Let's say you wanted to invest in a startup and you have 350 companies to choose from. What metrics would you use to ensure you put your money in the right company for the best return?
Before you answer, what if those 350 companies could be divided into two groups based on one differentiator? Statistically, the first set of companies would return 78 cents for every dollar invested. The other: only 31 cents.
The answer should be simple. You would invest with a company in the first group. But in 2018, 97.8 percent of venture capital investments were made in the second group.
What's the differentiator? The companies in the first group of startups are female founded or cofounded. The companies in the second group are founded by men.
According to research conducted by Boston Consulting Group and MassChallenge, female founded startups tend to generate double the amount of revenue for every dollar of funding than their male founded counterparts. And yet, of the 350 companies studied over five years, the average female founded startup received only $935,000 in funding. That's less than half of the $2.1 million invested with startups founded by men in the same study.
What the Hell's Going On?
The researchers offer three insights to explain how things have gone so sideways.
One: Investors are predominantly men, men who incorrectly assume women don't fully understand the technical side of business management.
Two: Male founders tend to make bold, overinflated market projections. Female founders tend to be more reasonable and conservative with their forecasts.
Three: 92 percent of partners at the largest American VC firms are men. Many (not all) female founded startups position their products and services for consumers with whom investors don't identify.
What is Marrow Doing About It?
Commerce and culture benefit from diversity. So Marrow is doing its part to make the world a little better by investing its strategic resources with a female founded startup.
On Tuesday, November 19 at SPARK's Who Got the Money?, one of four finalists will be recognized with the inaugural Female Founded Startup of the Year Award. The winning startup will receive a brand development engagement with Marrow that refines and amplifies its story. It's an opportunity to change the narrative, to invest in the women who are investing their perspective and talent in the world.
And the Finalists Are...
At-sea data-enabled camera technology for the verification of sustainable fishing efforts.
Founders: Sarah Alessi and Jacob Issac-Lowry
Environmentally responsible mosquito population control.
Founders: Karen Dobson and Stephen Dobson
Concussion management and data visualization platform for for athletic departments.
Founder: Kate Van Pelt
Third-party verification platform for CBD product purity and effectiveness.
Founders: Annie Rouse and Jason Amatucci