Report: Women-owned or Led Firms are Becoming a Leading Entrepreneurial force in Technology
"New research shows what many have long suspected: women entrepreneurs are poised to lead the next wave of growth in global technology ventures.
This is conclusion from the very thorough research on entrepreneurial women in tech, called High Performance Entrepreneurs: Women in High Tech, performed by a team led by founder and CEO Cindy Padnos of Illuminate Ventures, a venture fund that focuses on women led companies. Women are more efficient, have fewer failures, submit more patents, and start more companies and are heavily involved in IPO's. But is not all sunny: there still very few female investors, while women take on less capital than men. Here's a summary
"Report: High Performance Entrepreneurs: Women in High Tech
The report, prepared by Illuminate Ventures, documents the out-performance of women entrepreneurs in the past decade and the trends that are propelling them towards critical mass in the high-tech sector.
- Efficiency, efficiency, efficiency: The high-tech companies that women build are more capital-efficient than the norm. The average venture-backed company run by a woman had annual revenues that were 12 percent higher, using an average of one-third less committed capital.
- Big Progress in Recent Times: More women are serving as officers of venture-backed companies with successful exits. In 1988, only 4% of the 134 firms that went public in the U.S. had women in top management positions growing to over 41% percent by 2004. Of 2009’s 19 high-tech IPOs, all but two had at least one woman officer.
- Fewer Failures: Despite often being capital-constrained, women-owned businesses are more likely to survive the transition from raw start-up to established company than the average.
- Expanded IP Contributions: From 1985 to 2005, the annual number of U.S. female-invented fractional software patents increased 45-fold – three times the average growth rate in that sector.
- Growing Influence in Tech: Women-owned or led firms are the fastest growing sector of new venture creation in the U.S., growing at five times the rate of all new firms between 1997 and 2006 – now representing nearly 50% of all privately held businesses. These companies are being founded in the same business sectors at similar ratios to those led by men.
- Venture-level Returns: In the past 10 years more than 125 companies with over 200 women co-founders or officers have achieved IPOs or >$50M M&A exits in the U.S. high-tech sector alone
- Diversity Improves Performance: Organizations that are the most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers – and research shows gender diversity to be particularly valuable where innovation is key.
- Financial Bottleneck: $1M+ woman led companies are twice as likely as those led by men to gain debt versus equity capital. In 2008 woman co-founded tech businesses gained less than 10% of venture investment in the high-tech sector
- Impact of Women Investors: Women now represent just over 15 percent of the angel investors, but just 5%-7% of the partner-level high-tech venture capital investors in the U.S. Firms with women investment partners are 70 percent more likely to lead an investment in a woman entrepreneur than those with only male partners.
The bottom line (according to the report): "More than ever before, women are influencing the face of business. They are on the cusp of becoming a leading entrepreneurial force in technology. As the global economy regenerates, new business models are needed to stimulate economic and job growth. Investors seeking to reinvigorate bottom-line performance and to favorably impact the entrepreneurial strength of our economy would be wise to support strategies that enable high-tech start-ups that are inclusive of women entrepreneurs."
For the full report, please go to the website of Illuminate Ventures
Cindy Padnos, who founded Illuminate Ventures, is a successful serial entrepreneur in high tech and a long-time FWE&E advocate and member. She has built a track record of success as a venture investor and has now launched Illuminate Ventures, an early stage high tech VC firm that seeks to expand its deal flow to be more inclusive of talented women entrepreneurs.
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