women drive wealth. Emphatically. Let’s make the invisible visible:
Research shows that women-led startups outperform their male counterparts, generating 63% more value and twice as much per dollar invested. The Rogue Women’s Fund also found that women-led startups are five times more likely to become billion-dollar companies compared to male-led businesses. Proof that money is being left on the table when women founders are overlooked.
Venture capital has historically been a male-dominated industry, with 95.5% of U.S. VC firms having majority male decision-makers, leaving only 4.5% of firms with majority women decision-makers. At the Sun Valley Conference this year, only 10% of attendees were women. It’s hardly surprising that if men control the check-writing power, they’re more likely to bet on male founders.
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When you lift the veil off the important role that women play in driving wealth, and the dominant role they play in driving funding toward women founders, a strong business case is undeniable. More importantly, any confidence gap narrows. Yet it begs the key question: Why are VC firms not hiring or promoting more women partners?
You must bring the power of a pack of people to break a pattern, and studies show that when women are at the table, they’re twice as likely to invest in women founders than their male counterparts. Diversity begets diversity, giving way to a new investment strategy, and, ultimately, a new story.
Let’s reimagine what’s possible when you add the female factor into the equation, recognizing the power of diversity to drive better outcomes for all. By ‘outcomes,’ I’m not strictly referring to ROI. It’s about ROE—return on equity—when representation is about the strength in numbers it takes to drive real change.
The investment community has a huge opportunity and responsibility to ring the closing bell on tradition and rewrite a new normal—one where the collective minority can be greater than the current majority. As with any transformational change, it will require a conscious, concerted decision, and action to change the equation and close the gap.
The question should not be: Why is only 2% of VC funding going to women founders? The question should be: Why are only 16% of decision-makers at VC firms women?
