Why Women are Better Bets...

Dear Happiness & Leadership@Work Community,

I’ve recently had the opportunity to attend a couple of screenings of the documentary “Show Her the Money,” a 50-city tour sponsored by Wells Fargo.  The first was hosted by CED and xElle Ventures and the most recent was hosted last week on the beautiful new Bandwidth campus.

Listen to Google Lab’s commentary on my column:  Show Her the Money

Only 2%....

Venture capital can be a powerful growth accelerator. It has funded half of all public companies since 1979. However, according to PitchBook, since the beginning of 2016, companies with women founders have received only 4.4% of venture capital deals, and these companies have garnered just 2% of all capital invested. 

This data is disheartening.

Double the Revenue with Half the Funding

To better understand the why behind this data, the Boston Consulting Group (BCG)  partnered with MassChallenge, a nonprofit accelerator, to look at five years of investment and revenue data of 350 startups. This gender-focused analysis showed a clear funding gap: 

• Investments in companies founded or co-founded by women averaged $935,000, which is less than half of the average $2.1 million invested in male-founded companies.

According to the research, when women business owners pitch their ideas to investors for early-stage capital, we receive significantly less—a disparity that averages more than $1 million—than men. 

Yet businesses founded by women ultimately deliver higher revenue—more than twice as much per dollar invested—than those founded by men, making women-owned companies better investments for financial backers. 

Why?  And What Women Can Do Differently

Two of the causal factors that I’d like to point out:

• Women are more conservative in their projections and tend to stick more to facts, while men are more aspirational, often including moonshot projections. My advice? Women, learn to speak the future NOW!  This is what I tell audiences in my talks, that successful entrepreneurs are able to convincingly “speak the future now” and then inspire their teams to actualize these far-out dreams. Avoid underselling! I’ve coached women and conducted workshops on Confidence, essential to achieving what we set out to do, and in alarmingly short supply for women (see Why Confidence is Contagious).

• Women get more pushback.  MassChallenge found that when we pitch, women founders hesitate to respond directly to criticism. If a potential funder makes negative comments, we tend to accept it as legitimate feedback. On the other hand, “Most guys will come back at you in those situations,” an investor said. “They’ll say, ‘You’re wrong and here’s why.’” We need to learn to back up our statements, and calmly, yet forcefully explain why our ideas have legitimacy.

Women are Better Bets

The documentary shared data that lines up with what I discussed in Mr. Wonderful on Women Entrepreneurs. I shared my interactions with Kevin O’Leary from decades ago, right after he bought my company and called me in to make sure I wasn’t going anywhere. 

In the ensuing years, O’Leary noted that almost all his returns have come from companies run or owned by women, and he attributed four factors:

1. Better time management skills 
2. Achieving their goals more often 
3. Maintaining cultures with less turnover 
4. Successfully assimilate feedback

“Show Her The Money” echoed this, showing that women founders have a much lower failure rate.  Investors mentioned a 80-90% graduation rate, noting that women are grittier, more antifragile, and more efficient than men.   Grit was noted as the most important trait for a founder, pushing them beyond limits.  And similar to O’Leary’s investment results, their returns have been better.

Adversity Makes Us Stronger

Julie Hampton from Wells Fargo interviewed Sherry Stewart Deutschmann, a successful entrepreneur who sold her company successfully and then founded BrainTrust, an organization of small groups of women helping each other grow their business to $1M in revenue and beyond. She partnered with Wells Fargo to create the documentary.

Sherry shared how her extremely difficult upbringing—from having literally no money to her name—made her stronger and grittier.

I can relate. I’ve always said that I’ve never been the smartest, I’ve just worked harder.  I’ve been the only woman in the room  and the only female senior executive., and I had to work harder to earn my seat at the table. 

The documentary also highlighted how female founders are over vetted compared to men.. 

Interesting to see who tries harder - those who feel they have to.

Today and the Future

It’s encouraging to see efforts in our community and beyond to bring on more women to venture funds, as limited partner investors and in management teams including the C-Suite. 

A McKinsey study shows that investable assets controlled by women are expected to rise to $30 trillion by the end of the decade. 

For women out there looking to raise capital, “Show Her the Money” shares helpful Resources.

As more women step into the entrepreneurial spotlight, it’s essential that we continue pushing for equal opportunities in funding. 

Are we ready to change the narrative?

What will it take for investors to fully recognize the untapped potential of women entrepreneurs?

Let’s keep advocating, raising our voices, and most importantly—show her the money.

Published earlier this week in WRAL TechWire.

About Grace Ueng 

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Grace Ueng is CEO of Savvy Growth, a management and marketing consultancy dedicated to helping leaders and their companies realize their fullest potential.  With a proven track record in strategic reviews, marketing audits, and executive coaching, Grace guides organizations through their growth journeys. 

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