About Investing In Women and Why You Should Do It
Research show that companies with more women in senior positions perform better. For example, companies with female executives show higher return on equity, greater innovation and stronger client focus. Yet, less than 5% of all ventures receiving equity capital have women on their executive teams. The Diana Report, published last fall, is the first comprehensive analysis of venture capital investment in women entrepreneurs since the first Diana Report was published in 1999. According to the Diana Report, companies with a woman on the executive team during 2011-2013 received 21% of the the total investment dollars. Companies with a female CEO received just 3% of the total venture capital dollars.
Why? Well, one reason is a historical male network in the venture community. Unfortunately, that is a trend that seems to be going in the reversed direction. Again, according to the Diana Report, the number of women partners in venture capital firms declined significantly since 1999 from 10% to 6%. This is important because venture capital firms with women partners invest in companies with a woman on the management team to a much larger extent that firms with no female partners (34% compared to 13%). Venture capital firms with women partners are also more likely to invest in companies with female CEOs (58% of firms with women partners compared to 15% of firms without women partners).
So what can we do? #InvestInWomen, of course. And, luckily, there are a number of initiatives by smart women to improve investment in women-led and women-owned businesses to help us on the way. Pipeline Fellowship is one such initiative. Pipeline is an angel investing bootcamp for women that trains women in the art of investment. In return for learning about due diligence and evaluation, each participant vows to invest in a women-led, profit-making and socially conscious venture. Ellevate Network provides another opportunity to invest in women though its Pax Elevate Global Women's Index Fund.
So, do both business and yourself a favor and invest in other women.