References

Our pick of the most insightful reports, and a brief summary of the insight.

Why gender diversity makes financial business sense: 

Diversity Matters

McKinsey 2015

In the UK, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in our data set: for every 10 percent increase in gender diversity, EBIT rose by 3.5 percent.

Women Matter, Gender diversity, a corporate performance driver

McKinsey 2007

 

Organisation Excellence highest where at least 3 out of 10 women management, and tended to have operating margins and market capitalisation twice as high

Companies with a higher proportion of women in their top management have better financial performance

Top 89 European listed companies with the highest level of gender diversity in top management posts outperform their sector in terms of return on equity (11.4% vs an average 10.3%), operating result (EBIT 11.1% vs 5.8%), and stock price growth (64% vs 47% over the period 2005-2007)

Women on boards: Global trends in gender diversity on corporate boards

MSCI 2015

Of the 1650 companies represented in the MSCI World Index those companies with an above average share of women in their boards have a return on capital 35% higher than the rest.

Why Women-owned Startups are a Better Bet

BCG & MassChallenge, June 2018

“Businesses founded by women ultimately deliver higher revenue”

  • Investments in companies founded or cofounded by women averaged $935,000, which is less than half the average $2.1 million invested in companies founded by male entrepreneurs. 

  • Despite this disparity, startups founded and cofounded by women actually performed better over time, generating 10% more in cumulative revenue over a five-year period: $730,000 compared with $662,000.  

  • In terms of how effectively companies turn a dollar of investment into a dollar of revenue, startups founded and cofounded by women are significantly better financial investments. For every dollar of funding, these startups generated 78 cents, while male-founded startups generated less than half that—just 31 cents. 

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Is the X chromosome the X factor for business leadership?

Find out why companies led by women are outpacing the market. EY 2018

 

Women CEOs’ growth ambitions significantly outpace those of male leaders, despite their ongoing challenges in accessing capital. Almost one in three (30%) female-led companies are targeting growth rates of more than 15% in the next 12 months, compared with just 5% of male-led firms, even though more than half the women-led companies (52%) say they have no access to external funding.

Surveyed 2,766 C-suite (60% CEOs, founders or managing directors) in companies from

21 countries and with annual revenues of $1m–$3b.

'outward-looking, customer-centric approach'

external collaborative approach to innovation

'female-run businesses are more focused on increasing market share to become leaders in their respective industries'

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Shattering stereotypes, attitudes to growth:

Shattering Stereotypes, Women in Entrepreneurship

CFE & Barclays, 2015

 

  • Both men and women showed a strong appetite for growth

Among entrepreneurs, 82% of men and 83% 20 of women report being very to extremely interested in growing their business.

  • Women show a greater range of growth ambitions 

Including both domestic and international growth, and through the entry of new products and price points.

  • Women showed greater entrepreneurial ambitions

Less than 18% of male entrepreneurs say they are very or extremely interested in starting another business in the next three years, compared to more than 47% of female entrepreneurs.

Women entrepreneurs 2014: Bridging the gender gap in venture capital

Sponsored by EY, BABSON and The Diana Project

The study examined possible reasons why fewer than 5% of all ventures receiving equity capital had women on their executive teams. Conventional wisdom suggested that women entrepreneurs were neither prepared nor motivated to found high-potential businesses. As a result, they were not good candidates for venture capital investors. But the Diana Project found that, contrary to existing perceptions, many fundable women entrepreneurs had the requisite skills and experience to lead high-growth ventures. Nonetheless, women were consistently left out of the networks of growth capital finance and appeared to lack the contacts needed to break through.

“There is an enormous untapped investment opportunity for venture capitalists smart enough to look at the numbers and fund women entrepreneurs”,      Dr Candida Brush

Is there an untapped market? There is …

Not only do investors prefer male presenters, attractive males benefit most

Harvard Research 2014

In the study, VC investors (of both genders) chose businesses presented by male voices 68.3% of the time and only 31.7% by female voices, based on the same pitch with switched voiceovers.

'Untapped Unicorns’

Female Founders Forum, Barclays 2017

  • 'Male entrepreneurs 86 per cent more likely to be venture-capital funded,

  • and 56 per cent more likely to secure angel investment

  • however, when they do secure investment, women’s businesses show returns of 20% more revenue with 50% less money invested

  • in recent years, I have noticed two important trends emerge in the field of entrepreneurship. the first is the surge in funding choices available to business owners. The second is the rise of female entrepreneurs across the UK.” Juliet Rogan, former of High Growth & Entrepreneurs, Barclays

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Women Struggle to Get Access to Start Up Funding

FT, June 2018

  • All male teams are 4x more likely to receive investment than teams with even one woman

  • 97% of US venture capital funds handed to male CEOs between 2011-13

  • Yet no performance differences between the companies, instead company valuations 'significantly and consistently higher’ when a woman on the team

 

Source ‘The Gender Gap in Venture Capital – progress, problems and perspectives’, 2016

 
Insight into solutions:
Choice of words and understanding of different interpretations

Shattering Stereotypes

Barclays 2015

  • Women are more modest than men 

when it comes to evaluating the track record of their businesses. Over-confidence is often cited as the Achilles heel of the entrepreneur, and women seem to be less prone to this tendency.

 

62%of male entrepreneurs say their businesses are prospering compared to 42%of women, despite the fact that the female-run business in our sample report higher profit before tax.

  • Different words used by women founders on growth 

Note: The words are from women who are as growth orientated as the men in study, are successful entrepreneurs and C-suite executives, where the female led businesses had higher pre-tax profit, and had achieved this in a shorter timeframe (average 8 yrs compared to 15 yrs).

Approach to Growth

“calculated approach to risk" “sustainable growth" “contribution to society”

“consider multiple and wide-ranging factors for growth” 

“aim for controlled growth" “corporate responsibility” 

 “managed growth" “profitable growth" 

“growing is the most important thing but profitable growth"

 

Descriptive Words

“talked about the freedom provided by entrepreneurs" “familial words" “nature imagery"

“grows organically"

“my business is like a child growing up" 

De-biasing the corporation: an interview with Nobel laureate Richard Thaler

McKinsey May 2018

 - Hindsight bias​

 - Nudging the corporation

 - Diversity of thought

Insight into solutions:

De-biasing the corporation: an interview with Nobel laureate Richard Thaler

McKinsey May 2018

 

  • Hindsight bias

Write down the basis for important decisions, to distinguish between bad decisions and bad outcomes.

 

  • Nudging the corporation

Visual clues, ambience, that act as subliminal encouragements towards a behaviour.

  • Diversity of thought

“a lot of companies where everybody looks the same and they all went to the same schools. They all think the same way. And you don’t learn.” Richard Thaler

  • Encourage diversity of thought in discussion, encourage different viewpoints

“We seem to be all in agreement here, so I suggest we adjourn and reconvene in a week, when people have had time to think about other ideas and what might be wrong with this” Alfred Sloan, founder of GM

University of California Santa Barbara had participants evaluate business plans and manipulated whether the name of the entrepreneur was male or female. Female entrepreneurs were rated as less competent than their male counterparts and their business plans received less (hypothetical) investment

There was a way for women to escape this harsh judgement. When the business plan was highly innovative, this bucked gender stereotypes of women being less bold and risk loving. The author concludes, “women entrepreneurs may need to demonstrate more evidence of entrepreneurial ability than their male counterparts do. By introducing an innovative business model, a woman entrepreneur signals a level of agency that is not expected for women in general, but that better fits the masculine stereotype of the ‘entrepreneur’”

… women entrepreneurs can speak investors language

Male and Female Entrepreneurs Get Asked Different Questions by VCs

— and It Affects How Much Funding They Get

Harvard Business Review 2017

 

Dana Kanze, the study’s author (sold her tech business for $25m then wrote her Phd on vocabulary in funding), reviewed 200 videos of entrepreneurs pitching at a TechCrunch funding competition in New York. She tracked the words investors used when asking questions and found they use different words depending on the gender of the entrepreneur. 

 

Almost 70 percent of men were asked around their aspirations about making money for investors. Women were asked about how they planned to avoid losing investor's money. 

 

women

"accuracy" "afraid" "anxious" "avoid" "careful" "conservative” "defend" "fear" "loss" "obligation"  "pain"

men

"gain" "hope" "ideal" "accomplish" "achieve"  "aspire" "obtain" "learn" "expand" and "grow"

The problem, Dana Kanze said, is unconscious bias. Women investors ask female entrepreneurs the same questions men do. 

 

 … awareness of questions can change perceptions and outcomes

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Insight into solutions:
Attracting diverse and female-led businesses

Annette Kimmitt, EY head of global growth markets

‘Disheartening fundraising experiences can deter female entrepreneurs from future capital raising plans.’ 

EY survey of 2,700 people globally found 20% of female entrepreneurs had no plans to raise capital, in contrast to only 3% male entrepreneurs. 

‘It’s about convincing … the investment world that there is a thesis here’.

Rosie Bennett, Centre Director Bath SETsquared

‘investment community needs to market itself more carefully to women … looking at wording, visibility of female role models, women on adverts … to attract more diverse applicants’

Gender difference in equity crowdfunding: an exploratory analysis

International Journal of Gender and Entrepreneurship 2018

The authors find that women-owned companies constitute only 15.2 per cent of the ventures seeking funding in this data set; however, gender had no effect on the likelihood of successful fundraising.

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Gender stereotypes in the angel investment process

Bentley University, Babson College

International Journal of Gender and Entrepreneurship 2018

In the context of angel investing, there is a subtle bias that follows from the perceived stereotype between being female and the ability to lead a legitimate new venture.

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Entrepreneurial financing relationships: how does gender matter?

Bentley University, Babson College

International Journal of Gender and Entrepreneurship 2018

Social entrepreneur and gender: what’s personality got to do with it?

International Journal of Gender and Entrepreneurship 2018

Both female and male social entrepreneurs have personalities characterized by high levels of openness to experience, agreeableness, conscientiousness, extraversion and emotional stability. Only differ in one personality dimension – agreeableness – wherein women scored more highly. No significant differences are found in the other personality traits.

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Mixed-gender ownership and financial performance of SMEs in South Africa

International Journal of Gender and Entrepreneurship 2016

Results indicate that firms jointly owned by men and women appear to perform better than those owned by men

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