The venture capital industry, long notorious for being a “boys’ club”, is seeing a surge of female-founded firms intent on swaying the global sex-distribution of funding dollars—but is it enough?
In 2019, men received 87 percent of global venture capital dollars, with 3 percent going towards female-founded startups. Globally, only eight women made it into the top 100 venture capital partners last year, even lower than the nine women who made it in 2018. And 65 percent of US venture capital firms still have zero female partners—despite 2019 being a record year for women making partner in venture capital firms in the US.
As the financial gateway for many new businesses, venture capitalism plays an essential role in deciding which business ideas make it and which won’t. But the world of venture capital has long been notorious for being a “boys’ club”, known for its tendency to fund a disproportionately large number of white, male founders, resulting in a lack of funding for products and services pitched by women founders.
DANGEROUS CONSEQUENCES
This exclusion of women in the funding process has dangerous consequences not only for women founders, but for society as a whole. The lower the number of female venture capital partners, the higher the chance that companies will assume men to be the default sex in the design process, causing what Caroline Creido Perez, a journalist focused on gender issues, calls a “one-size-fits-men” approach.
While the issue of a lack of women representation is prevalent in almost all industries, technology is a particular hotbed for “one-size-fits-men” designs. When Apple first launched its health app in 2014 it was able to track minute changes in a person’s blood alcohol content and even a person’s sodium intake, yet it couldn’t track a woman’s menstrual cycle; speech-recognition software has a higher chance of understanding male voices compared to women’s (Google’s software is 70 percent more likely to understand men); and on average, smartphones are 5.5 inches in length, which is considered too big for most women’s hands and too large to fit into women’s pockets.
This is where women-founded companies should come in. Companies founded by women have a unique advantage that no male-founded company can compete with: the ability to intimately understand the true needs and wants of women.
See also: 5 Lessons for First-Time CEOs From The Founder Of Goxip, Juliette Gimenez
A UNIQUE SELLING PROPOSITION
Co-founded by Whitney Wolfe Herd, dating app Bumble, one of the world’s most successful dating apps, has a unique selling proposition: it prioritises women’s safety by allowing only women to initiate the conversation. It has proved to be an effective strategy. Since its founding in 2014, the app has acquired over 100 million users and is now set to IPO at a US$6 billion valuation.
In 2012, entrepreneur Sara Blakely became the world’s youngest self-made female billionaire after she revolutionised the industry of shapewear with her own creation, Spanx. It was her personal experience dealing with uncomfortable and easily visible alternatives that spurred her to design Spanx—a product for women, by women. “I remember thinking [during the design process], ‘Where are the women? Why am I not speaking to any women here?’ And then it dawned on me that maybe that’s why our pantyhose had been so uncomfortable for so long, because the people making them aren’t wearing them,” Blakely told Inc.
Herd and Blakely’s ability to pay attention to the wants of women and go to market with successful products that met those wants was far from chance. Other women founders have gone on to establish some of the biggest brands in the world, including dating site Coffee Meets Bagel, which was started by sister-founders Arum, Dawoon and Soo Kang; The Body Shop, founded by Anita Roddick; ClassPass, founded by Payal Kadakia and Mary Biggins; and Canva, founded by a trio of founders including Melanie Perkins, who is now Australia’s youngest billionaire with a personal fortune of US$1.3 billion.