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This article was published on August 7, 2018

Women founders get less funding than men but make double the revenue

Women founders get less funding than men but make double the revenue
Cara Curtis
Story by

Cara Curtis

Former TNW writer

As a woman, sexism isn’t new to me. I’ve encountered many casual sexist jokes and witnessed the infamous gender pay gap that looms over our heads.

But, what’s new to me is that sexism even exists in the progressive world of entrepreneurship.

A recent study by Boston Consulting Group (BCG) and Mass Challenger, a network of startup accelerators, found that when women applied for investment, they received less funding compared to the average male founder, but made double the revenue.

The study examined 350 companies over five years, and it revealed the average female-founded startup received $935,000 in funding. That’s less than half of the $2.1 million given to the male-founded startups in the same study.

Why are female founders receiving less funding?

BCG dug deeper into their research and identified three main reasons why female founders are more likely to receive less funding compared to their male competition.

  • Women’s ideas are prone to more pushback. It’s presumed by investors that women don’t know enough about the technical side of how a business is managed. However, this interrogation of technical knowledge isn’t conducted in the same way to male founders.
  • Male founders are more likely to “make bold projections and assumptions in their pitch”. BCG found that men often over-pitch and oversell their idea, women are generally more conservative.
  • Most investors are male themselves. To be specific, 92 percent of partners at the biggest VC firms in America are men. Male investors are not always the target customer for a female founders’ idea, especially if the pitch falls under categories such as childcare or health/beauty.

Even though male founders have been given a headstart in the world of entrepreneurship (almost $1 million more), female founders pull ahead by making more revenue per dollar funded.

This proves female-led companies to be the smarter investment option. According to the study, female startups made 78 cents per dollar that was funded. Male-founded companies only made 31 cents — that’s less than half.

In a world that seems to be built around men, women are at an obvious disadvantage and need to achieve more just to be seen as equal. Because of this unfair pressure, women have become more resilient to sexism and being underestimated — but the sexist jokes still aren’t funny.

With thicker skin and the motivation to prove the other half of the world wrong, women have adapted to living and working with these pressures.

Of course, this pressure can apply to men too. But according to BCG, actually living with the pressure burdened on you everyday is what makes all the difference.

Although it’s been proven female-founders are making more revenue, I don’t believe sexism will disappear anytime soon.

But if we can take anything from this study, it’s how women use sexism as a motivation to do better.

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