VCs Investing in Women - And Making it Pay
(This guest post comes to us courtesy of Stephanie Wanek, Entrepreneurial Alliance Manager for the National Center for Women & Information Technology, or NCWIT, a national organization working to support women technologists in the start-up community. You can read the full post here.)
Did you know that venture capital firms that invest in women-led companies outperform those that don’t? A decade’s worth of research involving 2,500 VC firms, 19,000 portfolio companies, and 90,000 deals found that the firms’ performance increased as their ratio of investment in women-led companies increased, and that firms investing in women-led companies were more likely to invest in additional women-led companies.
The study suggested a few potential explanations for these results: first, firms that invest in women-led companies may do greater “due diligence,” resulting in more successful investments; second, these firms also tend to co-invest with other firms, and therefore may be more comfortable “taking a risk” on women-led companies; and finally, having women in leadership roles may simply cause startups to yield better results for the firms’ portfolios.
Other research on startups and the impact of women in leadership roles has found, in fact, that startups with women in executive positions (VPs, C-level managers, and board members) outperform those with no women in these roles, and that startups with women leaders use 40% less capital and are more likely to survive the transition from startup to established company.
Whether VCs see women as a risk or benefit, the numbers imply that adding women to your leadership roles is an investment that will pay off. Visit www.ncwit.org to find out more about recruiting and hiring women into your company, as well as making them more visible once they’re there.
You can also join us in Boulder during StartUp Week 2013 to hear from local startups about their challenges and perspectives on building diversity into their cultures, including Standing Cloud's Product and Operations VP Leslie Osborne, NCWIT's own Jenny Slade, and representatives from GNIP, Quick Left and SendGrid.
Scheduled for Wednesday, May 15th at 2:00 pm in Boulder, the event is free and open to both men and women. Find out more and register here.