Founding the Future: Challenges and Triumphs of Female Entrepreneurs
An Investigation // by Madi Johnson
Two point two percent. In 2017, female-led startups in the United States received just 2.2% of all venture funding dollars, accounting for $1.9 billion of the $85 billion that U.S. venture capitalists invested in startup companies. In terms of deals, companies founded by women made up 4.4% of all venture capital deals last year with an average deal size of $5 million, compared to an average deal size of $12 million for companies founded by men (Fortune).
There are a few key reasons for these drastic discrepancies. The Harvard Business Review points out that venture capital firms like to invest in familiar social networks to mitigate risk. This is problematic for female startup founders because only 8% of VC firms’ full-time investing partners are women. Unsurprisingly, male VCs tend to invest in male founders. Moreover, various studies have examined the impact of gender stereotypes on female entrepreneurs. One study in Entrepreneurship Theory and Practice examined deliberations among governmental venture capitalists and found that VCs used the titles “entrepreneurs,” “innovators,” and “inventors” when discussing men seeking funding, whereas they generally just referred to women founders as “she,” effectively delegitimizing their experience and accomplishments. These sort of subtle biases may seem small, but they can make or break potential million-dollar deals.
Despite these challenges, 2018 has the potential to be the best year for female entrepreneurs. According to TechCrunch, 21% of new venture and micro-venture firms founded between 2014 and 2017 had a female founder, compared to just 7–8% of the top 100 firms. As such, these female founders will likely invest in female-founded startups. In 2017, women accounted for 15% of partners at accelerators and corporate venture firms, a significant improvement from 12% the previous year. There is a promising future for female founders as well. The percentage of funded startups founded by a woman nearly doubled from 9% in 2009 to 17% in 2017. These trends are projected to continue on an upward trajectory throughout this year.
These statistics are great for making predictions, but the voices of female entrepreneurs are needed to tell a complete story.
Laura Carpenter, a recent Baker Scholar graduate of Harvard Business School — a designation granted to students matriculating within the top 5% of their class — is the co-founder of media startup Abridge News. When asked about the male-dominated world of VCs, Laura commented:
Though I haven’t personally fundraised yet, I do know that because of the increased attention on the “boys-club” nature of venture capital many investors are going out of their ways to meet with female founders. This is a good start, but these meetings don’t always lead to investments. There was a great HBR article recently that explained how many investors ask aspirational questions (e.g., “What’s the brand vision”) to male founders while they ask prevention questions (e.g., “Are you planning to Turing test this”) to female founders. This has happened to me on occasion.
She cites “Rebecca Liebman from LearnLux” as a female role model for her ability to “walk into a room and win anybody over with her confidence. She’s also a great champion of other female entrepreneurs and has gone out of her way to provide me with helpful advice.”
Finally, she urges aspiring female startup founders to “[not] be afraid of criticism — you have to embrace it! I think that many females, myself included, have a tendency to strive for perfection . . . This doesn’t work in an entrepreneurial setting. As a founder, you have to be comfortable putting something that is 75% ready in front of people.”
Although entrepreneurship continues to be a male-dominated space, women are poised to found — and lead — the future business world, one dream at a time.
