Yes, 2017 was a record breaking year in that female-founded startups received more venture capital funding than in previous years, but they still received far less funding than male-founded startups and that’s hardly a secret at this point in time.
There’s new data to suggest female-founded startups are the better option for investors, which might come as a surprise to you, and here’s why.
Boston Consulting Group and MassChallenge recently released a new study in which they closely took a look at 350 startups. Their findings point to female-founded startups receiving $930,000 in funding, whereas startups founded by male counterparts got $2.1 million dollars.
That is quite a large gap, and female-founders received pretty much half of what male founders did.
So let’s get to why female-founded startups are a better option for investors.
First off, for every dollar a female-founded startup was given in funding, they were able to generate 78 cents. For every dollar given to male-founded startups, they were able to generate only 31 cents (that’s half what their female counterparts were able to generate).
If you take a look at how female-founded startups perform over time, they are able to generate 10% more cumulative revenue over a five-year time period. In dollars, it’s $730,000. Male-founded startups generate on average $662,000.
Factors that have been ruled out in the study as to why this discrepancy exists include the quality of pitches and founders’ education levels between genders.
The findings of Boston Consulting Group and MassChallenge’s study are surprising, but it’s also exciting that they took a look at this data and are trying to change the tune of investors.
Their study concludes with ways for female-founders to help close this funding gap, such as pitching to investors and VC firms that are more gender neutral, joining accelerators that can help to provide networking, mentorship, and resources, and learning how to navigate the system as it currently is.
Change certainly won’t happen overnight, but hopefully this study will bring key findings to light for female-founders as well as investors that may have otherwise overlooked them.
Bre is a female millennial go getter residing in New York. One part entrepreneur, one part geek, she obtained her degree in Textile/Surface Design from The Fashion Institute of Technology.
She has held some exciting roles in both fashion as a designer working for brands like Victoria’s Secret and Henri Bendel, as well as in ad tech working for publishers like Ziff Davis.
Today she operates her own luxury label and is also the Chief Chick at Chipchick.com which reaches millions of women each month.
Bre is passionate about keeping women informed of the latest technology trends and products to improve their lifestyle and believes in providing real, useful information and advice to her readers.