What can a female founder do differently to receive more?
Here’s an interesting fact, companies founded by women bring higher returns from investment. According to a study by Boston Consulting Group, the return from each dollar invested in a 'woman-led business' is nearly twice as high, and the total revenue over a five-year period exceeds the earnings of male-run businesses by around 10%.
It’s paradoxical, but in spite of such impressive results, female startups still lose out in drawing investment compared to male-run ones, and the gap is huge. In 2020 just 2.3% of venture investment went to women founders. Alas, this has nothing to do with how ambitious the ideas are or the responsibility or professionalism of the representatives of either sex. To a large degree, it all comes down to prejudices, which manifest already at the presentation stage. Male founders are more often asked questions about how their product is being promoted and developed, around 67%. But if the founder of the business is a woman, 66% of questions will be along the lines of “What are you going to do if something goes wrong?” Moreover, the investor’s sex does not play a role here, as both men and women (the latter representing just 9% of venture investors in the USA) can be equally prejudiced towards women.
This doesn’t mean that a woman-led business is doomed. It just means that there are still things that need to be worked on in this area. Overcoming prejudice, first of all.
Women in senior positions: what are the advantages?
As was mentioned at the beginning, female startups have higher returns and bring larger profits. And this doesn’t only apply to businesses founded by women. Companies where gender equality is present – including in management positions and the board of directors – bring bigger profits. A study by Boston Consulting Group has found that companies with higher gender equality (i.e. those in which 8 out of 20 managers are women) showed greater innovation and better financial indicators.
Women think differently. This allows them to examine problems from different angles and come up with unique solutions targeted at different customers. It can’t be denied that women better understand other women and better predict their consumption patterns, needs, and decision-making. For businesses, taking advantage of these opportunities is essential in dealing with customers.
This brings us to our next point. Most of the decisions on purchases (70–80%) within a family are made precisely by women. Approximately 43 trillion dollars, according to the figures in a study by Frost & Sullivan – that’s the amount which women represented in the consumer market in 2020. By influencing women, engaging with them, understanding their needs, and offering solutions targeted towards them, a business will gain a huge advantage, including in terms of simple profit.
The risks of not having women in senior management
I’m the founder and CEO of BetterMe, a leading Health&Fitness apps publisher. Our apps have been downloaded by over 100 million users in 190 countries around the globe.
One of the distinct traits of a health tech company is that the majority of customers are women. Yet such companies are mainly led by men. This gives rise to an inability to understand customers’ needs and as a result, the product will fail to satisfy consumers in the best case, while in the worst one it might even harm them.
For example, apps that track the menstrual cycle often use flowers and hearts as icons, which is a poor match for the pain and discomfort which women actually experience during their period. And a huge number of weight-loss apps, developed by men, are primarily targeted towards making women conform to oppressive standards of beauty, not making them healthy and happy. Consequently, their physical and mental health can suffer enormously.
That is why it is so important for a company to have women among its senior leadership, among those who are making the decisions and directly shaping the product.
The experience of BetterMe
Of the senior management at BetterMe, women make up half, and we have seen amazing results from our teamwork. Since 2018, our mobile app has consistently ranked among the most downloaded apps in the Health&Fitness market. The majority of our customers are women, and we have designed our product based on their needs and expectations.
At the same time, the users of our app include many men. Thanks to the gender diversity in our team and senior management, we have a well-grounded approach to developing content for them, one which can take also men’s thinking and goals into account.
Women should have more self-confidence and believe in their own strengths. It is silly for us to live in fear. The worst thing that might happen is that we gain greater experience. The worst that might happen is that you will be turned down. But you will never discover the best that can happen if you don’t try. “Start before you are ready” as Rachel Mushahwar, Intel’s vice-president, recommended.