The article examines the longstanding issue of the gender gap in venture capital (VC) funding, where women-led startups receive a disproportionately small share of VC investments. The author argues that this disparity is not due to a lack of capable women entrepreneurs or other systemic factors, but rather the biases and choices of the predominantly male VC community.
The article presents data showing that in 2022, companies with solely female founders received only 2.1% of all U.S. VC funding, while mixed-gender founding teams received 16.3%, leaving 81.6% for male-only founded companies. This is despite women making up 28% of all U.S. entrepreneurs in 2019 and starting businesses at a faster rate than men.
The author refutes common excuses given by VCs, such as the lack of a strong pipeline of investable women entrepreneurs or the claim that men simply pitch better business ideas on average. Instead, the author argues that these are self-fulfilling prophecies, as VCs tend to only seriously consider founders who fit a narrow archetype, often white male "nerds" from elite universities.
The article highlights the irony that women-led startups tend to produce better returns than their male-led counterparts, generating 10% more revenue over a five-year period and achieving 35% higher ROI and 12% higher revenue when venture-backed. Yet, VCs continue to overlook these high-performing women-led ventures in favor of less effective male-led ones.
The author concludes that the solution lies in VCs confronting their own biases, looking beyond their usual male-dominated networks, and making the choice to fund excellent women-led ventures in serious numbers. Until then, the gender financing gap will persist, with more repetitive diversity efforts that avoid addressing the root cause.
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by Joan Westenb... at medium.com 06-13-2024
https://medium.com/westenberg/heres-why-venture-capital-doesn-t-fund-women-cef70ae704acDeeper Inquiries