Startups With At Least 1 Female Founder Hire 2.5x More Women

Summary of Study

Bottom Line: Companies with female founders hire 2.5 times more women than male-dominated ones. To improve gender-diversity in startups, female entrepreneurs must be supported at every step of the startup life cycle. This will help pave the way for executive and employment opportunities for future generations of women.

Female executives remain significantly underrepresented in corporate America. Just 4% of Fortune 500 CEOs are women. A CEO is more likely to be named John or David than be a female CEO. And women are much more likely to be hired when making use of blind applications.

There have been recent improvements to this gender disparity. Between 2000 and 2018, the percentage of startups with at least one female founder increased from about 4% to over 20%.

All-male founding startups continue to attract record levels of venture investment, while female-founded startups have shown a marginal increase before plateauing. In 2018, all-male founded startups raised $100 billion versus $12 billion by firms with one or more female founders.

This study looked at over 90,000 companies, which included a dataset of over 400,000 employees, and determined that only 60,000 (15%) of these employees were women. One reason for this disparity is that founders tend to hire people that resemble themselves.

Female-founded startups tend to have much more symmetrical gender splits, with company employees seeing a more even split at around 40% female and 60% male. In fact, female-founded firms hire 2.5 times more women than all-male founded firms. The impact is more pronounced for employees and executives in industries like consumer services and healthcare, which have a greater percentage of female founders. Contrast this with male-dominated firms in the business services industry, where females occupy a mere 6.4% of roles compared to 93.6% for men.

This discrepancy between investment opportunity and gender poses two significant issues, internal for the startup itself and external for the industry as a whole:

1) Diverse viewpoints are missed.
2) Women miss opportunities that come with a positive early-stage exit track record.

Although momentum is building to support hiring women and investing in women-founded companies, it’s going to take a much stronger and holistic effort by the entire startup and venture capital industry to make substantial and lasting change.

Read the full study HERE.

Feature Charticle

Firm’s Gender Balance by Firm Founder Gender

Kauffman Foundation

Findings:

  • Female-founded firms hire 2.5 times more women than all-male founded firms.

  • Even more female employees and executives exist in industries like consumer services and healthcare, which have a greater percentage of female founders.

  • One reason for this finding is that founders tend to hire people that resemble themselves.

  • To improve gender-diversity in startups and corporate American, female entrepreneurs must be supported at every step of the startup life cycle.

Read the full study HERE.