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Article by Katarina Warnström

On Friday 3/8 we celebrate International Women’s Day. The official campaign theme this year is #BalanceforBetter, implicating that a more gender-balanced world is a better world. And though the pros of a more gender-balanced world are obvious for women in a number of ways, when it comes to business #BalanceforBetter can be interpreted quite literally: investing in women-led companies is better for the balance – on your bank account!

Women-led and women-owned companies yield above-market return on investments, according to an analysis by MSCI ESG Research. And according to a study conducted by the American incubator Mass Challenge, companies with only females or mixed founder teams had 10 % more in revenue over a 5-year period compared to companies with all male founders – despite the fact that the latter got more than twice the amount of investment capital.

The fact is that women only get around 2 % of all venture capital funding, and just 16 % of all conventional small business loans, according to Mycnote.com. Yet, the women outperform their male competitors in so many ways. This is why Golden Seeds, a network of angel investors, exclusively funds women-led companies. Golden Seeds’ Managing Director, David Nethero, lists five major reasons:

  • Women are less likely to create a product simply because it’s feasible or technology suddenly allows them to do so. Instead, they focus on addressing real issues or problems they’ve observed or experienced. And they don’t just stop at solving the problem. They make sure there’s a streamlined, cost-effective solution that’s both time- and resource-efficient.
  • Women know they’re likely to start with less funding, but determined to scale their companies, they generally learn early to be capital efficient. 
  • When women start or lead companies, they tend to bring with them five to ten years of experience in their respective fields.
  • Women are becoming serial entrepreneurs, with the measurable track records and results angel investors want to see.
  • Women-led company cultures tend to be collaborative, inclusive and consultative.

One could argue that we have come a long way as far as gender equity goes in the past thirty years. Up until 1988, banks often required female entrepreneurs to have a man co-sign their business loan (!). But considering the numerous reports that girls outperform boys in schools, and that women outperform men in business, it is surprising that we haven’t come further.

So why not celebrate International Women’s Day this year by investing in a female-led company. Not because it is the morally right thing to do, but because it is the economically smart thing to do!

Happy Women’s Day!

Sources / Articles on the topic
Financial Times.com: Venture Capitalists Lose Out by Ignoring Women Entrepreneurs
Entrepreneur.com: Why Investing in Women-Led Startups Is the Smart Move
Veckans Affärer, va.com: Att ignorera kvinnor kostar för riskkapitalisterna
Forbes.com: Business On The Basis Of Sex
Msci.com: Women on Boards – Global Trends in Gender Diversity on Corporate Boards.
Internationalwomensday.com