Funding Female Led Startups Is Not Charity, It’s The Best Investment There Is

International Women’s Day is behind us, society has taken the time to celebrate the talent and resilience of women. However, ongoing hurdles prevent them from achieving their goals and impacting the world. This is certainly true in venture capital where the best founders are overlooked because of their background or pitching approach. As a result, female founders remain largely underrepresented.

Table of Contents

Investing in the Best Founders

Compared to men, startups with strictly female founders received a mere 2.8% of VC funds in 2023, the lowest amount in four years. Rather than advocating for a quota, venture capital firms should simply be investing in the best founders. By doing so, they will naturally cultivate a diverse portfolio with attractive returns.

Gender Gap in Venture Capital

The World Economic Forum’s 2022 Global Gender Gap report showed that it will take at least 132 years until gender equality is achieved. Age-old stereotypes like ‘men take charge, women take care’ and ‘think leader think male’ rule the corporate world. Women generally get less funding than male teams despite the benefits of investing in a female-led company.

Challenges for Female Founders

Data proves that female entrepreneurs often outperform their male peers by building businesses with higher revenue and job creation. Despite this, female founders encounter more pushback during their pitching and fundraising process.

Bridging the Investment Gap

Female VCs have tried to bridge investment gaps by creating women-only funds. However, research shows that exclusively receiving funding from female VCs comes at a cost.

Transforming the Industry

Venture capitalists need to look beyond their network and begin seeing diversity not as a quota to be met but as a byproduct of finding the best founders. By diversifying investments and advocating for a reevaluation of ‘red flags’ in founder assessments, firms could have a transformative effect on society.

As International Women’s Day 2024 focuses on accelerating progress for women across the globe, venture capital is given another chance to start investing in women not only because it’s the right thing to do, but because the best founders come from all walks of life.

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