KANSAS CITY — A gender imbalance in the entrepreneurial ecosystem is squelching innovation and suppressing industry growth. Female founders have significantly less access to capital and other resources required to launch and sustain successful businesses — despite generating strong returns and demonstrating superior leadership capabilities.
“Businesses founded by women are often different than businesses founded by men because they have different insights and different needs,” said Ciara Dilley, vice-president of Transform Brands and Portfolio Innovation at PepsiCo, Inc. “Women are still the key decision makers when it comes to purchasing and making food for our families — a role that when combined with a woman’s persistence and solution-oriented mindset can open countless new doors for innovation.”
In 2019, companies founded solely by women received 2.8% of the total venture capital invested in start-ups in the United States, a figure that edges up to 12% for businesses with both male and female founders, according to PitchBook, a private market data company.
Females are underrepresented on the other side of the table, too. Women account for 12% of decision makers at U.S. venture capital firms, according to PitchBook. Last year saw a record number of women — 52, up from 38 in 2018 — becoming first-time partners or general partners at U.S. venture capital firms, based on a report from All Raise, a non-profit dedicated to advancing female founders and funders. The number of men named partner or general partner grew even more in 2019, to 71 from 40 in 2018. Two out of every three firms still have zero female partners.
Investors who fail to support female founders may be leaving money on the table. A Boston Consulting Group analysis found businesses started by women deliver higher revenue — more than two times as much per dollar invested — than those founded by men, and PitchBook data indicate female-founded start-ups have a consistent history of exiting faster than male-led start-ups.
Additionally, women outranked men on 17 of 19 capabilities that differentiate strong leaders from average or poor ones, according to the Harvard Business Review. Criteria for which women scored higher than men included taking initiative, driving for results, inspiring or motivating others and championing change.
Launching a business is difficult enough; cultural biases compound the challenges female entrepreneurs must overcome. Several founders interviewed about this topic described instances of harassment or exclusion and a lopsided power dynamic in the food industry.
Trends are improving, however, as more networks, programs and events are geared toward supporting women entrepreneurs. PepsiCo recently launched WomanMade, an initiative to advance female-founded businesses in the food and beverage industry. At the inaugural WomanMade Expo West Challenge on March 6 in Anaheim, Calif., 10 female entrepreneurs will pitch their business plans to a panel of industry leaders for a chance to win $100,000 in business grants.
The Hatchery Chicago, a food and beverage incubator, is set to host an event on March 10 in connection with International Women’s Day featuring women founders and leaders, investors and finance experts and a workshop with Women’s Business Development Center on becoming a certified woman-owned business.
A lack of diversity in business leads to a lack of perspective, creativity and empathy that lays the foundation for powerful innovation. When the market rewards more women and minorities with opportunities, everyone benefits.
This commentary was featured in the March 3 edition of Food Entrepreneur. Read the full issue here.