Want your start-up to get ahead? Get a female team member.
That is a key finding of professors at Babson College, a leading US business school which specializes in entrepreneurial research, in a study of states-based start-ups.
The report, Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital, found that start-ups with a female founder are more likely to achieve higher valuations in both their first and third rounds of venture capital funding.
Data from the analysis of nearly 7,000 companies show that female-founded firms receive valuations which are up to 64% higher than those without a female team member.
The amount of early-stage investment in companies with a woman on the team has tripled from 5% to 15% in the past 15 years – but 85% of all venture capital–funded businesses still have no women on the executive team.
The majority of VC funding therefore goes to male-only start-ups, and Babson also found that less than 3% of venture capital-funded companies had a female chief executive.
VC firms with women partners are also more than twice as likely to invest in companies with a woman on the executive team, and more than three times as likely to invest in companies with women CEOs. However the total number of women partners at VC firms has fallen 6% to 10% since 1999.