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Why Women-Owned Startups Are a Better Bet
Article

Why Women-Owned Startups Are a Better Bet

Kate Abouzahr, Frances Brooks Taplett, Matt Krentz and John Harthorne
Boston Consulting Group, 2018
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Editorial Rating

8

Qualities

  • Analytical
  • Applicable
  • Inspiring

Recommendation

Start-ups led by women receive an average of $1 million less in early-stage investment than those run by men and generate double the revenue per investment dollar. This suggests that women-led start-ups are the better investment. So why haven’t male investors at US venture capitalist firms gotten the message? getAbstract recommends this inspiring analysis to women entrepreneurs, start-up accelerators, venture capital firms, and other investors.

Take-Aways

  • Start-ups founded or co-founded by women generate far less capital in early-stage investing, despite data suggesting that women-led start-ups generate more revenue over a five-year period.
  • Some 92% of the partners at US venture capital firms are men; they appear to have an affinity bias for male-led start-ups.
  • Yet over the first five years, women-led start-ups make 78 cents for every dollar invested. Start-ups led by men make only 31 cents per investment dollar.

About the Authors

Kate Abouzahr is Global People Team senior manager for Boston Consulting Group (BCG) and manages its thought leadership on gender diversity. Frances Taplett is Global Consulting People Team director for BCG. Matt Krentz is senior partner and managing director of BCG Chicago. John Harthorne is CEO of the MassChallenge start-up accelerator.

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    K. T. 5 years ago
    Can you please check the math again? <br> <br>“The women-led start-ups, however, made 10% more revenue than start-ups led by men over the first five years, equivalent to 78 cents for each $1 invested in female-led start-ups versus 31 cents for male-led start-ups. “
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      5 years ago
      Thanks for your comment. You'll notice that we have adjusted the text to clarify how the 10% calculation is applied in the original article. It states:
      "Despite this disparity, startups founded and cofounded by women actually performed better over time, generating 10% more in cumulative revenue over a five-year period: $730,000 compared with $662,000.
      "In terms of how effectively companies turn a dollar of investment into a dollar of revenue, startups founded and cofounded by women are significantly better financial investments. For every dollar of funding, these startups generated 78 cents, while male-founded startups generated less than half that—just 31 cents."

      Again, thanks. We appreciate your eagle eye and your math. E. Rauzin, Senior Managing Editor, getAbstract