Posted on March 24th, 2015
A gender gap in venture capital? In all honesty, this is not something I ever thought of before this past fall when I was invited to be a panelist at an event hosted by Babson College. The event was held to discuss the findings of a new study on venture capital funding and women entrepreneurs. The study, Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital, was conducted by the same Babson professors who started the Diana Project, a program focused on women entrepreneurs and their continued growth. Two stats from that study caught my eye:
- Over the course of 3 years (2011-2013), only 2.7% of the companies receiving venture capital funding had female CEO’s
- If women entrepreneurs started with the same capital as their male counterparts, they would add 6 million jobs to the economy in 5 years and 2 million in the first year alone.
The report shocked me. But then I thought about how many women have come to pitch me for funding for their companies over the past 10 years … how many women entrepreneurs have come through our doors? I realized that in fact, this percentage isn’t all that dissimilar to the 2.7% cited.
Once you see how large the gender gap is, it’s pretty hard to ignore not just the problem, but also the profound impact, both economically and culturally, that we’d all see from bridging it.
A number of challenges are cited for this disparity including lack of role models, few mentors and unconscious bias. And while there absolutely are merits to all of these, where do we start?
In my opinion, a big part of the problem and the best place to start is at the top of the funnel. The truth is, there are disproportionately fewer female entrepreneurs seeking funding to begin with. We need to get more women pitching for capital.
Even if you are more economically motivated than values-driven, doesn’t it make sense to become part of the solution? Venture capital will chase success, but it also has to breed it. There is far too much upside to continue looking the other way. This is why we’ll be kicking off a business challenge for women entrepreneurs in partnership with Babson College later this year.
Generating an open and honest conversation about the gender gap is critically important. I’m certain that many of my male counterparts are, like I was, simply unaware of the problem, as well as the opportunity. This is something we can change, and I invite you to join in on the conversation.
Read more from John Burns in The Boston Globe here