Twenty years ago, the angel investing landscape had few traces of a female presence, and women were barely represented 5% all business angels and 3% of financed firms. Fast forward to 2022 and the scenario has modified dramatically and is now led by women 40% business angels and 31% of firms financed by business angels.
This change is not only a numerical increase; it is a seismic evolution that reflects broader changes in society and the business world.
Our own journey began in 2004 with Golden Seedsa nationwide network of business angels that invests exclusively in early-stage firms led by women.
We were met with a lot of skepticism. However, our belief was driven by two undeniable trends: the growing number of women-owned businesses and the growing capital, skills and networks of women willing to speculate in start-ups.
Since then, the idea of investing in women-owned businesses has gained great popularity. Golden Seeds’ investments of greater than $180 million in nearly 250 firms, which have collectively raised an additional $2 billion, are a testament to the economic and social impact of women entrepreneurs and investors.
However, it is premature to declare success. Despite progress in seed investing, there stays a serious disconnect between women’s innovation leadership and the pace at which enterprise capital is pursuing these opportunities.
How is it possible that women can run half of the recent businesses in the US, or much more 80% VC-financed deals in 2023 went to all-male teams? This is equal parts surprising and frustrating.
By reflecting on our experiences, which include each successes and challenges, we have identified significant ways in which the enterprise capital community can join us in our mission to direct additional capital and other forms of support to women-led startups.
Insights from the enterprise ecosystem
First, the compelling impact that women in leadership has on company performance can’t be overstated. Research consistently shows that gender-diverse teams and firms led by women outperform their peers financially. Last 12 months, McKinsey reported that firms whose management teams are diverse in terms of gender are 39% more more likely to achieve higher financial results.
Similarly, Black Rock I discovered it firms headed by women CEOs almost consistently perform higher led by men over the last decade. Influence Group AND BCG further supports this evidence by showing that gender-balanced boardrooms are almost 20% more more likely to improve business performance, and women-founded firms deliver 2.5 times more revenue per dollar invested than those founded by all men.
This data is not only numbers – it is a clear signal that diversity is a strategic advantage.
Second, the world of enterprise capital has often relied on pattern recognition – investing in entrepreneurs who fit a known mold, often favoring serial entrepreneurs with a history of successful exits. This methodology, while convenient, led to missed opportunities and missed innovations. This bias has unintentionally sidelined some of the most promising ideas, especially those developed by women and minorities.
Third, the enterprise ecosystem has traditionally been focused on the coasts, ignoring the wealthy diversity and potential of startups across the country. In 2022 44% financed transactions with business angels took place outside traditional VC centers, which indicates a significant pool of untapped potential across the country.
Finally, including more women in decision-making roles at VC firms could drastically change the funding dynamics. Research from Babson College‘S Diana’s project indicates that when there is at least one female partner in a VC firm, the probability that a woman entrepreneur will receive financing increases 2-3 times. However, women constitute lower than 20% decision-makers at US VC firms, highlighting a key area for improvement.
Towards a more inclusive future
After two many years of pioneering investments in women-led startups, we are at a crossroads where investing in women is not only an emerging trend, but a mature movement. Today, with solid data and knowledge gained over the years, the influence of women as entrepreneurs and investors is undeniable. However, the evolution of the corporate community towards gender equality and inclusivity is still ongoing.
To build a higher enterprise ecosystem requires not only recognition of past successes, but an unwavering commitment to opening recent pathways for diverse entrepreneurs to access the financing and support they need.
A future of enterprise capital infused with women’s knowledge and leadership guarantees not only higher outcomes for women entrepreneurs, but also unparalleled economic growth and innovation for all.