Female founders generate significantly higher revenue per euro invested than male entrepreneurs. Yet, startups founded by women receive less external capital, according to a recent study.
The gender pay gap is well known: women in employment earn less than their male colleagues. But the problem doesn't stop at dependent employment — female founders also have a harder time than male founders. Study by the Boston Consulting Group According to the study, startups founded by men receive an average investment of $2.1 million, while those founded by women receive only $930,000. Despite this limited capital, women still generate higher revenues on average than men.
The analysis of 350 startups found that companies founded by women generated an average of 78 cents per dollar invested within five years. Male startups, in contrast, achieved revenue of only 31 cents per dollar.
Female founders should “act early and confidently”
Not only do the female founders studied use the capital entrusted to them two and a half times more effectively than their male counterparts, but the startups (co-)founded by women are ultimately more successful despite having fewer financial resources: With the average investment of $930,000, they generated $730,000 within five years. The male founders in the sample achieved only $662,200 in revenue with investments of $2.1 million. Wolfram Gross, project manager of the project organized by the Federal Ministry for Economic Affairs Start-up competition – Digital innovations sees the different approaches of female founders compared to male:
"We repeatedly observe that they act more cautiously with regard to their business model and investors. Only when there is a clear prospect of success do many young female entrepreneurs expand their team and approach investors more aggressively. The demonstrably higher returns can now be used by aspiring female founders as an opportunity to act early and confidently."
The number is also a strong argument that investors should rely less on their gut feeling when making investment decisions.
