Arthur M Blank Center for Entrepreneurship, Babson College, September 2014
An analysis was conducted comparing US venture capital (VC)-funded companies with women entrepreneurs on the executive team and those without between 2011 and 2013. It showed that 18% of business funding in 2013 had a woman on the executive team while only 2.7% had a woman CEO – these firms received 9% and 3% of venture capital dollars respectively. Companies with a woman executive were more likely to receive later-stage funding (21% of investments), but only 13% of early stage investments, and 9% of seed stage. Women entrepreneurs were most prevalent in software and biotech companies that received VC funding.
The report notes that conventional recommendations have included financial literacy, expanding of networks, and pitching training for women. However, while many women entrepreneurs have taken this advice they have not been able to achieve proportionate gains in early-stage growth capital.
There were 9 recommendations offered:
- increase the number of women investment professionals in the VC industry;
- VC industry should recruit and promote women to partner level;
- limited partners should demand more investments by VCs in companies with women on the executive team;
- VC industry should re-examine its preferences for investing in companies led by male CEOs;
- VC industry should seek out more early-stage companies with women on the executive team;
- increase media awareness of the lack of women in the VC community;
- examine if gender biases are part of VC decision making process;
- increase VC investment in companies with women on the team across all industry sectors; and
- VC industry should be re-examined based on gender and geographical investment preferences.