New research shows what many have long suspected: women entrepreneurs are poised to lead the next wave of growth in global technology ventures. This report, prepared by Illuminate Ventures, documents the out-performance of women entrepreneurs in the past decade and the trends that are propelling them towards critical mass in the high-tech sector.
Efficiency, efficiency, efficiency: The high-tech companies women build are more capital-efficient than the norm. The average venture-backed company run by a woman had annual revenues that were 12 percent higher, using an average of one-third less committed capital.
Big Progress in Recent Times: More women are serving as officers of venture-backed companies with successful exits. In 1988, only 4% of the 134 firms that went public in the U.S. had women in top management positions growing to over 41% percent by 2004. Of 2009’s 19 high-tech IPOs, all but two had at least one woman officer.
Fewer Failures: Despite often being capital-constrained, women-owned businesses are more likely to survive the transition from raw start-up to established company than the average.
Expanded IP Contributions: From 1985 to 2005, the annual number of U.S. female-invented fractional software patents increased 45-fold – three times the average growth rate in that sector.
Growing Influence in Tech: Women-owned or led firms are the fastest growing sector of new venture creation in the U.S., growing at five times the rate of all new firms between 1997 and 2006 – now representing nearly 50% of all privately held businesses. These companies are being founded in the same business sectors at similar ratios to those led by men.
Venture-level Returns: In the past 10 years more than 125 companies with over 200 women co-founders or officers have achieved IPOs or >$50M M&A exits in the U.S. high-tech sector alone
Diversity Improves Performance: Organizations that are the most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers – and research shows gender diversity to be particularly valuable where innovation is key.
Financial Bottleneck: $1M+ woman led companies are twice as likely as those led by men to gain debt versus equity capital. In 2008 woman co-founded tech businesses gained less than 10% of venture investment in the high-tech sector
Impact of Women Investors: Women now represent just over 15 percent of the angel investors, but just 5%-7% of the partner-level high-tech venture capital investors in the U.S. Firms with women investment partners are 70 percent more likely to lead an investment in a woman entrepreneur than those with only male partners.
The bottom line: More than ever before, women are influencing the face of business. They are on the cusp of becoming a leading entrepreneurial force in technology. As the global economy regenerates, new business models are needed to stimulate economic and job growth. Investors seeking to reinvigorate bottom-line performance and to favorably impact the entrepreneurial strength of our economy would be wise to support strategies that enable high-tech start-ups that are inclusive of women entrepreneurs.
Donna Novitsky; CEO, BigTent
