Are startups with a female executive more likely to succeed?

Women-in-tech

Women-in-tech

It seems that behind every successful startup you are likely to find a high-powered female executive — or so says a report from Dow Jones. The report, titled “Women at the wheel: do female executives drive start-up success?” explores a few questions around women’s roles at startups.

The report doesn’t really explain why women seem to make companies more successful, just that they do. It also poses some interesting questions about the influence of women in the startup world. What industries have women influenced? How have women on management teams affected exit options? At what stage do women join startups? What verticals see the highest number of females?

According to Dow Jones corespondent Deborah Gage, the study “finds that companies have a greater chance of either going public, operating profitably or being sold for more money than they’ve raised when they have females acting as founders, board members, C-level officers, vice presidents and/or directors. At successful companies, the median proportion of female executives was 7.1%; at unsuccessful companies, 3.1%.”

Women are being recognised in the tech world as leaders of the industry. Companies such as Facebook, Google and Yahoo have high-powered women running (or helping run) the business and driving innovation.

Though this is not the case as Gage surmises from Cameron Lester, a general partner at Azure Capital Partners, he feels that women face bias in the tech industry. “I continue to be surprised that there aren’t more venture-backed companies with women CEOs,” says Lester.

According to Lester “investors tend to go with what they know”, which translates to backers going with a company headed by the a certain entrepreneur mold, such as a “young male computer scientist who’s graduated from Stanford University and worked at a hot company like Google or Facebook,” argues Gage.

Gage also comments that because women are more conservative than men that “financially, they may raise less money than men, which makes them more capital-efficient”.

Though according to Theresia Gouw Ranzetta, a partner at Accel Partners and one of Silicon Valley’s few female venture capitalists, this may lead to women being “more likely to sell a company when they get a good offer, rather than to keep it independent or take it public for a bigger success down the road”.

The study only considered about 20 194 US-based companies currently listed in Dow Jones’ VentureSource database that either received funding or exited between 1997 and 2011. Of the 167 556 executives involved, about 7% were female.

The study concludes:

In the pool of successful companies versus failed companies, we do not see any significant difference between the proportion of female executives. However, a dependence exists between a company with a female CEO and its success within the consumer services and IT industries, the two industries that in the past five years saw the highest number of new companies enter the VC market.

The full study can be found here.

More

News

Sign up to our newsletter to get the latest in digital insights. sign up

Welcome to Ventureburn

Sign up to our newsletter to get the latest in digital insights.