Just 20 Companies on the NYSE and Nasdaq Were Founded and Led by Women
Could VCs be part of the problem?
20: That’s the number of women startup founders who have led their companies to an IPO on the New York Stock Exchange — since its founding 204 years ago — or the Nasdaq, according to an analysis by Business Insider.
If you include companies that are no longer publicly traded, or which were led but not founded by a woman, that number increases slightly. But only 4 of the 442 companies that went public in 2020 were both founded and led by women. This major imbalance is driven in large part by the lack of venture funding that goes to women founders. Pitchbook reported that in 2019, women-founded startups received only 2.7% of all venture funding in the U.S., and that share went down to 2.6% in 2020.
Women founders face an especially steep challenge at the late stage when startups are more likely to attempt to go public. Pitchbook found that the median valuations for women-founded late-stage startups lagged the broader market by about $8 million, and that gap widened to roughly $17 million during the pandemic, with the median valuation for women-founded late-stage startups falling slightly from 2019.
There are some silver linings, however. Pitchbook found that startups founded or led by women have, over the last 10 years, been quicker than other startups to exit via acquisition or IPO — in other words, the VCs who do invest in these startups get faster returns on their investments.
Warren Buffett. Jeff Bezos. Bill Gates. The richest people in the world all started their own companies — or inherited their fortunes from someone who did.
That's because founders tend to own large chunks of their companies when they exit, far larger portions than employees working for them ever could.
If women want to become as powerful as men, they need to start the next Fortune 500s and create rivaling fortunes.
But in the 204-year history of the New York Stock Exchange and Nasdaq — where hundreds of companies go public each year — only a few dozen have been founded and led by women. Seventeen of those IPOs means, Initial Public Offering were in just the past seven years.
When women do try to start companies, numerous pitfalls prevent them from scaling their ventures.
Only 13% of all venture-capitalist decision-makers are women, according to an AllRaise.org follow-up to its 2019 report. Pitchbook reported that in 2019 2.7% of VC capital went to companies founded only by women, while companies cofounded by both men and women garnered 14%.
For women of color, the investment gap is even wider.
DigitalUndivided is a nonprofit social startup focused on programs and training that foster economic growth in Black and Latinx communities. In 2016 it launched ProjectDiane, a biennial research study that tracks investment in companies founded by Black and Latinx women. Its latest report, released this month, showed some progress for these communities. But not enough.
Women aren't thinking about starting businesses or planning for outsized success early enough. And when they do, they aren't dreaming big enough. One survey of 57 women CEOs found that only 12% of them planned to be CEO someday. The rest had to be told it was something they should consider.
Despite the barriers, it's time for more women to try. To stop thinking What if it fails? and instead think What if it works?
What they are is they're determined. They have a goal and they have a big vision and they don't give up, and they did it. They didn't think about everything that would possibly go wrong. They thought, I am going to do this, I can make this happen.
Gender equality in business isn't only a moral imperative. When it's achieved, it improves a company's bottom line and boosts the global economy.
Companies also perform better when more women are in power. A Bank of America paper found that S&P 500 companies with more diverse boards and a higher percentage of women in leadership positions delivered higher returns on equity.
Fortune 1000 companies with female CEOs have been found to perform three times as well as those led by men.
Understanding the link between women's empowerment and the wealth and health of societies is crucial for humanity includes art and culture of course.