Summary of Why Women-Owned Startups Are a Better Bet

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Why Women-Owned Startups Are a Better Bet summary
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Start-ups led by women receive an average of $1 million less in early-stage investment than those run by men and generate double the revenue per investment dollar. This suggests that women-led start-ups are the better investment. So why haven’t male investors at US venture capitalist firms gotten the message? getAbstract recommends this inspiring analysis to women entrepreneurs, start-up accelerators, venture capital firms, and other investors.

In this summary, you will learn

  • How little of the investing pie goes to female entrepreneurs,
  • Why investing in women-led startups makes good financial sense, and
  • How female entrepreneurs can operate within the existing system until they’re able to change it.
 

About the Authors

Kate Abouzahr is Global People Team senior manager for Boston Consulting Group (BCG) and manages its thought leadership on gender diversity. Frances Taplett is Global Consulting People Team director for BCG. Matt Krentz is senior partner and managing director of BCG Chicago. John Harthorne is CEO of the MassChallenge start-up accelerator.

 

Summary

Data collected from 350 companies – 92 founded or co-founded by women and 258 founded by men – shows that start-ups led by women were the better investment. Women-led start-ups receive only $935,000 in early-stage investing for every $2.1 million obtained by start-ups led by men. The women-led start-ups, however, made 10% more revenue than start-ups led by men over the first five years, equivalent to 78 cents for each $1 invested in female-led start-ups versus 31 cents for male-led start-ups. A closer look at the application materials for each company – all of the 350 companies examined by this study were accepted by the start-up accelerator MassChallenge – shows that the business plans and pitches received similar qualitative scores. The differences in funding appear based on gender, not other factors.


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