latimes.com – Start-ups led by women generate higher returns. Research shows this again and again. Investment firm First Round Capital looked at 300 companies it seeded between 2005 and 2015, and found that those with a woman among the founders performed 63% better than ones founded just by men. The Kauffman Foundation reported that female tech entrepreneurs generated, on average, a 35% higher return on investment than their male counterparts.
And yet, investors hand men, not women, the money. A lot more money. Researchers at Babson College found that over a two-year period, companies with a female CEO received $1.5 billion in venture capital dollars, while companies led by men received $49.3 billion. That means for every $1 invested in companies led by women, about $34 went to companies led by men.
What’s going on here? It’s not that there are 34 times more male entrepreneurs. Women own 31% of all privately held firms in the United States. Nor can we shrug and say men simply have a lock on superior business ideas. According to a 2014 research study led by Alison Wood Brooks, a professor at Harvard Business School, when men and women pitched the same idea, investors were 60% more likely to invest when a man proposed it.
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