The Real Value of Investing in Women Founders (Hint: It’s in the Trillions)
Investing in women founders isn’t just the right thing to do—it’s good business.
In the pursuit of a more inclusive and impactful financial ecosystem, investing in women founders presents an unparalleled opportunity. How do you feel about the fact that all-women founding teams raised just 1.9% of VC funds last year? That’s a tiny $4.5 billion slice of the $238.3 billion pie allocated to venture capital.
Plus, get this: companies with a woman founder perform 63% better than investments with all-male founding teams.
Frustrated? Us too. But rather than accept the status quo, we’re fired up to flip the script. And because you’ve found us, we hope you’re rallying for this mission too.
Let’s talk about the immense potential and impact fostering a financial feminist economy and investing in women founders has on our world.
The Gender Gap in Entrepreneurship and Investing
Before diving into the value of investing in women founders, we need to address the current landscape.
Historically, women have been underrepresented in entrepreneurship and investing, with systemic challenges hindering our access to capital and support:
Only about 11% of decision makers at Canadian VC firms are women
85% of all Canadian LP dollars are invested to funds with no women managing partners
Since 2011, the amount of VC dollars going to teams of only women has ranged from 1.8% to 2.7%—we’re currently sitting at 2.0%
Because women don’t fit traditional patterns, we’re already behind right out of the gate. If these barriers weren’t already obvious, it becomes crystal clear with the research showing that when a woman is at the table, a fund is twice as likely to invest in a women-led start-up.
Despite some progress made over the years, we still have a long way to go to close the gender gap.
Considering women drive 85% of all consumer spending, there's a tremendous opportunity for women to create (or redesign) products and services we consume daily—with a woman in mind.
With the rate of women in entrepreneurship in Canada increasing by 30% over the past decade, creating meaningful change requires addressing these disparities and meeting the rise of women entrepreneurs with climbing capital.
The Power of Diversity in Decision-Making
Research consistently proves that diverse teams make better decisions and are more likely to outperform homogeneous ones. For example, a study from Boston Consulting Group found that for every dollar of investment raised, women-run startups generated 78 cents in revenue, whereas male-run startups generated only 31 cents.
Investing in women founders brings diverse perspectives, experiences, and problem-solving approaches to the table. This diversity leads to greater innovation and creativity, improving a company's long-term performance and resilience.
When we invest in women-led ventures, we foster an ecosystem where unique ideas flourish—ultimately benefiting investors and society as a whole.
Activating the Trillion-Dollar Potential
On the topic of society as a whole—actually, let’s look through a wider lens at the entire world—ready for that trillion-dollar value we hinted at in the title?
According to a McKinsey Global Institute report, advancing gender equality could add up to $12 trillion to the global economy by 2025.
Considering women account for about 51% of the population (a nod to our name!), the global economy will suffer if we don't achieve our full economic potential.
Picture a full potential scenario in which women play an identical role in labour markets as men: as much as $28 trillion could be added to global annual GDP (gross domestic product) by 2025.
How can Canada’s economy reach its true potential if 51% of the population isn’t fully participating?
Investing in Women-Led Ventures
By having more women champion other women and investing at the same rate as men, there could be more than $3.22 trillion of additional capital to invest globally.
The vast potential of investing in women founders is tied to their innovative ideas and untapped market opportunities. Women entrepreneurs often create products and services that address real-world needs overlooked by male-dominated industries. Think industries such as educational services, social assistance, climate and environmental, and women’s healthcare—especially the multi-billion dollar FemTech sector.
By investing in underrepresented ventures, we tap into new markets and consumer segments, generating substantial financial returns.
The Rise and Ripple Effect of Financial Feminism
Financial feminism isn’t about exclusion or superiority but rather about equality and empowerment. A Financial Feminist™ Economy encourages us to build an ecosystem that champions diversity, inclusivity, and shared prosperity.
Scroll down to the footer of our website, and you’ll find:
Women’s economic empowerment is key to unlocking gender equality. This includes participating equally in existing markets, acting as directors on boards, as venture capitalists, as entrepreneurs as business leaders, and as meaningful participants at all levels of economic decision-making.
When investors actively seek opportunities to support women’s economic empowerment, they contribute to a more equitable distribution of wealth, challenge gender stereotypes, and set a positive example for future generations.
Further, investing in women founders is not solely about financial returns or the bottom line; it's about making a positive impact on society.
Women tend to reinvest a higher portion of their earnings back into their communities and support social causes:
71% of women make investing decisions with wider sustainability considerations in mind compared to 58% of men
19% of women said they would invest in a company that was not considered socially responsible, compared to 51% of men
In a survey looking specifically at women between the ages 30 and 40, 61% handpicked their investments based on their social or environmental impact
By empowering women entrepreneurs, investors contribute to social development and upliftment, helping create a more sustainable and inclusive future that secures themselves, their families, and future generations.
As we strive for a more inclusive and transformative financial ecosystem, having more women at the table investing in women founders on the other side offers an unmatched opportunity.
Building a Financial Feminist™ Economy is a mountain to climb, and we are determined to continue onward and upward.
Join us! Whether it’s becoming an investor, showing your support as a Financial Feminist, or connecting with us to learn how to work together, the journey is much more possible with a strong community.
Women, gender-diverse people, outliers, and allies—together, we can create a more equitable and prosperous future, championing women to lead, innovate, and shape a world we all want to live in (not to mention activating the multi-trillion-dollar women economy!).
*A note on language (2023 08 02): The originally published title, post, and graphic mentioned “female founders," which we have since adjusted to “women founders.” When we say “women” we mean all individuals who identify as women. Transgender women are women. The51 is built by women for everyone.
*Please note that the information provided in this blog post is for informational purposes only and should not be construed as investment or financial advice. It's important to conduct due diligence, seek professional advice, and evaluate the suitability of investment opportunities based on your individual circumstances and risk tolerance.